[By Yash Kaushik]
The author is a student of National Law University Odisha
Introduction
The U.S. District Court of Columbia, vide its order dated August 5, 2024, ruled that the tech giant Google was a monopolist, meaning it illegally cemented its dominance in the area of ‘general search services’ and ‘general search text ads’. Google was allegedly involved in the transgression of Section 2 of the Sherman Antitrust Act, 1890 based on the court’s findings. This provision makes it unlawful for any person to monopolize or attempt to monopolize any part of the trade or commerce among the several states, or with foreign nations.
Google allegedly abused its dominant position to strike exclusive deals by paying billions of dollars to smartphone makers such as Apple and Samsung. In return, these manufacturers did the work of setting Google as the default search engine in their handsets. It was also held that Google being a default search engine operated at such a colossal scale that inherently disincentive other competitors to enter the tech market. This ruling will significantly impact ongoing antitrust cases against Big Tech firms such as Meta, Apple, and Amazon for their alleged involvement in the violation of respective antitrust laws and stifling fair competition.
In India also, numerous complaints have been lodged against Google for allegedly violating the provisions of the Competition Act, of 2002. For instance, an Indian startup named Alliance of Digital India Foundation registered a complaint with the Competition Commission of India (CCI) alleging Google for abusing its dominant position in the online advertising marketplace. The complainant reportedly submitted that Google was involved in the act of self-preferencing its own products over others, a case of an anti-competitive practice prohibited under section 4 of the Competition Act, 2002.
The article deals with how the U.S. ruling against Google assists in dismantling corporate monopolies and fostering fair competition concerning developing economies like India. The author further highlights the need for big tech regulation through a robust antitrust framework that encourages an equitable and just marketplace that harbours free and fair competition for all.
Understanding Corporate Monopoly And its Ramifications
A market structure or arrangement dominated by a single seller exercising exclusive control over a commodity with no close substitutes is termed a monopoly. Such an arrangement is marked by limited alternatives of products and inherent restrictions for other competitors to enter the market space. Because of limited or no competition, the producers generally have no incentive to foster the quality of their goods and services, leading to technological stagnation in an economy. Moreover, because of existing obstacles, small and medium sized entities chronically suffer from limited opportunities. This situation results in the accumulation of power in the hands of a few MNCs, which further exacerbates existing economic inequality and leads to unpleasant consequences such as price gouging and deteriorating quality of goods and services.
In such an arrangement, sellers generally charge more for their products to attain high profits by ignoring the market forces of demand and supply. Thus, in the long run, monopolistic competition can deform market dynamics leading to lower innovation and diminished economic growth and creating an unhealthy competition that is detrimental to consumer welfare.
Implications of the U.S. Ruling for Antitrust Enforcement in India
The contemporary globalized world runs on the dictates of powerful multinational corporations (MNCs) that have their footprints in almost every corner of the world. The major driving force for the operation of these MNCs is profit maximization. To fill their treasures, they may try to maintain a dominant and exclusive position in the market and prevent other competitors from succeeding. Thus, maintaining an equitable and sustainable competitive marketplace becomes a quintessential task.
The present verdict, though limited to the geographical boundaries of the US, holds great significance for the global tech market as it has paved the way for breaking the monopolies of dominant corporations involved in various anti-competitive practices. The judge ruled that Google’s exclusive distribution deals with corporations such as Apple and Samsung were anti-competitive because they resulted in the majority of users in the U.S. getting Google as the default search engine. This ultimately augmented Google’s dominant position and gave it an undue advantage over its counterparts because most of the users generally stick to default search engines.
In developing nations like India, which are already struggling with persistent income inequality, the dominance maintained by these giant firms worsens the situation. These entities exercise unprecedented concentration of power and defeat the purpose of maintaining fair competition, consumer choice and data privacy. The present ruling against Google reflects a valuable opportunity to rein in its uncontrolled dominance exercised throughout the world. Eliminating such practices is advantageous for both the consumers as well as the competitors. It can assist consumers in finding alternative search engines as opposed to getting a default one on their devices. It will further incentivize tech corporations such as Google to build a better product that is more user-friendly and focused on safeguarding consumer’s data and privacy.
The Draft Digital Competition Bill, 2024 released by the Ministry of Corporate Affairs, is a much-needed legislation in the direction of preventing anti-competitive tactics. Under this bill, the CCI, after determining a corporation’s digital dominance can designate them as Systemically Significant Digital Enterprises (SSDEs). These enterprises are strictly required to function fairly and transparently. To maintain a just and sustainable competition, these SSDEs are even prohibited from favouring their goods and services and sharing users’ personal information without their consent.
A Call for Big Tech Regulation
The phenomenon of the rise in consumption of digital goods and services is accompanied by the growing dominance of big tech corporations such as Microsoft, Apple, and Meta among others. Over the decade, these corporations have become the most valuable entities in the world. They exercise exclusive control over the digital services like e-commerce, social media and online search market and provide no space for small and medium competitors to enter this lucrative market. These big tech firms can rapidly augment their user base because of their already established ‘network effects’. This essentially necessitates a call for ‘big tech regulation’.
Regulating Big Tech corporations does not necessarily mean breaking them up, as it may have ramifications for users. Instead, more constructive steps should be adopted, for example, incorporating progressive taxes and data-sharing mandates with small and medium sized corporations. This would give them a levelling field to compete and better sustain them in the marketplace. Moreover, adopting a non-discriminatory policy would regulate the issue of favouritism that is common in the tech industry mainly because corporation tends to give special treatment to their products and services.
One of the inherent features of these corporations is their global nature which does not restrict them to any territorial boundary. Thus, there is a dire need for international coordination among state regulators, supervisors and other concerned stakeholders. Furthermore, a regulatory regime with updated rules and regulations should be established to avert these big corporations from entering into exclusive deals that can hamper free competition.
Conclusion
As one of the fastest growing and most vibrant economies, India cannot harbour rising monopolies of a few giant corporations, as no corporation is above the law. If they remain unregulated, these entities can dominate major aspects of the economy by stifling fair competition and cornering the majority of the revenue. Reining in monopolies thus becomes essential to foster fair competition and consumer welfare. Adopting a robust antitrust law framework that bolsters diverse market participation and ethical business norms can ensure that the benefits of a competitive market are shared by all the stakeholders. This will ultimately lead to the creation of a more resilient and inclusive marketplace.