Overlooked Policy Concerns at the Intersection of Technology and Competition Law

[Prateek Surisetti is a graduate of the NALSAR University of Law.

The author draws ideas for this post from his longer article “Matrimony.com Ltd v Google: an Indian perspective on a world-wide regulatory phenomenon”, (2020) 41 European Competition Law Review 26]

While various commentators have analyzed the rather extensive legal issues arising from the 2018 Competition Commission of India (“CCI”) order in Matrimony.com v. Google (here, here and here), scant attention has been paid to the broader consequences of the decision on the intersection of technological innovation and competition. This is especially relevant at the moment given that the earlier mentioned CCI decision is under appeal before the National Company Law Appellate Tribunal (“NCLAT”) and there exists an ongoing CCI investigation against Google for “Android abuse”. 

Analysis

At the outset, it would be apt to briefly recapitulate the essential elements of the decision. The CCI fined Google ₹135.86 crore for having abused its dominant position in the Indian market for “online general web search services” and “online search advertising services”. Technically, Google was held to be: (i) imposing unfair or discriminatory conditions in purchase or sale of goods or services, (ii) indulging in a practice resulting in denial of market access and (iii) leveraging dominance.

Although the CCI held against Google on various issues, I argue that the CCI’s acceptance of certain specific contentions of Google is extremely problematic. Allow me to explain. Google argued that its actions, even if detrimental to competition, should not be held to be in violation of the Competition Act (“Act”), as (a) the quality of service to customer could not be any better than Google’s service, and (b) its actions were constrained due to technical infeasibility of alternate avenues.

While the CCI accepted these arguments in certain contexts and did not in others, I argue that the mere acceptance of service quality and technical infeasibility (as metrics) as valid counter-balances to anti-competitive behaviour is detrimental to innovation. Neither are such counter-balances envisaged by the Competition Act. Let us delve deeper into these issues.

Quality of Service

The issue of user experience quality has been discussed throughout the decision. Essentially, Google argued that even if its actions were held to be foreclosing competition, its actions were not in violation of the Act as its quality of service was exceptional and the services could not have been better even if competition was not foreclosed.  While the CCI has chosen to accept and reject the argument at various junctures in the decisions, without any apparent design, I argue that the issue of quality as a metric should be irrelevant, irrespective of the context.

The consideration of service quality as a metric for deciding upon competition law violations begs a question that has been left unanswered by the CCI: “what is the threshold at which service quality will offset foreclosure of competition?” In the absence of a satisfactory answer to the same, the baseline assumption should be that increased competition would lead to an increase in quality of service. Therefore, if the action is foreclosing competition, the quality of service provided should not preclude the CCI from holding against the defendant.

Google, where suitable, also put forth a variation to the argument discussed above. It contended that alternate courses, though possibly less detrimental to competition, would lead to a deterioration in quality of service and CCI accepted the same as a valid response to competition foreclosure.

The same is problematic as market participants should be made to bear the burden of maximizing quality of service, while steering clear of actions that foreclose competition. The concern is similar to the one discussed in greater detail in the subsequent section.

Technical Infeasibility

Google argued that its actions, even if held to be foreclosing competition, were not in violation of the Act as alternate routes that were not foreclosing competition were technically infeasible. Again, the CCI accepted and rejected Google’s argument based on the specific contexts, but the mere fact that the CCI considers the contention to be valid is problematic.

The burden of developing products that increase quality while also being compliant with the Act should be placed squarely on Google’s engineers. Otherwise, the market participants are not incentivized to produce services and products that are compliant with the Act. Google and other service or product providers could perpetually take shelter under the claim that the technology does not allow for a route that does not violate the Act without lowering quality.

Conclusion

I submit that quality of service should not be a metric for deciding upon antitrust violations, as one cannot arrive at a satisfactory answer regarding the threshold of service quality at which foreclosure of the market becomes acceptable. Since it is not possible to conclusively prove that quality of service, accessible by the consumer, would not have been higher if there was greater competition, I submit that the baseline assumption should be that increased competition will lead to increase in user experience quality. Therefore, even cutting-edge quality of service should not be a valid defence for activities that foreclose competition.

Further, I submit that the burden of developing suitable technologies that are not in violation should be placed on technology developers as, otherwise, technology would not develop in a manner that is compliant with antitrust law and, consequently, competitive harm will be caused. If indeed, technology is not advanced enough to provide services without causing competitive harm, then it is for the legislature to formulate a balanced suitable policy solution, as opposed to the courts.

Therefore, while ascertaining whether a particular action is in violation of the Act, courts need to verify if the impugned action forecloses competition. If so, issues of the relevant service or product’s quality or the technical infeasibility of alternate courses should not be factored into the decision.

Prateek Surisetti

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