Abstract
Present day industry is broadly marked by IT industry that is expanding and focusing at an alarming rate and is among the most prominent markets of the current world. Nonetheless, the control of leading tech companies, coupled with abuses of competitive advantage harm competition, innovation, and consumers. Some of the risks that are associated with the use of big data include; Price discrimination Fewer choices for the consumers, and un ethical use of the data. Some features of the IT industry are conducive, and others enable and facilitate, anticompetitive conducts, which makes the application of antitrust law to this industry challenging. That is why some perspectives of antitrust are more susceptible to such considerations, but the Indian application of measures in the field of antitrust remains insufficient. Reviewing several legal proceeding against Microsoft and Google this research paper drew that there is need for intensified global antitrust regulation.
Keywords
Anti-Trust Laws.
US Sherman Anti-Trust Act, 1890.
Federal Trade Commission Act, 1914.
The Clayton Act, 1914.
Original Equipment Manufacturers (OEMs).
Internet Service Providers (ISPs).
Treaty on the Functioning of the European Union (TFEU).
European Economic Area (EEA) Agreement.
Google AdSense.
Introduction
Competition Laws, also known as Anti-Trust Laws, are a collection of regulations designed to oversee the competitive landscape of an economy. They serve as a protector for the economy, ensuring that businesses and corporations do not excessively control their influence and authority within the market. Large technology companies frequently exert significant control over market economies in their specific sectors, but competition laws play a role in maintaining equilibrium by allowing all companies or firms to secure an equal share of the market.
What is Anti-Trust Law?
Competition Laws, also known as Anti-Trust Laws, consist of a set of guidelines and regulations designed to address the competitive landscape of the economy. They aim to foster equitable competition and open market opportunities for all by prohibiting monopolistic behaviours, fixing prices, suppressing competition, strengthening market control, and other similar actions. This ensures that consumers are presented with a wide range of choices across different industries.
History of Anti-Trust Laws
Antitrust laws have their origins in the United States and were shaped by various intriguing cases that paved the way for their enforcement. The development of antitrust laws was influenced by a convergence of political, social, institutional, and economic factors. The US Sherman Antitrust Act of 1890 marked the inception of antitrust laws. This legislation aimed to prevent companies from exerting excessive dominance in the economic market and barred attempts to establish monopolies. Over time, the Act underwent modifications and was embraced globally.
How many Anti-Trust Laws are there?
Three key federal anti-trust laws that play a crucial role in the contemporary landscape are the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. These regulations are relevant to prominent tech companies like TCS, Infosys, Wipro, HCL Tech, LTI Mindtree, Tech Mahindra, Apple, Google, Meta, Amazon, Tesla, and others. Despite the existence of these stringent laws that oversee market dynamics, numerous instances of anti-trust law violations have been identified among major tech corporations. Recent cases involve companies such as Meta, Google, and Apple.
Anti-Trust Laws and Indian Economy
India has made significant strides in technology in recent years, particularly in the use of mobile phones, laptops, and computers in its fast-growing economy. With the increasing demand for these products and services, there is a need for a specialized law enforcement body to oversee matters related to anti-trust laws. Countries like the USA, China, Australia, India, the United Kingdom, and Japan have already implemented or are in the process of introducing new legislation to enforce anti-trust laws for large tech companies. The Competition Commission of India (CCI) is actively addressing conflicts between big tech firms and small startup developers, such as the dispute between Google and small app developers who allege that Google holds a dominant market share in the Indian economy.
Research Methodology
The approach to this study on Anti-Trust Laws and Regulations with major technology firms in India is mainly numerical and depends on the use of secondary research techniques. It encompasses a descriptive and evaluative examination of current literature and recent case studies concerning anti-trust activities in India. The goal of this study is to offer a thorough summary of the present situation of anti-trust laws and regulations, pinpoint obstacles, and suggest possible changes to enhance the anti-trust framework in the nation concerning major technology companies.
Review of Literature
The rise of major technology companies (such as Google, Amazon, Facebook) has sparked a discussion on the effectiveness of antitrust regulations in the modern era. Historically, antitrust legislation has centred around protecting consumer interests, typically evaluated through price competition. Nevertheless, experts like Maurice Stucke and Lina Khan contend that the conventional “consumer welfare standard” is inadequate when applied to digital markets. Despite providing “free” services, Big Tech firms may hinder innovation and limit user options by controlling data and benefiting from network effects. This highlights the necessity for a more comprehensive antitrust framework that considers aspects such as innovation, privacy, and data protection.
Method
Case study was a reliable method for a successful completion of this Research Paper. And so, Microsoft and Google were selected for this case study because of their significant market influence during the antitrust allegations, their similar approaches to engaging in technology-facilitated abuses, and how legislative bodies overlooked their misconduct due to a limited grasp of the technology involved. These case studies will delve into the technical specifics of the antitrust accusations, providing context for the issues discussed.
1. Microsoft
1.1. Introduction
Although not being the initial of its kind, the Microsoft lawsuit is a significant antitrust case in the tech sector, largely due to the fame of its creator, Bill Gates, and significantly because of its extensive control over the market.
The lawsuit filed first in 1998 created doubts for the government official and economists of that time regarding their approaches to assessing the product markets and the goods contained in them. Through this case, it was illustrated that precedents of antitrust laws and standards concerning the market control were insufficient, and it opened up avenues for today’s antitrust actions against technological companies.
This case also create the social issue concerning monopolies, government regulation and their impact on progress and advancement. One must consider the specifics of this case occurred at the time when consumption of foreign tech products was initially risen. This case required changes of the antitrust laws and provoked the whole society to rethink its attitude to the presence of the monopolies in the world that was becoming more interconnected on a daily basis. It is recognized to be one of the most prominent issues for the last twenty nine years with the continuous analysis of its benefits and drawbacks, and its impacts on today’s antitrust law suits.
1.2. Case Allegations
The claims made against Microsoft by the U.S. Department of Justice, the Attorneys General of 20 states, and the District of Columbia are listed below:
a. Microsoft acted in a wrongful manner by unauthorizedly controlling the market on operating systems (OS) of Intel based personal computers (PCs) as prohibited by the Sherman Antitrust Act.
b. Microsoft violated the Sherman Antitrust Act when it made contracts with OEMs and ISPs that locked out its competitors and when it acted to ensure that competitors did not gain ground and take away its market share.
c. Microsoft is guilty to have violated the Sherman Antitrust Act through mobilising its internet browser; Internet Explorer to single source through illegitimate means to do away with competition.
d. Microsoft violated the provisions of the Sherman Antitrust Act through integration of Microsoft Internet Explorer into Microsoft Windows operating system.
1.3. Microsoft’s Defence
a. Microsoft countered the allegations by asserting that their legal right to introduce new functionalities to their Windows operating systems, as recognized by a 1998 Court of Appeals ruling, exempted them from any legal wrongdoing for incorporating and packaging Internet Explorer with their products. Microsoft clarified that the actions towards Netscape were purely competitive without aiming to exclude any competitors.
b. The judiciary rejected Microsoft’s explanation because they were leveraging their dominant position to diminish their rivals’ market presence through aggressive pricing strategies, and because their behaviour failed to promote competition based on its quality.
c. Their defence argued that Microsoft did now no longer own a monopoly withinside the working structures sector, making it not possible for them to make the most their dominant role withinside the working structures marketplace to unlawfully have an impact on the consequences withinside the internet browsers marketplace. Microsoft contended that the generation quarter changed into too dynamic for any corporation to preserve a monopoly, and the opposition changed into too fierce for Microsoft to be visible as a monopoly. Microsoft did not convincingly show that they have been now no longer a monopoly, and the court concluded that they have been a monopoly due to the fact they might have grown their fees substantially above the opposition stage for an prolonged time without dropping market stocks to new marketplace entrants. The court also rejected Microsoft’s claims about innovative trends in the technology industry or their attempts to keep prices low as valid justifications for their defence that they were not a monopoly.
d. Microsoft’s case for not being held accountable was centred around the notion that their position as pioneers in innovation, offering affordable prices (and sometimes free items) contributed to the benefit of consumers, and this was achievable because of their dominant market position, which justified their actions. Their defense was mainly based on, what is known as the Chicago School of Antitrust Laws, which focuses more on consumers rather than competition. They supported this strategy when defending themselves on the bundling claim, pointing out to the council that the Windows OS and Internet Explorer were sold to the same market, thus the bundling improved the products. Even though the Court of Appeals had the prior case related to the problem, the judge in the current case thought that requirement for each item was different. The judge stated that they were not in the same market anymore, such that-perception plays a vital role in defining the market of products.
1.4. Court’s Ruling
a. The courts were able to conclude that Microsoft had monopolized the market for operating systems for its Intel-based personal computers hence being in violation of the Sherman Act. They were involved in legal dominance processes of exclusion in a way that they placed restrictive licenses on OEMs, and thus limited the entry of other competitors. Microsoft was also found to have violated the Sherman Act by incorporating elements in their Windows OS that prevented the removal of Internet Explorer. Additionally, they violated the Sherman Act by promoting a Microsoft-only Java code to restrict developers to creating applications solely for Windows OS, thereby impeding competition in the OS market.
b. Initially, Microsoft was convicted of many charges, although, indeed it was possible to appeal, many of such charges were dismissed. The concerns raised included accusations of developing an incompatible Java Virtual Machine, distributing the Internet Explorer browser for free, giving IAAs incentives and contracts to migrate ISp’s clients to the Internet Explorer, and integrating Internet Explorer as an important component of the Windows Operating System. Finally, it was possible to state that Microsoft had not violated the Sherman Act.
c. In 2001, Microsoft and the DOJ agreed to a settle down the dispute by Microsoft sharing its Application Programming Interface with competitive programs, refrain from retaliating against any OEMs and ISPs supporting competitors, and permit an unbiased expert panel to oversee the internal processes for ensuring compliance with the court orders. The settlement sparked controversy and debates due to its perceived mild consequences in addressing alleged anticompetitive behaviour.
2. Google
2.1. Introduction
Google, the internet’s most visited site, has evolved from a small project created by Larry Page and Sergey Brin to a global powerhouse encompassing various technological sectors like online advertising, mobile technology, GPS, gaming, cloud services, artificial intelligence, and more. Its widespread popularity has solidified its place in everyday vocabulary.
Other markets/CVs are closely linked to Google that its activities have raised alarms of its ability to manipulate other markets. Despite some activity by the Federal Trade Commission, there were not many developments regarding Google’s anti competitive actions in the United States. On the contrary, the European Union launched an extensive antitrust investigation against Google, the most crucial activity in that sphere in the last ten years. As the Google case arrived nearly twenty years after the Microsoft case, it also clearly underlines how valuable it is to have the contestable laws of antitrust that are adjustable to encompass the constantly developing technology market.
2.2. Case Allegations
a. For the past seven years, Google has been under a case investigation by the European Commission that was concluded 2017 where Google was charged under the Treaty on the Functioning of the European Union (TFEU) as well as the European Economic Area (EEA) Agreement with charges in prejudice of competing special Google’s search billboard for specialty shopping facilities.
b. While at the same time as DCG, in 2010, the European Commission began an investigation in 2010 alleging that Google had entered into contracts with websites which prevented them from placing Google AdSense, Google’s advertising product on their pages, thus being exclusionary. It was considered as acting Customer in an anti-competitive manner and abusing its dominant position in the market under Article 102 of the TFEU as well as Article 54 of the EEA Agreement.
c. The European Commission opened the third procedure against Google in 2015 for violating Article 101 and Article 102 of TFEU. The investigation concerned Google’s conduct with respect to the Android operating system proposed work add-on applications: Google Search and Google Chrome applications. Google was also accused of stifiling development and entry of its competitors mobile and tablet operating system systems.
2.3. Google’s Defence
a. a. The cases concerned are relatively new and there have been no opportunities to review the full file of the case regarding the AdSense and the Android cases at the time of writing this paper. However, press releases of the two companies and further discussions about the cases offer some ideas about the possible defenses that Google might have provided for the allegations made on it.
b. In the same case of Google Shopping, Google stood ground and said that the position and mode of presentation of comparison-shopping services on Google Search does not affect the traffics passed to such services. But, going further in the market analysis, this was proved to be false. Google also argued that Google Shopping was not a comparison shopping site but a new improved version of their tried and tested Google AdWords that was based on keyword bidding. Observations indicated that Google Shopping worked as a standalone unit and this, therefore, had different user interaction. Google also stated other comparison-shopping websites could join into Google Shopping to fix premium page placement. But the compromise was unveiled that these placements were not as open as Google painted, unlike the AdWords spots which are available to anyone. Google’s last argument was one of proportionality due to the fact that the innovation was designed to use comparable relevancy standards to locate comparison shopping services as in their general search services and product ads. Nevertheless, Google did not provide enough real-life examples to back up these allegations, and their surveys did not cover the problem. In the end, all of the defenses of Google were considered to be without basis.
c. Google has not disclosed its defences in the AdSense case, but some sources have mentioned that Google AdSense relies on exclusive and premium placements to sustain their business model, as they offer the service to website owners at no charge. Google AdSense’s belief that partners must make specific investments in order to continue providing their advertising-based revenue service raises a question, even as the debate over whether cost effectiveness and consumer benefits are good enough reasons to stifle competition and innovation.
d. In the Google Android case, this was done by asserting that Google needed to bundle the Android operation system with Google Search and Google Chrome in order to generate revenue to recover their investment. However, this defense was responded by Google having high revenues from clients using Android devices via Google Play Store, and information sales. The Commission did not accept Google’s justification that exclusive contracts with the device manufacturers to obtain an agreement to have Google Search pre-loaded had been necessary for effectively developing the Android ecosystem. Also, Google claimed that they limited manufacturers from using Android forks to reduce ecosystem fragmentation; nevertheless, they could have set the standards for the forks to include Google applications and services. In addition, Google did not submit a number of supporting data ‘testifying’ that these Android forks are non-compatible with their applications.
2.4. Court’s Ruling
a. Google was fined EUR 2.42 billion in June 2017 for anti-competitive behavior related to the Google Shopping case. They were directed to halt the actions in question and ensure equal treatment for their Google Shopping service on Google Search.
b. Google was fined EUR 1.49 billion in March 2019 for engaging in illicit practices related to the Google AdSense case. The company was required to cease its illegal conduct concerning exclusive supply agreements, which it had already stopped by 2016.
c. Google received a EUR 4.34 billion fine on July, 2018, for engaging in exclusionary practices related to the Google Android case. They were directed to halt all unlawful activities within 90 days of the ruling. Despite being required to permit device manufacturers to utilize any Android forks, Google was permitted to establish technical requirements to maintain the functionality of the Android ecosystem. While the fines and directives have been issued, it is probable that Google will contest these decisions, and appeals could be lodged shortly.
Suggestions
Some suggestions on how India can improve its antitrust laws to address the challenges posed by Big Tech companies:
1. Broaden the Scope of Antitrust Review: Look beyond mere price considerations. The existing emphasis on measuring consumer welfare solely through price may not provide a comprehensive understanding. Consider elements such as innovation, data security, and platform neutrality to gain a more holistic perspective.
2. Define Relevant Markets More Effectively: The digital landscape is characterized by intricate networks of interconnected services, making digital markets highly complex. In order to address this complexity, the Competition Commission of India (CCI) has the ability to establish comprehensive guidelines for defining relevant markets in the digital realm.
3. Address Data Ownership and Network Effects: The dominance of Big Tech frequently arises from their control over extensive quantities of user data. Delve into regulatory measures that encourage data portability and interoperability, enabling users to transfer their data across various platforms.
4. Enhance the CCI’s Capacity: Enhance the capabilities of the CCI by providing additional resources and specialized knowledge to handle intricate digital market investigations and rulings. Explore the possibility of creating a dedicated unit focused on digital markets within the CCI.
5. Leverage Ordoliberal Principles: Ensure a fair and equitable business environment by thwarting the accumulation of economic dominance among a select few Big Tech giants. Foster competition by facilitating the entry and participation of smaller startups in the market.
Conclusion
The digital age has brought forth a complex challenge in the form of the relationship between antitrust laws and Big Tech companies. Although traditional consumer welfare standards provide a basis, they may not be enough to tackle the complete range of potential harms in dynamic digital markets. This study has emphasized the necessity for a more refined approach.
The recommendations presented in this document, including expanding the scope of antitrust legislation and adjusting it to the unique characteristics of the digital realm, have the potential to provide policymakers with a more efficient set of tools. Augmenting the capabilities of enforcement agencies like the CCI and contemplating structural changes can additionally bolster competition and safeguard the interests of users. By drawing insights from global advancements and cultivating a competitive environment, India has the opportunity to establish a flourishing digital ecosystem.
Recent legal cases against Microsoft and Google have highlighted the dangers posed by their monopolistic power and underscored the potential for abusive market behaviour in the technology industry. The Microsoft case was a significant legal matter that occurred way before any lawmakers fully grasped the implicit behaviours enabled by information technology on a large scale. In the two decades following Microsoft’s rise, another major tech company, Google, emerged and later encountered its own antitrust challenges. Google’s dominance across various platforms, some of which are interconnected, resulted in a more intricate case compared to Microsoft’s. Despite significant differences in scale, a closer examination revealed that the fundamental issues were similar. The evolution of information technology since the Microsoft case did not deter Google from exhibiting patterns of abuse that indicated how information technology could encourage specific forms of market abuse distinct from traditional practices. Although new technologies may emerge and players may change, a degree of adaptability could assist antitrust authorities in identifying misconduct more effectively.
– Sanjeevani Kashyap,
Mumbai University Thane Sub-Campus.