Google fined in India for search bias(telegraphindia.com)
telegraphindia.com
Google fined in India for search bias
https://www.telegraphindia.com/india/google-fined-in-india-for-search-bias-207314
22 comments
Yeah, I too like that aspect of the fine.
And while the particular amount is tiny considering the whole of Google, it is apparently 5% of what Google earned in those years from its "Indian operations" - and that revenue drop and profit/loss implications will matter in internal decisions, and will be significant when the profitability of this arm of operations is considered internally. And that will in turn have direct and indirect implications for internal management and decision-making. Nothing dramatic of course, given they can still get away with a lot, but this is not a trivial fine or ruling like many seem to be assuming.
And while the particular amount is tiny considering the whole of Google, it is apparently 5% of what Google earned in those years from its "Indian operations" - and that revenue drop and profit/loss implications will matter in internal decisions, and will be significant when the profitability of this arm of operations is considered internally. And that will in turn have direct and indirect implications for internal management and decision-making. Nothing dramatic of course, given they can still get away with a lot, but this is not a trivial fine or ruling like many seem to be assuming.
It's very absurd that Google is being fined for what it puts on its own website.
> The DG also recorded that Google was not required to pay any monetary consideration for its house ads which gave it an additional competitive edge.
Yes, it doesn't make sense to give money to yourself.
> Google shows two types of commercial units in India: shopping units which display ads for product offers of merchants; and flight units which identify flight offers for a given destination.
It shows ads to make money to pay for costs.
> Third, the search intermediation agreements prevented publishers from using search services of competing search engines.
I have no idea what this means. Any ideas?
> The DG also recorded that Google was not required to pay any monetary consideration for its house ads which gave it an additional competitive edge.
Yes, it doesn't make sense to give money to yourself.
> Google shows two types of commercial units in India: shopping units which display ads for product offers of merchants; and flight units which identify flight offers for a given destination.
It shows ads to make money to pay for costs.
> Third, the search intermediation agreements prevented publishers from using search services of competing search engines.
I have no idea what this means. Any ideas?
*> Yes, it doesn't make sense to give money to yourself.
At Google's size, there are extra accounting processes that you should follow.
You might be looking at Google like a single giant thing while in fact it's a complex arrangement of companies and departments underneath.
At Google's size, there are extra accounting processes that you should follow.
You might be looking at Google like a single giant thing while in fact it's a complex arrangement of companies and departments underneath.
> At Google's size, there are extra accounting processes that you should follow.
I've always assumed when I see an ad for Google Chrome in the sponsored section in Google web search that it is money coming out of Google Chrome's marketing budget. So, it should technically count as revenue for Google web search.
Which is why I think corporate taxes on profit is silly. Taxes should be based on revenue, not on profit. That you choose to reinvest all of your profits back into the company should be immaterial. If a corporation has 1% of its revenue as profit vs another corporation has 25% of revenue as profit is not our problem.
I've always assumed when I see an ad for Google Chrome in the sponsored section in Google web search that it is money coming out of Google Chrome's marketing budget. So, it should technically count as revenue for Google web search.
Which is why I think corporate taxes on profit is silly. Taxes should be based on revenue, not on profit. That you choose to reinvest all of your profits back into the company should be immaterial. If a corporation has 1% of its revenue as profit vs another corporation has 25% of revenue as profit is not our problem.
> Taxes should be based on revenue, not on profit.
This means that every layer in a series of transactions to the customer would add costs. Great for the biggest companies who can do everything in house, terrible for smaller companies acting in a chain.
A massive company who buys raw materials and produces everything in house and sells for £1000 would pay tax on revenue of £1000 per widget.
A series of small companies may have:
Refinery: revenue £100
Part production: revenue £200
Construction: revenue £300
Wholesaler: revenue £400
Brick and mortar store: revenue £500
Now the massive company pays tax on £1000 but this series of companies pays tax on £1500.
This means that every layer in a series of transactions to the customer would add costs. Great for the biggest companies who can do everything in house, terrible for smaller companies acting in a chain.
A massive company who buys raw materials and produces everything in house and sells for £1000 would pay tax on revenue of £1000 per widget.
A series of small companies may have:
Refinery: revenue £100
Part production: revenue £200
Construction: revenue £300
Wholesaler: revenue £400
Brick and mortar store: revenue £500
Now the massive company pays tax on £1000 but this series of companies pays tax on £1500.
One arm of Google paying another arm of Google money should end up being a zero sum game when it comes to profits.
For a global corporation, it may (and likely does, potentially advantaged even) have tax implications -- but from a general profit/loss perspective it's still basically zero sum (though may actually cost them money in lost revenues/inventory in practice, which presumably gets booked as a liability if it's without compensation).
For a global corporation, it may (and likely does, potentially advantaged even) have tax implications -- but from a general profit/loss perspective it's still basically zero sum (though may actually cost them money in lost revenues/inventory in practice, which presumably gets booked as a liability if it's without compensation).
> That you choose to reinvest all of your profits back into the company should be immaterial.
But a guiding principle of taxes is: discouraging unwanted behaviour (or encouraging, through tax cuts / subsidies). We want to encourage corporations to invest, i.e. "putting the money back into the economy". Keep buying those new machines, upgrading your assembly line, upgrading your fleet of cars, for ever increasing efficiency and economic activity.
If you're talking about one company investing buy buying products from itself (like Google is, here), then hopefully the money one branch deducts from its revenue becomes additional profits for the other branch of the same company.
Sure, in theory, practice and theory are equal. In practice, they're not. Tons of loopholes exist around just this aspect of accounting and tax law. But there is at least a theoretical reason to tax profits, over revenue.
But a guiding principle of taxes is: discouraging unwanted behaviour (or encouraging, through tax cuts / subsidies). We want to encourage corporations to invest, i.e. "putting the money back into the economy". Keep buying those new machines, upgrading your assembly line, upgrading your fleet of cars, for ever increasing efficiency and economic activity.
If you're talking about one company investing buy buying products from itself (like Google is, here), then hopefully the money one branch deducts from its revenue becomes additional profits for the other branch of the same company.
Sure, in theory, practice and theory are equal. In practice, they're not. Tons of loopholes exist around just this aspect of accounting and tax law. But there is at least a theoretical reason to tax profits, over revenue.
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"Taxes should be based on revenue, not on profit"
Net margin varies wildly by industry. That would be hard to implement in a way that wasn't slanted to disproportionately reward high margin industry...further increasing their margins.
Net margin varies wildly by industry. That would be hard to implement in a way that wasn't slanted to disproportionately reward high margin industry...further increasing their margins.
>> Third, the search intermediation agreements prevented publishers from using search services of competing search engines.
> I have no idea what this means. Any ideas?
This refers to widgets on the search results page. E.g. when you search for flights, you'll see flight quotes right in the result page, with data that comes from travel companies. In this case, travel companies that partner with Google aren't allowed to sell their data for similar widgets in the results page of Google's competitors.
> I have no idea what this means. Any ideas?
This refers to widgets on the search results page. E.g. when you search for flights, you'll see flight quotes right in the result page, with data that comes from travel companies. In this case, travel companies that partner with Google aren't allowed to sell their data for similar widgets in the results page of Google's competitors.
Wouldn’t you be paying sales/service tax on Google ads, and by not paying for its own ads Google circumvented those taxes giving itself a competitive advantage?
You should take some time to educate yourself before calling things "very absurd" and making comments that are poorly informed and barely make sense. This is how anti-monopoly laws work; Google can be fined for what it puts on "its own website" much like Microsoft was fined for bundling Internet Explorer with "its own OS" - your actual product or service must be distinct from your advertising and marketing, because different rules and regulations apply to them.
> The investigation showed that Google integrates or blends its own specialised/vertical search services in its online general web search services in the form of "universal results and commercial units" using mechanisms that do not apply in an equivalent manner to non-Google websites or web content.
And when corporations start blurring that line because they think they can get away with it, these sort of checks and boundaries are necessary to minimise that abuse of power.
> It shows ads to make money to pay for costs.
No it did not, and that's the bloody point: these are not distinguished as ads, but as "enhanced features" that just happen to place Google's offerings unfairly above the others. This is misuse of one part of its business - that's supposed to be a fair and neutral search engine - and going beyond simply tweaking internal algorithms (which they possibly still do) to blatantly favor their own business. (And in case someone is thinking "of course they want to make money", I'll say "and of course they get slapped down by the legal system as they well deserve to, because we want more competition and better services").
> the search intermediation agreements prevented publishers from using search services of competing search engines
This by the way basically refers to agreements about using Google's search services for site-level searches and possibly internal searches - and depending on details, Google was apparently saying "if you use our search services in one part of your business, then by this agreement you are not allowed to use any other search service for another part of your business or service". And there are specific regulations concerning such exclusionary agreements from market-dominant players.
Two articles with a bit more (and a bit better organized) information: https://www.bloombergquint.com/law-and-policy/2018/02/08/goo... and https://news.webindia123.com/news/Articles/Business/20180208...
> The investigation showed that Google integrates or blends its own specialised/vertical search services in its online general web search services in the form of "universal results and commercial units" using mechanisms that do not apply in an equivalent manner to non-Google websites or web content.
And when corporations start blurring that line because they think they can get away with it, these sort of checks and boundaries are necessary to minimise that abuse of power.
> It shows ads to make money to pay for costs.
No it did not, and that's the bloody point: these are not distinguished as ads, but as "enhanced features" that just happen to place Google's offerings unfairly above the others. This is misuse of one part of its business - that's supposed to be a fair and neutral search engine - and going beyond simply tweaking internal algorithms (which they possibly still do) to blatantly favor their own business. (And in case someone is thinking "of course they want to make money", I'll say "and of course they get slapped down by the legal system as they well deserve to, because we want more competition and better services").
> the search intermediation agreements prevented publishers from using search services of competing search engines
This by the way basically refers to agreements about using Google's search services for site-level searches and possibly internal searches - and depending on details, Google was apparently saying "if you use our search services in one part of your business, then by this agreement you are not allowed to use any other search service for another part of your business or service". And there are specific regulations concerning such exclusionary agreements from market-dominant players.
Two articles with a bit more (and a bit better organized) information: https://www.bloombergquint.com/law-and-policy/2018/02/08/goo... and https://news.webindia123.com/news/Articles/Business/20180208...
Your explaination is incomplete. Its based on anti-monopoly laws being reasonable which you have yet to prove.
That's basically like 2 cents for Google, I don't think that they are going to change biasing search results any time soon
Yes its pocket money for google, but also it said the following
>>The commission ordered Google not to impose restrictive clauses with immediate effect in these agreements.
plus, I am guessing this will encourage more people/companies to pursue legal action against google if they don't do anything about this.
>>The commission ordered Google not to impose restrictive clauses with immediate effect in these agreements.
plus, I am guessing this will encourage more people/companies to pursue legal action against google if they don't do anything about this.
If my reading is correct, the violations were only for a period in 2009-2010. Whatever change of behaviour this ruling might have induced, it had happened a long time ago.
A whole $21M? I am sure they are making changes immediately.
if risk << reward {
attack;
}
Seems like Google would continue to attack startup ecosystem in India.
I think that such policies are more likely to make giant corporations think twice about abusing their market position. > "The penalty was calculated at the rate of 5 per cent of the average total revenue that Google [...] years of 2013, 2014 and 2015."