Policy Wrap: Publishers file a litigation in UK court over Google's abusive dominant practices in adtech space, Digital lending norms implemented by RBI, and more

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Competition

Publishers file a litigation in UK court over Google's abusive dominant practices in adtech space

A group of British website publishers sued Google alleging their abuse of dominant position in online advertising, as a result depriving them of revenue and earning super profits for itself. As per law firms Humphries Kerstetter and Geradin Partners, the class action claim was filed at the Competition Appeal tribunal on behalf of 130,000 businesses publishing around 1.75 million websites and apps in the UK.

Even though multiple investigations into Google’s advertising practices are already under way, a competition class action has been filed to help compensate the losses faced by these websites and apps. The claim alleges that Google has exploited its influence over the adtech infrastructure to impose terms, control prices, and implement self-preferencing, as a result harming thousands of businesses that have no choice but to use its tools in order to make money from advertising.

Economic analysis conducted for the claim, suggested that Google's action may have lowered advertising revenue by up to 40% for some businesses. The total loss to the businesses from 2014 to the present was estimated at up to 13.6 billion pounds, according to the law firms.

Damien Geradin, founding partner of the law firm with the same name, stated that the issue is not just about money or compensation. He added that Google has been denying companies worldwide, be it the local press or publishers of community focused websites, the opportunity to earn seamlessly in advertising for years now. This claim is to hold Google accountable in front of those parties who lost out due to Google’s abuse of dominance in the market.

The Competition and Markets Authority (CMA) of the United Kingdom has raised serious concerns about the state of the digital advertising sector. It had launched a deep-dive investigation in 2019. Its final report, released in July 2020, found that to address what it characterised as "wide-ranging and self-reinforcing" concerns, a new regulatory strategy (and dedicated oversight body) was required.

Policy

RBI's revised digital lending norms implemented from December 1

RBI’s revised digital guidelines, aimed at shielding customers from excessive interest rates charged by some entities while also preventing unethical practices involving loan recovery, came into effect on the 1st of December.

According to the new regulations, there cannot be any pass-through or pool accounts of the Lending Service Providers (LSPs) and all loan disbursements and repayments must be performed only between the borrower's bank account and the regulated entities (such as banks and NBFCs).

In a comprehensive set of recommendations for digital lending, the RBI claimed that the primary issues were the unrestrained involvement of third parties, mis-selling, data privacy violations, unfair business practises, the imposition of exorbitant interest rates, and unethical recovery practices.

Anil Pinapala, CEO and Founder of Vivifi Finances stated that licensed players should have an advantage over fintechs with other NBFC partnerships with a higher likelihood of rising market share in the future. He also added that the RBI's move will protect customers and ensure a level playing field.

ED to share companies’ data with 15 regulators, including the CCI

The Competition Commission of India (CCI), along with 15 other agencies, has entered into a data-sharing agreement with the Enforcement Directorate (ED). The government has notified data-sharing arrangements between the ED and the agencies under the Prevention of Money Laundering Act (PMLA). This will allow all the regulators to access key data which is currently in possession of the ED.
The current move is in the same direction as the Center's ongoing efforts to adopt a more unified regulatory strategy toward digital businesses and international investments.

This trend of higher regulatory coordination is being regularly observed in the recent government directions and enforcements in the digital and financial businesses. This is more visible in case the business receives foreign investment.

e-filing of consumer complaints mandatory from April 2023

The government has made e-filing of consumer complaints mandatory starting April next year. Even though e-filing for consumer complaints was introduced back in September 2020, the current norm enabled complaints filing of complaints before consumer commissions or courts either physically or in the online mode.

The mandatory e-filing of complaints will enable anyone to file their own consumer complaints without the assistance of a lawyer. This is expected to enable more swift case resolution.

The ministry has taken several steps to improve the consumer courts' infrastructure in the nation in order to make case filing and resolution easier and quicker.

RBI’s MPC meet in December likely to decide on hiking repo rate by 25-35 bps

The rate-panel of RBI’s Monetary Policy Committee (MPC) is expected to raise the repurchase rate (repo rate) by roughly 25-35 basis points (bps) in its upcoming meeting on December 5-7.

This move is likely to be implemented as the Consumer Price Index (CPI) inflation is likely to reduce in the months to come and is expected to fall below 6% by the end of the fiscal year. Even the Wholesale Price Index (WPI) has fallen sharply from 16 per cent in May/June to around 8 per cent.

Chief Economist of CARE Ratings, Rajani Sinha stated that fall in global commodity prices is like a boon. However, the key concern is that of core inflation, which is still above the 6 percent mark. Even food inflation, specifically cereal, is very high at the moment. She also added that as a result, household inflationary expectations, which are currently at a high of almost 10%, will be face an upward pressure. Therefore, even though there has been some relief from inflation, RBI will nonetheless exercise caution.

News

Lawsuit against Google over app store practices gets class-action designation in the US

A US judge in California on Monday allowed litigation against Google to be classified as a consumer class action of 21 million individuals. These individuals allege the company of violating U.S. anti-competition laws in the way it runs its Google Play app store.

In addition, the class attorney claims that Google utilised "misleading warnings to prevent customers from downloading apps outside the Google Play Store" and forbade app creators from directing users to rival stores.

They argued that due to Google’s anticompetitive conduct, class members and plaintiffs lost out on benefitting from a potentially broader choice, which would have allowed them to pay lower prices for apps and in-app purchases.

A trial is scheduled to begin in June 2023.

Google appeals antitrust fines to EU's top court

Google is challenging a European antitrust fine of $4.3 billion for Android operating system’s role in restricting competition and consumer choice. This move by Google comes after its appeal to a lower tribunal, which lowered the penalty by a magnitude of about 5%.

This fine by the EU in 2018 is one of the 3 antitrust penalties against the tech-giant, one in 2017 and the other in 2019. Google has already appealed the first of these penalties, which was announced for unfairly favouring its Google Shopping comparison service and amounts to over $2.5 billion. The appeal for the third penalty worth over $1.5 billion for abusing its dominance in online search ads is already being heard by one of the lower tribunals.

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