Note4Students
From UPSC perspective, the following things are important :
Mains level: Impact of monopoly in the market
Why in the news?
US Federal court ruled Google’s $26 billion payments to default on smartphone browsers violated US antitrust law, blocking competitors and benefiting the Justice Department.
About Google’s Antitrust Case
- The U.S. Department of Justice (DOJ) brought an antitrust case against Google, accusing it of maintaining a monopoly in the online search and advertising sectors.
- The DOJ argued that Google’s dominance was achieved through exclusive distribution agreements, which prevented competitors from succeeding in the market.
What Did the Ruling State?
- Google Monopolistic Practices: Google broke antitrust laws to keep its monopoly on “general search services” and “general search text ads.”
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- Advantageous position due to the “default” search engine: The Google company has an unseen advantage over its competitors where it’s search engine processes an estimated 8.5 billion queries per day worldwide.
- The present judgment by US District of Colombia limits itself to the relevant geographic market of the US.
- Paying billions to smartphone makers: Google was accused of paying billions to smartphone makers like Apple and Samsung to ensure Google was the default search engine on their devices and browsers.
How Do Monopolistic Practices Harm Consumer Experience?
- Impact on Competition: Monopolistic practices, like those exhibited by Google, stifle competition by preventing rivals from entering the market and can lead to higher prices and reduced innovation.
- Unfair Platform for Start-ups: The new start-ups would have to surmount the entry barriers to create a GSE of comparable quality to Google. These barriers would cost high capital, access to distribution channels, and brand recognition.
- Quality Degradation: A monopolist may lose the incentive to improve the quality of its products, as there is little risk of losing customers to competitors.
- The ruling highlighted that Google conducted a study in 2020 that showed it would not lose search revenue even if it significantly reduced the quality of its search product.
- Limites the choices of consumer: When a company holds a monopoly, consumers are often left with few alternatives, allowing the monopolist to exploit its position.
Government Initiatives taken in India for similar line:The Draft Competition Bill 2024: The Ministry of Corporate Affairs’ Bill prevents giant tech companies/ Systemically Significant Digital Enterprises (SSDEs) from participating in anti-competitive practices.
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Way forward:
- Encouraging Innovation: Governments and regulatory bodies should support the development of alternative search engines and platforms through incentives, grants, and support for startups.
- Banning Exclusive Agreements: Prohibit exclusive distribution agreements that make one product or service the default, ensuring that consumers have a choice and that competitors can fairly compete.
Mains question for practice:
Q Discuss the significance of India’s Competition Act, 2002 in regulating anti-competitive practices and promoting a fair market environment. 10M
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