Tech Law Forum @ NALSAR

Tag: Regulation

Over-The-Top Services: A Regulatory Quandary (Part II)

Posted on by Tech Law Forum NALSAR

[This is the second part of a two-part post authored by Abhilash Roy and Hrishikesh Bhise, fourth-year students at the National Law Institute University, Bhopal. Click here for Part I]

Argument for a Level Playing Field
‘Fair and reasonable opportunities to all market players’ and the concept of ‘a level playing field’ for market participants is important for a regulatory framework. A good regulatory framework is designed to induce confidence in the market and stems from necessity, more so, the imperativeness that positive competition practices in the market thrive and ensure opportunities to all participants without indirectly favouring a specific section of the market. It is evident that absence of a regulatory framework for OTT services is fostering poor competitive environment. For example, massive digital ad-revenue and the power/outreach of internet has facilitated the growth of OTT companies as giants in the industry and gives them an advantage over TSPs with respect to similar services such as messages and VoIP, among other things such as lack of a digital ad-revenue space for TSPs. However, there is ample evidence to suggest that telecom industry is not a ‘victim’ in a clinical sense as TSPs still charge customers for data consumption for using OTT services and an increase in these services results in increased data consumption which then translates to increased revenue for telecom companies. Any regulatory framework would have to be formulated by keeping in mind the revenue model of both stakeholders.

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Over-The-Top Services: A Regulatory Quandary (Part I)

Posted on by Tech Law Forum NALSAR

[This is the first part of a two-part post authored by Abhilash Roy and Hrishikesh Bhise, fourth-year students at the National Law Institute University, Bhopal. Click here for Part II ]

The purposes and functions of the internet, as we know it today, have grown manifolds since its inception over thirty years ago. Its importance and use has only grown due to the ongoing pandemic with an estimated 50 to 70% more hits.

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E-Pharmacy and Tech Law: An Interface (Part II)

Posted on by Tech Law Forum NALSAR

This is the second part of a 2-part post authored by Anubhuti Garg, 4th year, and Gourav Kathuria, 2nd year, of NALSAR University of Law. Part I can be found here.

The previous post analysed the laws applicable to e-pharmacies in India. The present post looks at the draft e-pharmacy rules and its implications and suggests ways to ensure the smooth application of the law in India.

Draft E-Pharmacy Rules

On August 28, 2018, the government came out with the Sale of Drugs by E-Pharmacy (Draft Rules) for regulating the sale of drugs through e-pharmacies. These Rules aim to put in place an extensive regulatory regime for e-pharmacies and are important in light of the concerns that e-pharmacies pose. Given below are the salient features of the Rules:

  1. According to the Rules the definition of e-pharmacy includes within its ambit sales made through websites as well as through mobile phone apps termed ‘e-pharmacy portals’.
  2. Mandatory registration is prescribed for all e-pharmacies and sales have to be routed through specified portals. A registration application must be reviewed within 30 days.
  3. Mandatory uploading of prescription by the customer is recommended which must specify the prescribed drugs and quantity thereof. This does not apply to over-the-counter drugs.
  4. All generated data must be kept confidential and localized.
  5. An e-pharmacy cannot sell drugs covered by the Narcotic Drugs and Psychotropic Substances Act, 1985 or and the restriction extends to those listed under Schedule X of the Drugs and Cosmetics Rules.
  6. An e-pharmacy has to comply with the provisions of the Information Technology Act, 2000 and the associated Rules.

Implications of the Policy

Firstly, it will fill the regulation gap that currently exists and will put into place a robust framework to deal with e-pharmacies. Existing laws are inadequate when it comes to addressing the requirements of e-pharmacies, however, the Rules will resolve the issue and prevent misuse of medicines and data.

Secondly, sales of conventional brick and mortar outlets will be adversely affected due to competitive pricing offered by e-pharmacies. Conventional stores may fail to compete with online pharmacies which provide substantial discounts as a result of which offline stores will suffer due to loss of business.

Thirdly, the question of jurisdictional conflicts remains unaddressed as it remains to be seen which law holds the field in case of legal inconsistencies. Several inconsistencies may be spotted in the Draft Rules which need to be resolved if a solution to this issue is to be found.

Impact on the Right to Privacy

Privacy forms an important concern for consumers. There need to be adequate safeguards regarding how the data given by a customer is protected and this warrants heavy regulatory compliances in addition to strict penalties in cases of violations. The recent Aadhar judgment also brought to light numerous concerns regarding privacy which need to be kept in mind when implementing a regulatory framework for e-pharmacies.

The Draft Rules prescribe that e-pharmacies would keep data confidential and localized, however, state and central governments can secure access to the data for “public health purposes”. No criterion is prescribed for what would constitute such a purpose and the Rules also fail to mention which authority can compel e-pharmacies to share health information.  Such ambiguities pose a threat of misuse of data by government.

Further, the Draft Rules come in direct conflict with the draft of the Personal Data Protection Bill, 2018, which allows for the transfer of data outside India where the patient has expressed his/her consent or where the transfer is necessary for prompt action. The conflict between the two needs to be resolved before the Draft Rules can be implemented.

Conclusion

In conclusion, it can be said that the e-pharmacy regime is changing slowly but steadily. The government has taken cognizance of the fact that there are many health concerns surrounding the sale of medicines online and accordingly has formulated a policy which address these concerns. India is taking a step forward in terms of drafting a full-fledged policy exclusively for e-pharmacies; this is sure to make the lives of a lot of citizens easier.

There is no doubt that the proposed Rules are progressive in nature. By making regulations that stand in conformity with global best practices the government is providing impetus to the continued growth of the e-pharmacy industry. However, there exist issues that need to be resolved sooner rather than later, such as the tendency of the government to misuse data and the conflicting nature of its provisions with those of the IT Act, 2000.

India has a long way to go in governing e-pharmacies and there are a lot of loopholes that need to be plugged. Currently, there is no law governing the actions of drug companies and as a result they are operating with little regard to the consequences of their actions. There is a need to bring the Rules into force as quickly as possible, and despite the government’s promise to implement them within 100 days of the elections they are yet to act in this matter.

It is hoped that concerns about consumer privacy are addressed in a more stringent manner by the government and that provisions are put in place which ensure that misuse of the data of the customers is strictly prohibited. The government should address loopholes in the policy and examine how they come into conflict with existing rules and amend them to resolve such contentious issues.

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E-Pharmacy and Tech Law: An Interface (Part I)

Posted on by Tech Law Forum NALSAR

This is the first part of a 2-part post authored by Anubhuti Garg, 4th year, and Gourav Kathuria, 2nd year, of NALSAR University of Law. Part II can be found here.

The growth of the Internet and rise of companies like Amazon and Flipkart has meant that e-commerce is rapidly gaining traction in India. A notable emergence in this regard has been that of e-pharmacies, which provide heft discounts and hassle-free deliveries to attract consumers. Their arrival on the scene has been acknowledged by the government which has tried to bring in a draft policy in order to regulate these entities, however it is yet to be implemented. The existing laws are inadequate when it comes to dealing with e-pharmacies and there is an urgent need for new legislation governing the issue which is precisely what the Sale of Drugs by E-Pharmacy (Draft Rules) aim to do.

The present post aims to analyse the laws currently applicable to e-pharmacies in India, and Part II will look at the consequences of implementing the proposed policy. The focus is on highlighting the lacunae in existing laws and providing suggestions with a view to implementing a better solution.

Laws Regulating E-Pharmacies

India does not have a special law dedicated to governing e-pharmacies. Most of the laws which are applicable to e-pharmacies were made at a time when computers did not exist and consequently, they are incapable of addressing the issues faced by e-pharmacies.

Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945

The Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 regulate the sale, distribution and storage of drugs and other pharmaceutical products in India. According to the law pharmacies need to necessarily comply with two conditions: first, they need to acquire a license from the state food and drugs authority, and secondly, specified medicines can only be sold on the basis of a prescription provided by a medical practitioner. Recently, a notification passed by the Office of Drugs Controller General clarified that the present law did not distinguish between online and offline pharmacies; which implies that the present Act would govern e-pharmacies as well.

Information Technology Act, 2000

The Information Technology Act, 2000, does not contain specific references to e-pharmacies. In general, any transaction happening on the internet falls within the ambit of the Act and as a result e-pharmacies will be governed by its provisions.

Challenges with the Laws

Firstly, the current laws are inadequate when it comes to governing the functioning of e-pharmacies. For instance, the Drugs and Cosmetics Act and Rules mandate that a physical pharmacy have proper storage facilities for the medicines with special requirements pertaining to hygiene etc. However, in the case of e-pharmacies it becomes very difficult to assess where the medicines are stored or obtained from, which increases the possibility of the medicine being of below the required quality.

Secondly, the possibility of repeated use of prescriptions gives rise to the risk drug misuse and addiction. There is a need to regulate the manner in which e-pharmacies sell these drugs as restrictions applicable to conventional drug stores cannot be applied in the case of e-pharmacies.

Thirdly, there exist pertinent concerns regarding the privacy of online customers and the confidentiality of their data which need to be addressed. This aspect is not governed by any law and storage of customers’ data by e-pharmacies could prove to be problematic in the long run.

Fourthly, accountability of e-pharmacies is an increasing concern as some pharmacies claim that by virtue of their position as “intermediaries” they should not be held accountable for any problems that may arise in the future. Intermediaries are governed by the IT Act and Section 2(w) classifies online market places like Amazon and Flipkart as intermediaries. Section 79 provides them with immunity from liability for third party information provided they conform to the requirements of Section 79(2). Rule 3 of the Information Technology (Intermediaries Guidelines) Rules 2011 makes intermediaries responsible for informing the users about its policies and provides for a redressal mechanism. However, it fails to impose a high enough burden on information uploaded to the portal, as a result of which serious liability cannot be imposed on e-pharmacies.

The picture that emerges is that of inadequate laws governing the functioning of e-pharmacies, with the varied approaches taken by courts posing another problem. The Madras High Court had earlier imposed an interim ban on e-pharmacies, which was later reversed by a division bench order. Similarly, the Delhi High Court had also banned e-pharmacies however this was overturned by the government’s legislation which was upheld in a later order.

It was to deal with the confusion existing over e-pharmacies that the government came up with draft policy, however this is yet to be implemented. The next part will analyse the draft rules and highlight some concerns surrounding the legislation and will attempt to show the way forward for the regulation of e-pharmacies in India.

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Metadata by TLF: Issue 5

Posted on by Tech Law Forum @ NALSAR

Welcome to our fortnightly newsletter, where our Editors put together handpicked stories from the world of tech law! You can find other issues here.

RBI Releases Discussion Paper on Guidelines for Payment Gateways and Payment Aggregators

The RBI on 17th September released a discussion paper on comprehensive guidelines for the activities of payment aggregators and payment gateway providers. It was acknowledged that payment aggregators and payment gateways form a crucial link in the flow of transactions and therefore need to be regulated. The RBI has suggested that these entities be governed by the Payment and Settlement Systems Act, 2007 which requires all  ‘payment systems’ (as defined in the Act) to be authorised by the RBI. Additionally, different frameworks have been proposed for regulating payment aggregators and payment gateways, and full and direct regulation has been discussed in detail. This would entail payment aggregators and gateway services to fully comply with any guidelines issued by the RBI.

Further Reading:

  1. Trisha Jalan, RBI proposes regulation, licensing of payment aggregators and gateways, Medianama (18 September 2019).
  2. Full regulation by RBI will require payment gateways, aggregators to be incorporated in India, The Hindu (18 September 2019).
  3. Shayan Ghosh, RBI could bring payment aggregators, gateways under direct supervision, livemint (18 September 2019).
  4. RBI paper on payment gateways: Maintain Rs. 100 crore net worth or wind up operations, moneycontrol, (19 September 2019).

Twitter removes more than ten thousand accounts across six countries

Political turmoil and instability in countries is majorly aggravated by the internet and various portals online. In light of this crisis, Twitter has decided to remove more than ten thousand accounts across six countries. These accounts were found to be actively spreading unrest in countries which were already in the wrath of a political turmoil. Twitter removed more than four thousand accounts in United Arab Emirates and China, around thousand in Ecuador, and more than two hundred in Spain.

Twitter has been making an active effort since the past one year to identify and remove accounts which were agitating sensitive issues in countries facing crisis. Online portals even have the power to sway the election processes in Democratic countries. In order to curb these impending threats, Twitter has been removing certain accounts on its platform. Even though thousands of new accounts are created everyday and several people have termed this removal process as arduous and never ending, these measures have to be taken.

Further Reading:

  1. Trisha Jalan, Twitter removes 10,000 accounts from six countries for political information operations, Medianama (23 September 2019).
  2. Ingrid Lunder, Twitter discloses another 10,000 accounts suspended for fomenting political discord globally, Tech crunch (20 September, 2019).
  3. Abrar-al-Hiti, Twitter reportedly removes over 10,000 accounts that discourage voting, Cnet (2 November 2018).
  4. Christopher Bing, Twitter deletes over 10,000 accounts, that sought to discourage voting, Reuters (3 November 2018).

California passes AB 5 Bill requiring business to hire workers as employees

California legislators approved a landmark Bill on 11 September, 2019 that has the potential to disrupt the gig economy. The Bill known as “AB 5” requires companies like Uber and Lyft to treat contract workers as employees, which gives hundreds of thousands of California workers basic labour rights for the first time. Apart from its immediate impact, the move by the California legislature might set off a domino effect in New York, Washington State and Oregon, where stalled moves to reclassify drivers might witness renewed momentum. The move has been criticised by ride-hailing firms Uber and Lyft which built their businesses on inexpensive labour, and the companies have warned that recognizing drivers as employees could destroy their businesses.

Further Reading:

  1. Kate Conger and Noam Scheiber, California Bill Makes App-Based Companies Treat Workers as Employees, New York Times (11 September 2019).
  2. Manish Singh, California passes landmark bill that requires Uber and Lyft to treat their driver as employees, Tech Crunch (11 Septemer 2019).
  3. Rosie Perper, California passes landmark bill to treat contract workers as employees, sending it to the governor for signature, Business Insider (11 September 2019).
  4. Alexia Fernandez Campbell, California just passed a landmark law to regulate Uber and Lyft, Vox (18 September 2019).
  5. Andrew J. Hawkins, California just dropped a bomb on the gig economy — what’s next?, The Verge (September 18, 2019).

Microsoft Announces Change in Policies

Microsoft has stated that most large tech law companies, will change the manner in which content is moderated on their social media platforms, irrespective of the US Congress implementing new laws. Their Chief Legal Officer and President, Brad Smith has indicated that most companies will take initiative, irrespective of U.S. Lawmakers. The statement has been made in light of the recent Christchurch shootings which were livestreamed on most social media platforms. Further, major tech companies are responding to the changes in laws around the world. S. 230 of the U.S. Communications Decency Act, 1996 presently protects these companies from being sued on the basis of the content that is uploaded by its users. Microsoft itself has claimed that it has refused the government’s requests for facial recognition software due to the fear that it may be misused. The President of Microsoft has called for other tech companies as well to stop following the “if it’s legal, its acceptable approach” since companies need to start refusing selling their products to certain clients, irrespective of the legality of the action. However, ACLU, senior legislative council has accused Microsoft of continuing to sell software that can track faces and fear in real-time, leading to violation of privacy.

Further Reading:

  1. Sheila Dang, Microsoft’s Brad Smith: Tech companies won’t wait for U.S. to act on social media laws, Reuters (13 September 2019).
  2. Alex Hern, Microsoft boss: tech firm.s must stop ‘if it’s legal, it’s acceptable’ approach, The Guardian (20 September 2019).
  3. Tom Simonite, Microsoft’s Top Lawyer Becomes a Civil Rights Crusader, MIT Technology Review (8 September 2019).
  4. Microsoft’s Brad Smith: Tech Companies Won’t Wait For U.S. To Act On Social Media Laws, Communications Today (15 September 2019).

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Metadata by TLF: Issue 3

Posted on by Tech Law Forum @ NALSAR

Welcome to our fortnightly newsletter, where our editors put together handpicked stories from the world of tech law! You can find other issues here.

Uber likely to start bus service in India

The San-Francisco cab-aggregator giant, Uber is working on to kick-start an AC bus service in India. With the introduction of AC bus service, Uber is trying to inch closer toward its goals of reducing individual car ownership, expanding transportation access and helping governments plan transportation. Pradeep Parameswaran, Uber India and South Asia head said that “we are in the process of building the product and refining that. Some pilots are live in parts of Latin America and the Middle East. So they are the archetype of markets that would look like India”.

Uber bus will allow commuters to use the Uber app and reserve their seat on an air-conditioned bus. Uber will scan other passengers travelling in the same direction as the rider and hence reaching the destination with fewer stops. Through its bus service, Uber is emphasizing on educational campuses and business centers. Earlier Ola, Uber’s direct competitor, had launched similar kind of bus service in limited cities in 2015 but was stopped in 2018. At present, Gurgaon based Shuttl provides app based bus service to offices. Uber bus service in India is expected to become a reality in mid-2020.

Further Reading:

  1. Moupiya Dutta, Uber will be starting a bus service in India by 2020, TechGenyz (8 August 2019).
  2. Shreya Ganguly, Uber mulls launching bus service in India, Medianama (9 August 2019).
  3. Tenzim Norzom, Ride-hailing major Uber to soon launch bus service in India, Yourstory (7 August 2019).
  4. Hans News Service, Uber to start bus service in India, The Hans India (8 August 2019).
  5. Priyanka Sahay, India may see Uber buses plying on roads in a year, Moneycontrol (8 August 2019).

WhatsApp Hack Can Alter Messages and Spread Misinformation

The Israeli Research Company, Check Point recently revealed that WhatsApp could be hacked causing serious potential security risks to users at the Annual Black Hat Security Conference on 7thAugust, 2019. According to Roman Zaikin and Oded Vanunu, they were able to change the identity of a sender, alter the text of someone’s reply on a group and even send private messages to another member in the group as a public message, such that the reply is visible to all the participants of a group. They were able to exploit the weaknesses of the application, after they reverse-engineered the source code in 2018 and decrypt its traffic. Since then Check Point has stated that it found three ways to manipulate and alter conversations, all of which are exploited through its quoting feature. The creators did warn WhatsApp in 2018 that the tool could be used by ‘threat actors’ to create and spread misinformation and fake news. Facebook has responded stating that the risk is not serious, and to alter the application would mean having to store data about the sender, leading to lesser privacy for its users.

Further Reading:

  1. Davey Winder, WhatsApp Hack Attack Can Change Your Messages, Forbes (7 August 2019).
  2. ET Bureau, WhatsApp hack attack can change your messages, says Israeli security firm, The Economic Times (7 August 2019).
  3. Shreya Ganguly, Messages and identity on WhatsApp can be manipulated if hacked: Check Point Research, Medianama (9 August 2019).
  4. Mike Moore, Hackers can alter WhatsApp chats to show fake information, Tech Radar (9 August 2019).

Facebook’s new entity Calibra raises attention of privacy commissioners

Several privacy commissioners across the world raised concerns over the privacy policy of Facebook’s new Libra digital currency. The countries which have raised concerns are US, UK, EU, Australia, Canada, Albania and Burkina Faso.

Calibra is the new subsidiary of Facebook and its cryptocurrency is called Libra. Calibra hopes to build a financial service on top of the Libra Blockchain. The privacy concerns raised go beyond the question of financial security and privacy because of the expansive collection of data which Facebook accumulates and has access to. Calibra issued a statement that user information will be shared in only certain circumstances but there is no definite understanding of what such situations are. 

Apart from privacy concerns, the joint statement issued by the countries includes several concerns on whether Facebook should be given the right to get involved in the banking sector. If they did, they should seek a new banking charter and should be regulated by all the banking laws. These were few of the concerns raised by privacy commissioners.

Further Reading:

  1. Soumyarendra Barik, Privacy commissioners from across the world raise concerns over Facebook Libra’s privacy risk, Medianama (6 August 2019).
  2. Nick Statt, Facebook’s Calibra is a secret weapon for monetizing its new cryptocurrency, The Verge (18 June 2019).
  3. Reuters, Facebook’s cryptocurrency project raises privacy concerns, asked to halt programme, tech2 (19 June 2019).
  4. Jon Fingas, US, UK regulators ask Facebook how Libra will protect personal data, engagdet (8 May 2019).
  5. Harper Neidig, Global privacy regulators raise concerns over Libra, The Hill (8 May 2019).

EU General Data Protection Regulation exploited to reveal personal data

University of Oxford researcher James Pavur successfully exposed a design flaw in the GDPR, as a bogus demand for data using the “right to access” feature of the regulation saw about one in four companies reveal significant information about the person regarding whom the request was made. Data provided by the companies contained significant information including credit card information, travel details, account passwords and the target’s social security number, which was used by the researcher as evidence of design flaws in the GDPR. Pavur also found that large tech companies did well when it came to evaluating the requests, whereas mid-sized business didn’t perform as well despite being aware of the coming into force of the data protection regulation.

Further Reading:

  1. Leo Kelion, Black Hat: GDPR privacy law exploited to reveal personal data, BBC (8 August 2019).
  2. Sead Fadilpasic, GDPR requests exploited to leak personal data, IT ProPortal (9 August 2019).
  3. John E Dunn, GDPR privacy can be defeated using right of access requests, Naked Security by SOPHOS (12 August 2019).
  4. Understanding the GDPR’s Right of Access, Siteimprov (14 June 2019).

Apple to suspend human review of Siri requests

Human reviewers will no longer be used to study conversations recorded by Siri, according to a recent announcement by Apple. The move gives users a greater degree of privacy over their communications, and analysis of recordings will be suspended while the “grading” system deployed by the company is reviewed. The system refers to the manner in which contractors grade the accuracy of the digital assistant’s voice recognition system, with the primary task being to determine the phrase that triggered action by i.e. whether the user had actually said, “Hey, Siri” or if it was something else.

Further Reading:

  1. Hannah Denham and Jay Greene, Did you say, ‘Hey, Siri’? Apple and Amazon curtail human review of voice recordings., Washington Post (2 August 2019).
  2. Jason Cross, So Apple’s going to stop listening in on your Siri requests. Now what?, Macworld (2 August 2019).
  3. Rob Marvin, Apple to Halt Human Review of Siri Recordings, PC Mag (2 August 2019).
  4. Kate O’Flaherty, Apple Siri Eavesdropping Puts Millions Of Users At Risk, Forbes (28 July 2019).

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‘Search Bias’ Under Indian Competition Law

Posted on by Tech Law Forum @ NALSAR

The following post has been authored by Vishakha Singh Deshwal, an LLM candidate at the West Bengal National University of Juridical Studies (WBNUJS), Kolkata. Here she analyses an emerging issue at the intersection of technology and competition law.

 

Every enterprise wants its Uniform Resource Locator (URL) to appear among the top links on search engines because these links get the most clicks. Research reveals that the 10 highest-ranking generic search results on the first page together generally received approximately 95% of all clicks on generic search results.[1] While some enterprises pay huge advertisement costs to ensure that their links appear at the top (paid links), others resort to Search Engine Optimization (“SEO”) from a service like the SEO services in Provo
to acquire top spots among unpaid links. SEO may include regularly uploading quality content to the website, creating a user-friendly browsing experience, ensuring that the website is compatible with computers and hand-held devices, engaging in social media marketing, etc.

As a large part of the market has shifted to online platforms (e-commerce platforms), it becomes important to understand the interface between the working of Search Engines and Competition Law. This post seeks to explain the concept of “abuse of dominance” in the context of search engines. First things first, let us look at Google Search Shopping case to understand the relevance of Search Neutrality.

Until 2010, Google, which is the most used search engine, misused its dominant position to place certain links above others. In 2010, European Union’s Commissioner for Competition began investigating Google’s conduct and held it liable for abuse of dominance. In 2017, the biggest fine ever imposed by an antitrust regulator was slapped on Google (Google Search Shopping Decision). After this, Google corrected the bias advertised and sponsored links were distinctly marked and search order was based on relevance, popularity, design and so on.

Search Neutrality

The principle of Search Neutrality requires that search engines should have no editorial policies other than that their results be comprehensive, impartial and based solely on “relevance”. For instance, Google Search uses certain algorithms to rank web pages based on their relevance. For e.g., PageRank that works by counting the number and quality of links to a page to determine a rough estimate of how important the website is. Moreover, several updates (like Panda) are also used to improve the user experience by identifying and demoting low-quality sites that do not provide useful original content or otherwise add much value.

Search Bias

Any manipulation of the organic/natural order of the links in search results amounts to a search bias. Such bias is inbuilt in the very business model of the search engines. As per the founders of Google: “ . . . we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers”.[2] So, the pertinent question is – what is the basis of such bias?

Relevance as the basis of Bias

In the domain of search engines, neutrality does not mean equal treatment regardless of the content. As mentioned earlier, search engines try to push up more relevant and quality links for a better user experience. Therefore, some amount of bias is inherent. Relevance is used as the basis of refining search results; it is defined in the search engine, so that the results are subject to the user’s preferences and the user is satisfied.

For example, a search for “Flights from Delhi to Mumbai”, would show several links. Some would be advertisements and sponsored links, while others would be unpaid links of travel gateways like MakeMyTrip, Goibibo, etc. Additionally, some other links for travel blogs, news items, maps, etc. would show up . Here, the search engine uses various algorithms to ensure that the most relevant links appear at the top. However, as relevance is subjective, bias based on relevance is contentious. At times, search engines tweak the algorithm to place their own or associated links higher up in the order to limit or eliminate competition.

Search Bias and Abuse of Dominant Position under Competition Act, 2002

Search Bias may become anti-competitive when it violates Section 4 of Competition Act, 2002. Section 4(1) prohibits abuse of dominant position. The explanation to Section 4(2)(b) defines “dominant position” as a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to- (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favor.

Further, clauses (c) and (e) of Section 4(2) prohibit practices resulting in denial of market access and use of dominant position in one relevant market to enter into or protect other relevant market. In case of search engines, the peculiar feature of the sector is that there are a few enterprises that enjoy a dominant position in relevant markets (e.g. Google, Amazon, etc.) and such position may be abused.

To understand the interface of these provisions with search bias, let’s take a look at the Competition Commission of India’s (“CCI”) ruling on Google (2018).

In 2012, two cases were filed against Google alleging contravention of Section 4 of the Act. It was alleged that while conducting the core business of search and advertising, Google had been manipulating the search results and favoring its own services and partners, such as Google Video, YouTube, Google Maps, etc. Pages in the search results did not appear solely according to their relevance, popularity, etc. It was further averred that Google is widely recognized as enjoying a dominant status in the search advertisement market because of its market share, size, resources, reputation etc. Therefore, its search bias amounts to abuse of its dominant position.

Decision

The CCI confirmed that Google is a dominant enterprise with respect to the relevant markets of Online General Web Search Services and Online Search Advertising in India based on factors such as size and resources, economic power and commercial advantages, entry barriers, etc.

The CCI held that Google violated Section 4 by extending and preserving its dominance through:

  • Wrong and unfair display of the search results prior to 2010 in pre-determined/fixed positions instead of ranking them in order of relevance.
  • Embedding only its specialized services in ‘more results’ link. Further, by abusing its dominance, Google did not merely limit market access of its competitors, but it also accessed large volumes of user data and thereby, indirectly deteriorated the ability of the competitors to further innovate on their products and sustain and survive in the market.

Approach

The decision did not deal with the question of effect-based versus form-based approaches to determine abuse of dominance. The dissent order indirectly referred to the latter approach as it emphasized the need for greater economic evidence and its implications for competition and consumers to consider an alleged conduct as abusive. The form-based approach is the traditional approach to look at the abuse of dominance where perfect competition is the goal. Whereas, the effect-based approach aims at weighing the pro-competitive and anti-competitive effects of a firm’s action keeping in mind special considerations for an industry, rather than simply protecting competition. It recognizes that firms continuously look for new opportunities to maximize their profits through innovation. For this, a firm may adopt strategies that enhance its market power or eliminate a competitor, however, its actions may result in more efficient processes and enhanced consumer welfare (E.g. Reliance Jio case).

Thus, the argument of improving quality of search results cannot be disregarded, as it ultimately benefits the users. However, we must not overlook the implications of bias e-commerce platforms such as Amazon, Grofers, Nykaa, etc. where products that are not necessarily better in quality appear high up in the search result to the disadvantage of third-party sellers. For instance, if products sold by Cloudtail (in which Amazon has a substantial stake) on Amazon appeared higher in the search result not on the basis of relevance but as part of the strategy to push Cloudtail’s products, that would be an anti-competitive practice. The provisions under Section 4 of Competition Act could be invoked in these cases as well.

Way Forward

CCI’s decision demonstrates the ability of the Indian law to deal with new forms of abuse. Further, the Competition Law jurisprudence is to evolve with changing times including the propounding of the effects-based approach by the CCI. However, the effect of Search bias is not just limited to the visibility of business enterprises, but it has an over-arching impact in shaping public opinion and even affecting political outcomes (e.g. Cambridge Analytica Case). Today, when more people have access to the internet than ever before, it is important that search engines ensure transparency in their bias. It will ensure that the rights of all stakeholders such as consumers, business enterprises and citizens in general are protected. Relevance as the basis has stood the test of time, but other markers like popularity, design, quality etc. used by search engines may also affect search neutrality. Therefore, there is a need for an informed debate over the most appropriate basis of bias that keeps a check on the abuse of dominance in the market as well as suppression of information in the society in general.

 

[1] https://www.epw.in/engage/article/should-google-search-engine-be

[2] The Anatomy of a Large-Scale Hypertextual Web Search Engine (1998)

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Indian Convergence Law – Forever 'in the Pipelines'?

Posted on by Kartik Chawla

(Image Source: https://flic.kr/p/pVxM7q)

Back in the year 2001, when the same government was in power, it tried to pass a bill called the Communication Convergence Bill, 2001. The Bill failed, due to reasons mentioned later in the post, but apparently it isn’t quite ready to die yet.  The Bill has now been revived as the Communication Convergence Bill, 2014, with news reports indicating that the Telecom Minister is quite definitely going to push for it.

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