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FEATURES/Real Issue | Jul 22, 2013 | 77639 views

Is Google Gobbling Up the Indian Internet Space?

Google has a staggering amount of control over the Indian internet space. That can’t always be good
Is Google Gobbling Up the Indian Internet Space?

T

o the average indian internet user, Google is oxygen—omnipresent, free and essential to her existence. Whether it’s a web search, watching a video, using a browser, the operating system for smartphones or plain and simple email, Google is everywhere—and free.

But someone is obviously paying for it all. And among them, an increasing number think of Google as an adversary in the garb of a friend, someone who inserts himself between their customers and themselves, and charges what they see as an unreasonable tax on the oxygen essential to ecommerce.

Take apparel ecommerce, for starters.

Sometime early this year, three of India’s biggest players in the space—Jabong, Myntra and Yebhi—came to a stark realisation. Nearly one-third of the Rs 1.5-2 crore each of them was spending every month on Google search ads was spent on ambushing each other’s potential customers, often with little bang for the buck.

The three had been engaged in a bruising bidding war for ads related to their own “brand searches”

—ads shown to users who searched Google for, say, “Jabong.com ” or “Jabong”. But in their zeal to snatch potential customers a second or two away from clicking through to a rival’s website, and conversely to defend their own brand searches from rivals, they had all bid up the cost-per-click (CPC) rates for such ads through the roof (CPC is the money paid by an advertiser for every customer that clicks on its ad).

As they saw it, Google was the proverbial monkey pretending to settle a dispute over a cake between two cats, while ending up eating the cake.

“Google is sucking all the air from the ecosystem. No matter how good your business is at a gross margin, they just skim the cream off everyone,” says the co-founder of one of India’s leading travel portals.

With profits still a mirage and venture capital money fast running out, the companies put aside their fierce rivalry and reached out to each other informally. A decision was taken to stop bidding on each other’s brand searches. Naturally, CPC rates for brand search ads plummeted drastically, as companies were often the sole bidders for their own brand searches.

But this is where the story takes an interesting turn. According to insiders with access to what went on after this informal deal, some of the three apparel companies received calls from their sales contacts in Google.

“Why have you stopped bidding on competitive brand searches? This is very risky. The Indian ecommerce sector is still nascent, which means that even when a customer is searching for Myntra, she might be open to switching to Yebhi,” they were told.

But the companies decided they couldn’t bleed any more. Today, one of them says, it spends just about 10 percent of what it once did on brand searches.

A similar truce also exists in the travel space, where three of the biggest players, Makemytrip, Cleartrip and Yatra, are learnt to have informally agreed to not target each other’s potential customers.

But no such luck was forthcoming to Matrimony.com, the largest online matrimonial service in India. After tasting success with their Bharatmatrimony.com service, the company had rapidly created numerous offshoot websites like Tamilmatrimony.com and Bengalimatrimony.com, each of which was duly trademarked as well. In 2008, it drew $11.75 million in venture funding from Yahoo! and Canaan Partners.

Since 2009 it has been waging a dual legal battle against Google alleging the search giant willfully allows its competitors like Shaadi.com to advertise themselves to users searching for ‘Bharat Matrimony’ or many of its other trademarks. (One may ask: Why would users type Bharat Matrimony if they already know the site they want? They can go directly there. But this practice is common among lay users, who happily let Google auto-complete the URL.)

In the courts (first the Madras High Court, where it lost, and now the Supreme Court) Bharatmatrimony.com is arguing that Google adopts “double-standards” towards brand searches, disallowing ads for its own or large global brands like Citibank, Facebook or ICICI Bank, even while encouraging the same for smaller Indian brands. It has also filed a case with the Competition Commission of India (CCI) alleging discriminatory trade practices.

During the past few years, Google has firmly cemented itself into the daily lives of India’s internet users, reaching them across economic and geographic barriers. According to Comscore, its services reach over 95 percent of India’s 137 million internet users.

Having been shut out of the world’s largest internet market, China, due to political reasons, India is Google’s biggest bet for the future after the US.

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Comments (12)
Neena Jan 23, 2014
Google will intentionally boycott the websites of certain webmasters it is prejudiced against, especially single women. Effectively these webmasters will lose all their traffic from India.
Alex Oct 18, 2013
Acknowledged internationally as being one of the main drivers behind internet evolution, Google have now legally acquired the shortest internet domain name. http://www.g.cn/. Google purchased the unique domain name to assist their Chinese users in locating Google with greater ease. To find your domain visit http://goname.com/category
Shailendra Aug 3, 2013
Mobile advertising grows bigger than any other form of digital or internet advertising. Anywhere in the world, the numbers of customers who use mobiles have been rapidly increasing. Response rate of audiences is also high on mobile as compared to other tools of advertising. And there are more chances of seeing an ad in the mobile using SMS, MMS or WAP applications.
Jawan Jul 30, 2013
I'm sorry but this is how Google works. That is how a bidding system works and ultimately provides better value to a consumer. Its a fair system, because it doesn't provide an unfair advantage to any of the players, and Google is not one of the players.
Priyeshu Garg Jul 29, 2013
Google is a corporate company, not a charity. What they are doing is acceptable from business perspective. They have their expenses and they have to meet them and since majority of their revenue comes from advertisements it's in their interest to adapt strategies which yield higher revenue.
Rajesh Tyagi Jul 25, 2013
A great research topic would be why American companies like goog, aapl and amzn have failed to crack the Chinese puzzle while here in India, they are doing significantly better. The key to this is dominance of english in India and active government "help" provided in China to local companies. The english factor should not be underestimated - the dominance of english amongst educated middle and upper classes and the multiplicity of local languages makes India an easy and ready market for western multinationals to dominate.
Ajay Anand Jul 24, 2013
Great piece of work! Kudos to Forbes for this article!
Having been in the Internet space, I have observed one thing i.e "Google's core philosophy has been to keep its users Happy!"

Rest everything follows on its own. Growth, Market share, Revenues and some criticism:) This story talks it all.
Arun Y Jul 23, 2013
This is bound to happen when there is no competition in search space. What is stopping Indians to build search engine? Everyone is busy launching ecommerce site, who will build search engine? China couldn't afford to kick Google out without building Baidu first.

I strongly feel, India need more search engines, without that one can't blame Google for monopoly.
Response to Arun Y:
Amit Jul 24, 2013
But do you think one more search engine has got the market in India. Google, Facebook will always remain Google of India and Facebook of India... There can't be a local regional bet that could be addressed as Google of India.

Khoj and Guruji have become as case studies. However, I personally feel that focused search engine of an industry or task could have any chance...what do you think....A search engine for Insights ???? Any market for this ?
Jasmine Randhawa Jul 23, 2013
Not one of the links on http://www.chandnichowknowonline.in/ is working. Most of the domains have already expired. Strange marketing!! Google Advts should be removed as its cost is increasing the cost of all the products. All searches should be genuine and based on keywords and popularity only
Jinesh Jasapara Jul 23, 2013
Whats the option for marketeers besides Google?... incase everyone plays fair..will Google allow fair play???
Roopesh Jul 22, 2013
Good article

PS : Kindly correct the URL from chandnichowknowonline.com to chandnichowknowonline.in in the article
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