Google India executives asked to furnish 50% of FEMA penalties as bank guarantee

The Karnataka High Court has directed Google India and three of its senior executives to deposit 50 per cent of the penalties imposed, for alleged Foreign Exchange Management Act (FEMA) violations, as bank guarantees.

The Enforcement Directorate (ED) had earlier levied a penalty of ₹5 crore on Google India and a combined penalty of ₹45 lakh on the three senior officials of the multinational tech major. The case pertains to alleged violations of section 6(3)(d) of FEMA involving transactions worth ₹364 crore.

Google India under ED scanner

According to the ED, the violations relate to payments made by Google India to Google Ireland as distributor fees and for acquiring equipment from Google US. The enforcement agency contended that ₹363 crore, payable to Google Ireland, remained unpaid for over four years until May 2014, while another payment for nearly ₹1 crore worth of equipment sourced from Google US remained unsettled for over seven years until January 2014.

The ED classified these as commercial loans, which would require prior approval from the Reserve Bank of India. Google India contested the allegations, asserting that the transactions were not foreign exchange borrowings.

The company emphasized that no loan agreements, deferred payments, or interest were involved and claimed adherence to an RBI circular issued on July 1, 2014. Earlier, on January 11, 2019, the Appellate Tribunal for FEMA in Delhi had granted a stay on the penalties, citing that Google India's appeal appeared to have merit. The ED filed a second appeal challenging the stay.

A division bench comprising Justices V Kameshwar Rao and S Rachaiah observed that the tribunal's stay was based only on a preliminary view. They have now instructed Google India and the concerned officials to provide the bank guarantees for half the penalties within two weeks.

Google's spam policy hit by EU antitrust complaint

Meanwhile, a German media company has complained to EU antitrust regulators following Google's crackdown against companies gaming its search algorithm to push up rankings for other sites. In its complaint, Hamburg-based ActMeraki, until recently called Meraki Group GmbH, urged immediate action against the policy, saying it penalises websites.

Launched in March 2024, Google's reputation abuse policy targets publishing third-party pages on a site to abuse search rankings by taking advantage of the host site's ranking signals, commonly referred to as parasite SEO.

ActMeraki's complaint echoed a joint grievance by the European Publishers Council, the European Newspaper Publishers Association and the European Magazine Media Association, which issued a letter calling for regulatory action.