The competition regulator has uncovered deals between Google and Australia’s biggest telcos that saw the tech giant’s search services preinstalled on mobile phones in exchange for a cut of its digital ad revenue.
Optus and Telstra held the deals with Google since at least 2017 but have provided the Australian Competition and Consumer Commission (ACCC) with a voluntary undertaking to not to renew them this month, heading off the watchdog’s competition concerns.
Investigations into Google’s similar deals with other distributors continues, however, as the ACCC pushes the Albanese government to establish an ex ante regime for digital platforms that could stop the agreements from ever being signed.
Google holds a near complete market share of search services in Australia, with users’ inputs used to build profiles that feed a complex and opaque digital advertising system also dominated by Google.
“Practices such as entering into agreements to ensure exclusivity can limit consumer choice or deter innovation. Digital platforms with significant market power should be aware of their obligations under Australia’s competition laws,” ACCC Commissioner Liza Carver said in a statement.
The ACCC revealed the deals on Tuesday after they had expired on June 30, and said the telcos had agreed to not continue the arrangement to have Google’s search services preinstalled as the default search service on Android devices supplied by Optus and Telstra.
The undertakings resolved the regulator’s concerns about Optus and Telstra’s involvement in anticompetitive conduct, but investigations into similar deals Google holds will continue.
“The undertakings will allow alternative search engines to be able to compete to be a default search engine on the Android devices these companies supply,” Ms Carver said.
The ACCC began exploring the introduction of “choice screens” that allow users to select a default search provider in 2021, flagging Google’s lack of them as a competition concern.
After a preliminary inquiry, the regulator then asked for new powers to prevent Google from signing exclusionary agreements with distributors, which collectively cost the tech giant billions of dollars and demonstrate just how valuable the default positioning.
The practice could also be stopped by the ex ante competition scheme proposed by the regulator and agreed in principle by the Albanese government late last year.
The European ‘gatekeeper’ system it is modelled on came into force this year and has prompted changes in platform giants’ business models and early moves on compliance.
Last week, the European Commission levelled its first allegation that Apple is in breach of the competition laws underpinning the regime.
Another allegation has now been made by the European Commission that Meta is also in breach of the law because of its “pay or consent” advertising model.
The model was introduced in anticipation of the European law to offer Facebook and Instagram users a subscription to use the platforms without advertisements or access without charge that includes personalised ads. The model allegedly breaches the European law because it does not provide users with a less personalised but equivalent version of Meta’s social networks.
The European Commission has begun preliminary investigations into Google’s search services, with preliminary concerns its search results self preference its other vertical search services.
The European regime includes fines of up to 10 per cent of the designated platforms’ total worldwide turnover and up to 20 per cent and forced breakups for repeated infringements.
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