ACCC recommends curbs on Google’s search engine dominance

Mariam Cheik-Hussein
By Mariam Cheik-Hussein | 28 October 2021

The ACCC has recommended the federal government introduce new measures to address Google’s dominance in search engine services.

The competition watchdog released an interim report into its Digital Platform service inquiry which is looking into the supply of digital platform services in Australia and their impact on competition and consumers.

The report found that Google has a market share of 94%, with Google Search the default search engine on the two most popular browsers in Australia, Google Chrome and Apple’s Safari browser.

The report also found that Google’s dominance in general search engine services in Australia is “extended and entrenched” by the large sums of money it pays to be the default search engine on Apple’s Safari browser, its ownership of Chrome and by the pre-installation and default arrangements it has in place with competing browser suppliers and device manufacturers that use Google’s Android operating system.

“Search engines play a critical role in the digital economy. We are concerned that Google’s dominance and its ability to use its financial resources to fund arrangements to be the default search engine on many devices and other means through which consumers access search, such as browsers, is harming competition and consumers,” says ACCC Chair Rod Sims.

“Google pays billions of dollars each year for these placements, which illustrates how being the default search engine is extremely valuable to Google’s business model.”

Roughly one in four consumers reported not knowing how to change the default web browser or search engine on their mobile device, according to a survey commission by the ACCC.

“Access to consumers is critical for search engine services to grow and compete against Google, but Google’s vertical integration and costly commercial arrangements have made this very difficult,” Sims says.

“Google’s existing dominance and its commercial arrangements have significantly increased barriers to entry and prevented new or emerging rival search engines from reaching consumers, not only through browsers but also through other access points like search apps, widgets and voice assistants like Siri.”4

“This is likely to have stifled innovation and reduced consumer choice. It means that consumers may not be exposed to or aware of other options, such as search engines that protect users’ privacy and/or have an ecological focus, which limits the ability of these businesses to grow.”

To address this, the ACCC recommended a range of measures, including that it be given the power to develop and implement a mandatory search engine choice screen. A choice screen presents consumers with a selection of search engines, rather than having a default search engine set for them.

“Choice screens can give consumers the opportunity to make an informed choice about the search engine they use,” Sims says.

“Choice screens can also help reduce barriers to expansion for competitors to Google, who may offer consumers more options for alternative search engines around issues like privacy and how personal data is collected and used.”

Subject to consultation with industry and further user testing, the ACCC envisages that the choice screen should initially apply to new and existing Android mobile devices and across all search access points on these Android mobile devices.

The ACCC also recommended that it be given the power to develop additional measures to improve competition and consumer choice in search. This may include potentially restricting dominant search engines from tying or bundling search services with other goods or services, among other measures.

“We are carefully considering these potential measures, which would sit alongside the rules and powers proposed in the ACCC’s Ad Tech Final Report,” Sims says.

“The framework for these rules and powers will be considered as part of the fifth report of the Digital Platform Services Inquiry. The ACCC intends to commence consultation regarding these potential proposals for broader regulatory reform in 2022.”

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