Google and the Australian Competition and Consumer Commission (ACCC) have asked the Federal Court to approve a AU$55 million (US$35.8 million) penalty over Google Search deals with Telstra and Optus.

The ACCC said Google reached deals with Telstra and Optus between December 2019 and March 2021 to pre-install only Google Search on Android phones they sold.

In exchange, the telcos received a share of ad revenue generated when consumers used Google Search on these devices.

Google has admitted liability and has cooperated with the ACCC, and both parties are submitting the proposed penalty to the Federal Court.

Google and its parent company have committed to remove certain pre-installation and default search engine restrictions from contracts with Android phone makers and telcos.

ACCC Chair Gina-Cass Gottlieb said this created the potential for millions of Australians to have greater search choice, and for competing search providers to gain meaningful exposure.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Exclusive pre-installation deals amplify already dominant market positions

Google’s exclusive search deals with Telstra and Optus were particularly problematic because they reinforced an already dominant market position.

The ACCC found in 2019 that Google held over 90% market share in Australia’s search engine market, raising significant concerns about competition and consumer choice1.

The exclusive pre-installation agreements from December 2019 to March 2021 essentially locked competing search engines out of millions of new Android devices sold by Australia’s major telecom operators.

This demonstrates how contractual restrictions can have significant competitive effects when applied by a dominant player across major distribution channels.

The revenue-sharing arrangement with Telstra and Optus, where the telecoms received a cut of Google’s ad revenue from searches on their devices, created financial incentives for these companies to maintain exclusivity rather than offer consumer choice.

2️⃣ Cooperative enforcement approach yields faster regulatory outcomes

Google’s decision to admit liability and agree to the $55 million penalty represents a notable shift toward cooperative resolution of competition cases.