Google to Pay $36M Fine in Australia for Anticompetitive Deals

Google has agreed to pay a fine of approximately $35.8 million (A$55 million) following an admission of illegal business practices in Australia. This decision comes after the Australian Competition and Consumer Commission (ACCC) found that the tech giant engaged in anticompetitive agreements with local telecommunications providers, specifically Telstra and Optus, which limited consumer choice regarding search engine options on Android devices.

The ACCC stated that these arrangements, which were in place between December 2019 and March 2021, required Telstra and Optus to only install Google Search as the default option on the Android phones they sold. In exchange, Google provided advertising revenue shares when customers used its search services. More critically, these deals included provisions that prohibited the carriers from installing or even suggesting other search engines on their devices.

According to the ACCC, the agreements effectively restricted competition by ensuring that “all search access points on such devices were configured to utilize Google Search out-of-the-box.” The commission emphasized that such conduct is illegal in Australia, as it typically leads to reduced choice, increased costs, and diminished service quality for consumers.

Gina Cass-Gottlieb, Chair of the ACCC, remarked, “Conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs or worse service for consumers.” Google has acknowledged these issues and expressed commitment to altering its business practices in response to the ACCC’s concerns.

Changes to Business Practices

In addition to the financial penalty, Google has signed binding commitments to modify its operational framework. As per the undertaking filed with the ACCC, Google will eliminate restrictions that previously compelled phone manufacturers and telecom providers to pre-install Google Search as the default search engine.

Google has also agreed to address broader competition issues arising from its contractual arrangements with Android device manufacturers and Australian telecoms dating back to 2017. While Google does not fully concur with all of the ACCC’s concerns, it has acknowledged them and is committed to improving the competitive landscape in the Australian market.

This resolution aligns with commitments made by Telstra, Optus, and TPG in 2024, where they pledged not to renew or enter new agreements that would require Google’s search services to be pre-installed exclusively on their devices. The ACCC noted that these changes would enhance search options for millions of Australians, allowing telecoms to configure search services on individual devices and collaborate with alternative search providers.

Broader Implications and Global Context

This Australian case is part of a larger international scrutiny of Google’s market dominance. In August 2024, a U.S. judge ruled that Google had illegally monopolized the search market, where it commanded an estimated 89.2% share for general search services, increasing to 94.9% on mobile devices. U.S. prosecutors are pushing for Google to divest its Chrome browser, and the company has faced over €8 billion in fines from European regulators since 2017 for antitrust violations.

The ongoing global scrutiny reflects a significant shift in how search engines operate, particularly as artificial intelligence tools are reshaping information retrieval. Cass-Gottlieb noted that the changes come at a pivotal moment when innovative search technologies are emerging, thus intensifying competition in the sector.

The ACCC’s enforcement action follows a comprehensive five-year inquiry into the Digital Platform Services, aiming to understand the influence of major tech companies on competition and consumer welfare. The commission highlighted that cooperation with regulatory bodies can help avoid lengthy litigation processes while fostering a more competitive environment.

While Google has cooperated during the investigation to avert extensive court battles, the final approval of the $35.8 million fine still awaits judicial endorsement. The ACCC remains dedicated to addressing anticompetitive practices and cartel activities, emphasizing that a competitive market is essential for economic vitality. The final decision on the proposed changes is anticipated in the coming months, with Google’s new commitments expected to take effect immediately once approved.