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Global tech giant Google has been hit with $55 million in penalties by the Federal Court for engaging in anti-competitive conduct over arrangements with Telstra and Optus to pre-install Google Search on Android mobile phones that the telcos sold.
The penalty brings to a quick end action launched against the Asia Pacific subsidiary of Google by the Australian Competition and Consumer Commission (ACCC) in August.
It also follows court enforceable undertakings by Telstra (ASX: TLS), Optus and TPG last year to resolve the ACCC’s concerns about their agreements with Google which gave them a share of advertising revenue when consumers used Google Search on their phones.
Telstra and Optus were not party to the ACCC proceedings against Google, which struck the deals with the telcos between December 2019 and March 2021.
The ACCC says Google cooperated with its investigation and admitted that it had engaged in anti-competitive conduct that was likely to have substantially lessened competition. The tech company made joint submissions with the ACCC in relation to penalties.
“This penalty should send a strong message to all businesses that there are serious and costly consequences for engaging in anti-competitive conduct,” says ACCC deputy chair Mick Keogh.
“Our market economy is predicated on businesses competing freely with each other, which is why locking out competing businesses in a way that substantially lessens competition is illegal.”
On top of the $55m in penalties, Google Asia Pacific and its parent the US-based Google LLC, have provided the ACCC with a court-enforceable undertaking to removing pre-installation and default search engine restrictions from Google's contracts with Android phone manufacturers and telcos.
In the court-enforceable undertakings provided by Telstra, Optus and TPG, the telcos undertook not to renew or make new arrangements with Google that require its search services to be pre-installed and set as the default search function on an exclusive basis on Android devices they supply.
The ACCC says the three telcos can configure search services on a device-by-device basis, and in ways that may not align with the settings set by Google. They can also enter into pre-installation agreements with other search providers.
“Today’s outcome, combined with the undertakings from Google and the telcos, creates the potential for millions of Australians to have greater search choice in the future,” says Keogh.
“Other search tools, including those enhanced by artificial intelligence, can now compete with Google for pre-installation on Android phones.
“Search tools, including those that incorporate AI, are rapidly changing how we search for information, and it’s critical that competitors to Google can gain meaningful exposure to Australian consumers.”
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