Measures addressing Google’s dominance in search engine services, including a choice screen that provides consumers with a selection of search engines, should be introduced in Australia, as set out in the ACCC’s third Digital Platform Services Inquiry interim report.
This is a media release from the Australian Competition & Consumer Commission (ACCC). It was originally published on 28th October, 2021.
The report, released today, found that Google continues to be the dominant search engine in Australia, with a market share of 94 per cent. Google Search is the default search engine on the two most popular browsers in Australia, Google’s Chrome browser and Apple’s Safari browser, which are pre-installed on most mobile devices in Australia.
The report 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,” ACCC Chair Rod Sims said.
“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.”
A survey commissioned by the ACCC found that most consumers surveyed tend to stay with their device’s pre-installed browser and pre-set search engine.
Further, roughly one in four consumers reported not knowing how to change the default web browser or search engine on their mobile device.
“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,” Mr Sims said.
“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.”
“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,” Mr Sims said.
“While most search engines do not charge users to conduct search queries, a competitive search services market could include many benefits for consumers including innovation in search results or display, a reduction in sponsored advertising results and incentives to attract users through novel offerings such as rewards or better data protection.”
“It is common for the quality of service to suffer when companies gain a dominant position.”
To address this, the ACCC recommends a range of measures. First, 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. 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,” Mr Sims said.
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’s report examined Google’s choice screen for search services on new Android devices in Europe, which was voluntarily implemented by Google following a decision by the European Commission. The ACCC found many deficiencies in these arrangements.
“The ACCC will continue to monitor significant developments and proposals overseas, where similar concerns have been identified. We will continue to work with our international colleagues, sharing lessons and advancing regulatory reform as appropriate,” Mr Sims said.
Second, the ACCC also recommends 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. 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,” Mr Sims said.
On 10 February 2020, the Australian Government directed the ACCC’s Digital Platforms Branch to conduct a five-year inquiry into markets for the supply of digital platform services in Australia and their impacts on competition and consumers. This inquiry will report to the Treasurer every six months and will examine digital platform services including their advertising services and data brokers until the conclusion of the inquiry in March 2025.
This report, focusing on choice screens for search services and web browsers and providing advice to Government on the roll-out of Google’s choice screen on new Android devices in Europe, is the third produced under this direction.
The fourth report, focussing on general online retail marketplaces, is due to be provided to the Treasurer by 31 March 2022.
The fifth report, focussing on competition and consumer issues raised in the course of the Digital Platform Services Inquiry, the Digital Advertising Services Inquiry and the Digital Platforms Inquiry (2017-2019) to date, and whether specific ex ante rules should apply to digital platform markets, is due to the Treasurer by 30 September 2022. The ACCC intends to release a concepts paper in the first quarter of 2022 seeking feedback to inform the report.
The ACCC’s Digital Platforms Branch concluded a separate inquiry into markets for the supply of digital advertising services. The final report for that inquiry was published on 28 September 2021.
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