Google’s search dominance under fire following ACCC digital platform services report

The ACCC has called for new measures to rein in the tech giant, which is responsible for 94 per cent of all searches in Australia.

The ACCC, which is led by chairman Rod Sims, wants new measures to rein in Google, which is responsible for 94 per cent of all searches in Australia. Picture: Joel Carrett/ AAP Image

Australia’s consumer watchdog has flagged major new laws to rein in the market power of tech giants, amid revelations that Google is responsible for 94 per cent of all local web searches.

The ACCC is concerned that Google’s dominance is stifling innovation and crippling potential local competitors.

ACCC chair Rod Sims said that recommendations for new rules will be delivered to the government in the middle of next year, following similar pushes to curb so-called ‘Big Tech’ in Europe, the UK and Germany.

“By September 2022 we will put forward a report on the upfront rules that should be put in place to deal with these issues … It’s very hard to just do things by taking people to court,” Mr Sims said in an interview.

“You could look at all the payments Google makes to suppliers, all the bundling, and that’s five or six years tied up in court. So I think it’s time to look at upfront rules, and that’s going to be our dominant focus next year.”

The ACCC on Thursday called for specific measures to tackle Google’s search dominance in Australia, including a so-called choice screen that would let users choose which search engine they want to use after finding the tech giant is responsible for 94 per cent of local online searches.

The watchdog’s research also found that most consumers tend to stay with their device’s pre-installed browser and preset search engine, and one in four people don’t know how to change the default web browser or search engine on their smartphone.

Mr Sims said Google pays large sums of money to Apple to be the default search engine on Apple’s Safari browser, and also pays Android device manufacturers to be the pre-installed default search option.

“They wouldn‘t pay that money unless they benefited enormously from it,” Mr Sims said. “The sheer size of the payments means there is a tremendous competitive value, and are they paying not just for the value that they receive, but for the value in precluding competitors?”

He added that Google’s power and dominance was stopping a potential Australian search competitor from enjoying success.

“Australia has some stunningly successful digital companies. I mean, think of Afterpay, Atlassian and Canva. There’s a range of them and you open up possibilities for others to come along with innovation, with new ideas, but Google as the only search engine makes that awfully difficult,” he said.

“I think the issues generally with large tech players, whether it‘s in choice screens, or ad tech or apps, their dominance can make it difficult for innovation and their dominance can, over time, see the degradation of what you’re being offered. Competition can only be good for suppliers who want to start up new businesses, and who want to prosper and thrive.”

If the ACCC gets its way, the choice screen would initially apply to new and existing Android mobile devices and across all search access points.

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

It comes after the ACCC also probed Google’s dominance in the Ad Tech market, recommending that the watchdog be granted new powers to address Google’s dominance in the online ad supply chain.

Google in a statement defended its dominant market position in Australia.

“People use Google Search because it’s helpful, not because they have to and its popularity is based on quality that’s built on two decades of innovation,“ a Google spokesman said.

“Android gives people choice by allowing them to customise their device – from the apps they download, to the default services for those apps. Pre-installation benefits users by making it easier for them to use services quickly and easily. We are continuing to review the report and look forward to discussing it with the ACCC and government.”

Mr Sims said in response that the fact Google pays Apple billions of dollars globally to be the default search option on iPhones would raise major red flags in other industries.

“If you’re so popular, why do you need to pay everybody to become the default?,” Mr Sims said. ”Secondly, when you’re so dominant, then you are the source of innovation. Do we want all the innovation to come from Google, or would we like different forms of innovation?

“I accept that pre-installs are helpful but there is a fine line between being helpful and preserving your dominance.”

Originally published as Google’s search dominance under fire following ACCC digital platform services report