Google’s user dominance stifling innovation, says ACCC as it flags search engine choice screen
The Australian Compeition and Consumer Commission (ACCC) has recommended that a choice screen, providing consumers with a selection of search engine options be introduced in Australia, in order to curb Google’s dominance in the space.
This recommendation comes as part of the ACCC’s third Digital Platform Services Inquiry interim report, released this morning.
The report has found that Google has a market share of 94%, as the dominant search engine in Australia, with Google Search being the default search engine on the two most popular browsers nationally, Chrome and Apple’s Safari, both pre-installed on most mobile devices.
The parent company of Google yesterday reported d a 41% revenue rise in the third quarter, driven by significant growth from its advertising business.
Total revenue hit US$65 billion, up from US$46 billion in the same quarter last year.
Google search has a 94% market share
Rod Sims, chair of the ACCC said: “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.”
“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 conducted by the ACCC found that most users tend to opt for the pre-installed browser on their devices, with a further one in four not knowing how to change the default web browser or search engine on their mobile devices.
Sims said that in order for competing search engine services to Google, access to consumers is ciritical, but that Google’s “vertical integration and costly commercial arrangements” have proved to make this very difficult.
ACCC chair, Rod Sims
“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,” said Sims.
The ACCC put forward two recommendations, the first that it be given the power to “develop and implement a mandatory search engine choice screen”, that gives consumers a selection of search engines, rather than have a pre-set default.
The second is that it recommends it be “given the power to develop additional measures to improve competition and consumer choice in search”, which may include restricting dominant services “from tying or bundling search services with other goods or services, among other measures”.
Sims said: “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.”
“We are carefully considering these potential measures, which would sit alongside the rules and powers proposed in the ACCC’s Ad Tech Final Report,” said Sims. “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.”
With the value of digital advertising continuing to increase, the ACCC last month concerns in its Digital Platform Services Inquiry – September 2021 Interim report. As part of its analysis, the ACCC concluded that “customer inertia” and the effect of default settings is a barrier to expansion for smaller search engines.
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Calum Jaspan was news editor at Mumbrella, based in Melbourne. He was also the producer and host of the Mumbrellacast. He left Mumbrella in May 2023.
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