Internet giant Google has been ordered to pay a $55 million fine after the Federal Court of Australia found the company guilty of engaging in anti-competitive practices. The ruling, approved by Justice Mark Moshinsky, comes as part of a settlement with the Australian Competition and Consumer Commission (ACCC) over deals with major telecommunications companies Telstra and Optus.
The fine represents one of the largest penalties levied against the US tech giant in Australia, second only to a $60 million fine in 2022 for unauthorized collection of location data from Android users. The ACCC’s legal action, initiated in August, targeted agreements between Google Asia Pacific and the telcos that spanned from December 2019 to March 2021.
Background and Details of the Case
The controversial contracts required Telstra and Optus to pre-install Google’s Search app on Android devices, making it the default search engine while prohibiting the installation of competing search services. In return, the telecommunications companies received a share of advertising revenue generated from Google search results on these devices.
Justice Moshinsky emphasized that the penalty should be substantial enough to deter similar anti-competitive behavior in the future. “The cases emphasize that the primary, if not sole, purpose of civil penalties is deterrence of further contravening conduct of a like kind,” he stated.
“I’m satisfied that the proposed total penalty is a sufficiently significant figure to achieve the object of deterrence, both specific and general,” Moshinsky added.
Implications for the Tech Industry
Telstra, Optus, and TPG have since signed court-enforceable undertakings to avoid similar arrangements with Google in the future. The ACCC’s lawyer confirmed that no further action would be pursued against these telcos.
Deputy chair of the ACCC, Mick Keogh, highlighted the importance of curbing anti-competitive behavior on digital platforms to ensure consumers have access to the best technology. “This penalty should send a strong message to all businesses that there are serious and costly consequences for engaging in anti-competitive conduct,” he said.
“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,” Keogh noted.
Context and Industry Impact
The court’s decision follows the ACCC’s extensive five-year inquiry into Digital Platform Services, which concluded nine months ago. The inquiry recommended mandatory codes of practice to enhance competition and protect against unfair trading practices.
Google’s dominance in the Australian search market is significant, with Statcounter estimating that the company delivered 91% of web search results over the past year, compared to Bing’s 6.2% and Yahoo’s 1.35%.
The ruling is expected to have far-reaching implications for the tech industry, particularly as new, artificially intelligent search tools emerge. By enforcing penalties and promoting fair competition, regulators aim to foster an environment where innovation can thrive without being stifled by monopolistic practices.
Looking Forward
As the digital landscape continues to evolve, the ACCC and other regulatory bodies worldwide are likely to maintain a close watch on tech giants like Google. The emphasis on fair competition and consumer choice remains a priority, ensuring that emerging technologies can compete on a level playing field.
The case serves as a reminder of the ongoing challenges in regulating digital markets and the need for vigilant oversight to protect consumer interests and promote healthy market dynamics.
