Google has agreed to cop a $55 million fine for reaching secret deals with Telstra and Optus to exclusively preinstall its search engine on Android devices sold by the two telcos.
The Australian Competition and Consumer Commission launched Federal Court action on Monday, alleging Google’s “understandings” with Telstra and Optus were anti-competitive.
Google, which has been cooperating with the regulator, admitted liability ahead of the proceedings and, in a joint submission to the court, has agreed to pay a $55 million penalty.
The secret deals were uncovered last year and follow a lengthy investigation that emerged as a result of the Digital Platforms Inquiry report on search defaults and choice screens in 2021.
Telstra, Optus and TPG all had agreements with Google to have its search services preinstalled as the default search services on Android mobile phones they supplied to customers in exchange for a cut of its digital ad revenue.
The ACCC has already secured voluntary undertakings from both Telstra and Optus, as well as TPG, not to preinstall any Google search services for three years, resolving the regulator’s concerns over their involvement.
On Monday, the ACCC said the agreement reached with Google related to search services preinstalled on devices sold by Telstra and Optus, between December 2019 and March 2021.
Google and the ACCC will jointly ask the Federal Court to impose the $55 million penalty on Google, although the court will ultimately decide on the size of the penalty and make orders.
The company has also signed a court-enforceable undertaking to address broader competition concerns held by the ACCC “relating to contractual arrangements between Google, Android phone manufacturers and Australian telcos since 2017”.
“In the undertaking, Google commits to removing certain pre-installation and default search engine restrictions from its contracts with Android phone manufacturers and telcos,” the ACCC said.
ACCC chair Gina Cass-Gottlieb said the penalty, as well as the undertakings with Google and the three telcos, have improved competition, for the benefit of both consumers and competing search providers.
“Conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs or worse service for consumers,” Ms Cass-Gottlieb said in a statement on Monday.
“Today’s outcome, along with Telstra, Optus and TPG’s undertakings, have created the potential for millions of Australians to have greater search choice in the future, and for competing search providers to gain meaningful exposure to Australian consumers.”
In a statement, Google said the company is “pleased to revolve the ACCC’s concerns, which involved provisions that haven’t been in our commercial agreements for some time.”
“We are committed to providing Android device makers more flexibility to preload browsers and search apps, while preserving the offerings and features that help them innovate, compete with Apple, and keep costs low, a spokesperson said.”
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