Google Admits to Anti-Competitive Conduct in Australia, Faces $36 Million Penalty

Key Takeaways

• Admission of Anti-Competitive Conduct: Google acknowledged that its agreements with Telstra and Optus between 2019 and 2021 unlawfully restricted rival search engines on Android phones.
• Penalty Proposal: Google has agreed to recommend a $36 million penalty (AUD $55 million), subject to Federal Court approval.
• Binding Undertakings: Google committed to removing pre-installation and default search restrictions from contracts, adding to prior undertakings already made by Telstra, Optus, and TPG.
• Regulatory Impact: The ACCC sees the outcome as a way to increase consumer choice and create openings for competing search providers, especially amid the rise of AI-powered search tools.
• Compliance Insight: The case underscores regulatory scrutiny of exclusivity arrangements in digital markets and signals heightened risks for platforms relying on restrictive contracts.

Deep Dive

Google has admitted to engaging in anti-competitive conduct in Australia, following a long-running investigation by the Australian Competition and Consumer Commission (ACCC). The tech giant acknowledged that, between December 2019 and March 2021, it reached restrictive agreements with Telstra and Optus requiring that Android phones sold by the carriers only pre-install Google Search, shutting out rival providers.

Under these arrangements, Telstra and Optus received a share of advertising revenue generated when customers used Google Search. By tying revenue sharing to exclusivity, Google has admitted the effect was likely to substantially lessen competition in Australia’s search engine market.

Penalty and Undertakings

Google Asia Pacific has cooperated with the ACCC and agreed to jointly recommend that the Federal Court impose a $36 million penalty (AUD $55 million). The Court will ultimately determine whether this proposed penalty and associated orders are appropriate.

In parallel, Google has signed a court-enforceable undertaking that addresses broader concerns about its contracts with phone manufacturers and Australian telcos dating back to 2017. While Google disputes some of the ACCC’s findings, it has committed to removing pre-installation and default search restrictions from future contracts.

These commitments build on similar undertakings secured last year from Telstra, Optus, and TPG, which pledged not to renew exclusive agreements with Google. Collectively, the new framework gives telcos flexibility to install and configure alternative search providers on Android devices.

ACCC’s View

ACCC Chair Gina Cass-Gottlieb underscored the importance of the outcome, saying the changes 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.”

She also pointed to timing, with AI-powered search tools beginning to reshape the market. “Importantly, these changes come at a time when AI search tools are revolutionising how we search for information, creating new competition,” she said.

The ACCC’s five-year Digital Platform Services Inquiry had already flagged exclusive pre-installation arrangements as harmful to consumer choice. Its recommendations included introducing a new regulatory framework with mandatory service-specific codes for designated digital platforms, a proposal now under Treasury consultation.

Broader Implications for Competition

The ACCC’s proceedings highlight ongoing scrutiny of digital platform practices in Australia. The regulator stressed that cooperation from companies can avoid lengthy litigation while delivering outcomes that benefit consumers and competitors alike.

“Conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs or worse service for consumers,” Cass-Gottlieb said. “The ACCC remains committed to addressing anti-competitive conduct like this, as well as cartel conduct. Competition issues in the digital economy are a current priority area.”

While the Federal Court has yet to decide whether to approve the proposed penalty, the combination of penalties and undertakings appears to mark a turning point for search competition in Australia. The case illustrates both the risks of restrictive contractual practices in digital markets and the regulatory shift toward curbing tech platform dominance, with ripple effects that may extend to other jurisdictions.

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