Android Devices Illegally Installed with Google Search, Resulting in $35.8 Million Fine for Google
In a significant move, Google has been fined $35.8 million AUD (approximately $36 million USD) by the Australian Competition and Consumer Commission (ACCC) for engaging in anti-competitive conduct involving exclusive agreements with Telstra and Optus, Australia's two largest telecommunications companies, between December 2019 and March 2021.
The key details of the anti-competitive practices are as follows:
- Google entered into restrictive agreements with Telstra and Optus, requiring that Android phones sold by these carriers only have Google Search pre-installed as the default and sole search engine, effectively excluding rival search engines from being pre-installed on these devices.
- In exchange for this exclusivity, Telstra and Optus received a share of the advertising revenue generated by Google Search usage on the devices they sold.
- This arrangement created a significant barrier to competition in the search engine market in Australia, as most users do not change default search settings, thus funneling millions of consumers to Google Search by default and limiting exposure and user base growth opportunities for competing search engines.
- The ACCC led the investigation and viewed Google’s conduct as likely to have the effect of substantially lessening competition, which is illegal under Australian competition law.
As part of the resolution, Google agreed to pay the fine and sign binding court-enforceable undertakings to remove pre-installation and default search restrictions in its contracts with phone manufacturers and telecommunications companies, allowing more consumer choice and competition in search providers moving forward.
Similar undertakings were previously agreed with Telstra, Optus, and TPG to not renew or renew similar exclusive search deals with Google. Singapore Telecommunications, which owns Optus and Telstra, has also agreed with the ACCC not to sign a contract with Google to pre-install its search feature.
Google has expressed its willingness to not sign any such agreements in the future and aims to preserve offerings and features that help device makers innovate, compete with Apple, and keep costs low. The company is also committed to providing Android device makers more flexibility to pre-load browsers and web search apps.
This case highlights regulatory scrutiny on exclusivity and restrictive contracts in digital markets and aims to enhance competition and consumer choice, especially as AI-powered search tools offer new alternatives. The ACCC has fined Google $35.8 million for this anti-competitive practice and warned against including such clauses in future contracts.
