ACCC calls for more choice in Internet search browsers

Regulatory watchdog's latest Digital Platform Services Inquiry report highlights the dominance of Google in the search engine market and recommends measures to bolster choice

The Australian Competition and Consumer Commission (ACCC) is calling for search engine choice screens to be introduced in an attempt to kerb Google’s dominance of the search engine market.

The regulatory watchdog made the recommendation in the latest of its Digital Platform Services Inquiry Reports, released this week and focused on competition across Australia’s search engine market. It’s one of a number of areas being investigated as part of a five-year inquiry into the supply of digital platform services in Australia kicked off in 2020 by the ACCC’s Digital Platforms Branch.

The latest report found Google’s market share in Australia’s search engine market at the end of June 2021 was 94 per cent, with Google Search the default option pre-installed across both Google Chrome and Apple Safari browsers. This dominance was further propelled by Google paying to be the default search engine on Apple Safari and through default arrangements with competing browser suppliers and device manufacturers using Google’s Android operating system.

Combined, these browsers command 80 per cent of the desktop device market and more than 90 per cent of the mobile device market nationally.

Adding to this dominance is user behaviour. A survey into consumer search engine use conducted by the ACCC found most tend to stay with a device’s pre-installed browser and pre-set search engine, and that one in four don’t know how to change either the default Web browser or search engine on their mobile device. What’s more, about half don’t understand how browsers and search engines make money.

The status quo was a concern for ACCC chair, Rod Sims, who noted the critical role search engines play in a digital economy.

“We are concerned 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,” Sims said in announcing the report.

“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.”

In its report, the ACCC noted the antitrust lawsuit filed by the US Department of Justice and 11 State Attorneys-General against Google and these exclusivity agreements between Google and Apple, and Google and Android OEMs, along with tying and other arrangements with OEMs. The first trial is currently set for September 2023.

Access to consumers is critical for competing search engine service to grow scope, yet Google’s vertical integration and commercial arrangements have made this very difficult to do, Sims continued.

“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,” Sims stated.

“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.”

Search engines the ACCC pointed to that operate in Australia right now and emphasis privacy and data collection include DuckDuckGo and Brave Search.

“While most search engines do not charge users to conduct search queries, a competitive search services market could include many benefits for consumers including innovation in search results or display, a reduction in sponsored advertising results and incentives to attract users through novel offerings such as rewards or better data protection,” Sims added.

To combat the competition deficit, the ACCC’s report recommends developing and mandating a search engine choice screen allowing consumers to choose upfront which search engine they want to use on their device. The watchdog is advising these be applied to new and existing Android mobile devices and search access points on devices.

The recommendation takes its cues from Google’s decision to voluntarily implement a choice screen for search services on new Android devices in Europe following a decision by the European Commission. However, the ACCC warned that step did not go far enough.

“The ACCC will continue to monitor significant developments and proposals overseas, where similar concerns have been identified,” Sims said.

The ACCC is also recommending it gain the power to develop additional measures to improve competition and consumer choice. One way could be by disallowing dominant search engines from tying or bundling search services with other goods or services.

In both cases, these powers would sit separately to those rules and powers proposed in the ACCC’s Ad Tech Final Report.

Consultation around the proposed measures is expected to kick off in 2022. The ACCC’s two further reports, one on Australia’s online retail marketplaces and one that rounds up consumer and competition concerns stemming from the whole of the ACCC’s exploration into Australia’s Digital Platforms space, are due to Government by 31 March 2022 and 30 September 2022, respectively.

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