Google is facing a penalty of A$55 million (US$36 million) in Australia for engaging in anti-competitive behavior related to deals with major telecommunications companies. The Australian Competition and Consumer Commission (ACCC) initiated Federal Court proceedings against Google Asia Pacific after uncovering agreements with Telstra and Optus that restricted competition in the mobile search market.

Between December 2019 and March 2021, Google struck deals with Telstra and Optus to exclusively pre-install Google Search on Android phones sold by the telcos. These agreements prevented the installation of rival search engines, effectively locking in Google as the default option for millions of consumers. In return, Google shared a portion of the advertising revenue generated from searches made on those devices with Telstra and Optus.

The ACCC alleged that these arrangements substantially lessened competition, limiting consumer choice and hindering the visibility of competing search providers. Google has admitted that the agreements were likely to have had a significant impact on competition from rival search engines.

In addition to the fine, Google has signed a court-enforceable undertaking to remove certain pre-installation and default search engine restrictions from its contracts with Android phone manufacturers and telcos. This commitment aims to provide Android device makers and carriers with more freedom in pre-loading search engines and browsers. Google will also ensure that Android device makers and Australian mobile operators are not restricted from using other general search engine services, and will also allow them to license applications such as Google Play separately from Search and the Chrome browser.

The ACCC believes this outcome will create 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. ACCC Chair Gina Cass-Gottlieb emphasized that conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs, or worse service for consumers. She also noted that these changes come at a time when AI search tools are revolutionizing how people search for information, creating new competition.

This penalty is not the first challenge Google has faced in Australia. There have been legal battles with Epic Games regarding app store competition and regulatory scrutiny over social media use by children.

Google has stated that it is pleased to resolve the ACCC's concerns, noting that the provisions in question haven't been in their commercial agreements for some time. The company has also affirmed its commitment to providing Android device makers more flexibility in preloading browsers and search apps.

The Federal Court will now decide whether the proposed penalty and additional orders are appropriate. The undertakings from Telstra, Optus, and TPG, accepted by the ACCC, commit them not to renew or enter into new agreements with Google that would require its search services to be pre-installed and set as the default on an exclusive basis for the Android devices they supply.