Google fined $36M in Australia over anticompetitive telco deals

Google will pay an A$55 million roughly $36 million fine in Australia following the determination by the Australian competition regulator that Google has anticompetitive practices according to the Australian competition and consumer commission, Google reached an agreement with the two largest telecom operators in the country namely Telstra and Optus to pre-load the Google Search app on Android phones such deals were made in late 2019.

By paying the telcos and contributing to advertising in early 2021, Google could prevent competitor search engines from penetrating Android devices. Since the majority of mobile operating systems in Australia are Android, Google has a significant upper hand.

Why the Fine is Important

Money is not the only matter of the fine. The use of $36 million is pocket change in the context of Google’s overall revenue. What is more problematic is that these cases highlight the increasing pressure on large tech firms to engage in healthy competition. Many countries are increasingly regulating practices that hinder consumer choice.

Gina Cass Gottlieb, the chair of the ACCC, said the result is crucial since it gives the people of Australia more flexibility in the future, competitors in the search engine business will find it easier to access users, unlike previously, when they were restricted from accessing users due to exclusive deals.

An Australian Pattern of Challenges

This is a penalty that Google is receiving during an already rough patch in Australia. The court, mostly going in opposition to the company as a part of the lawsuit filed by the Fortnite-maker Epic Games, continued its effort last week. The latter concerned Google and Apple blocking competitive app stores from running on their mobile operating systems.

Moreover, earlier, there was a ban on social media use by children under 16 years of age that included Google and YouTube. Regulators reversed their position on exemptions made on the site. This pair of issues demonstrates that Australia is emerging as a test bed to push the limits of what governments can legislate on big tech.

What Google says

Google has confessed that its deals with Telstra and Optus had a significant impact on competition. The business reported that it had ceased entering into these kinds of agreements and had cooperated with the regulator when resolving the situation. This collaboration shaved off a protracted and expensive court battle.

According to one of the Google spokespersons, the company is now determined to provide device makers with Android machines more freedom this implies that the manufacturers can pre-load with other browsers and search applications to use them as they wish concurrently, Google claims that it wishes to continue providing services that enable Android to compete with Apple at a low cost of the devices.

Telco impact

Telstra and Optus were no exception, facing scrutiny for their participation in these agreements. Both companies have claimed to have fully cooperated with the regulator and have vowed not to enter into similar agreements with Google after 2024. Optus, a subsidiary of Singapore Telecommunications, has remained silent on the case.

The broader outlook on the regulation of tech

The penalty indicates that regulators take seriously the need to ensure big tech firms cannot dominate the market by entering into exclusive arrangements. Governments around the globe are intervening to disrupt the grip of large companies in industries such as search, app stores, and digital advertising. This may be an increase in consumer choice in the future. The fact that rival search engines can access Android phones with far fewer challenges might mean people enjoy new features, enhanced privacy protection, or superior efficiency. The fine in Australia can be a warning to Google.

However, the company’s financial success is overshadowed by an increasing number of such cases worldwide. This trend may prompt other countries to follow suit in terms of acting upon regulators, given the threat and caution of a $36 million fine in Australia to mighty Google, which extends beyond the monetary amount. It suggests that authorities are willing to combat practices that restrict competition for consumers, potentially leading to greater consumer choice and fairness in the digital market. In the case of Google, it is another addition to the list of regulatory contests being refashioned in the way big tech conducts business globally.