Telstra and Optus cancel Google deals amid regulatory pressure

Under the deals, in place since 2017, both Telstra and Optus agreed to pre-install Google Search as the default search service on Android smartphones distributed by the respective operators. In return, they received a share of Google's advertising revenue.

This arrangement set off alarm bells at the Australian Competition and Consumer Commission (ACCC), which has spent the last few years trying to rein in the power of big tech in the online services market. This includes Google, which according to Statcounter, enjoyed a 98% share of Australia's search market between September 2021 and February 2024.

Both Optus and Telstra acknowledged the regulator's concerns and, following the expiry of their deals with Google at the end of June, agreed not to renew them.

"Practices such as entering into agreements to ensure exclusivity can limit consumer choice or deter innovation," said ACCC commissioner Liza Carver. "Digital platforms with significant market power should be aware of their obligations under Australia’s competition laws."

In separately-filed undertakings, Telstra and Optus also pledged to not enter into any arrangement with Google that requires them to favour its search engine in any way. That includes configuring devices so that Google is the exclusive, default search engine.

Google's search dominance is such that Telstra and Optus are also prohibited from doing any deal with Google that precludes them from setting a rival provider – like Bing or DuckDuckGo – as the default search engine.

"We are grateful for the cooperation of Telstra and Optus in responding to the ACCC's competition concerns. The undertakings will allow alternative search engines to be able to compete to be a default search engine on the Android devices these companies supply," said Carver.

The ACCC has been keeping close tabs on big tech since 2020, when it was ordered by the government to carry out a five-year investigation called the Digital Platform Services Inquiry (DPSI).

It publishes regular interim updates, which include not just its findings but various recommendations designed to curb big tech's dominance.

The third interim report, published in October 2021, focused on Google – specifically the money it paid Apple to be the default search engine on the latter's Safari browser; its ownership of Chrome; and the pre-installation and default search arrangements it has with other browsers and Android device makers.

The ACCC concluded these practices entrenched Google's search dominance, and recommended a range of measures, including a mandatory search engine choice screen that enables users to select their favoured provider. It also recommended restricting dominant search engines from tying or bundling search with other goods or services.

These recommendations were included in a later interim report, published in September 2022, that proposed a package of measures designed to address harms from dominant digital platforms to Australian consumers, small businesses and competition. More than a year later, in December 2023, the government backed the ACCC's recommendations.

"Reform to Australia's competition and consumer laws, particularly to create targeted service-specific mandatory codes of conduct for certain digital platforms to prevent anti-competitive conduct, remains critically important to address the influence digital platforms have across the economy," Carver said.

With similar measures implemented in the UK, Japan and across the EU, this development will come as little surprise to Google. And with Statcounter putting its share of the global search market at 91.05% as of June, no one at Google is likely to lose any sleep over this.