The outcome of the US Department of Justice’s antitrust case against Google is “significant”, according to the ACCC.
The finding to declare Google as a monopolist, and the charge that it acted as one to maintain its monopoly, is “an important application of US anti-trust law,” an ACCC spokesperson told AdNews.
This is the second time Google has been declared a monopoly A US court found back in December 2023 that the company used its market position to squeeze excess profits from app developers.
The latest investigation, launched in October 2020 and only recently concluded, focused on the tech giant’s dominance in the search engine space, finding that Google has a “major, largely unseen advantage over its rivals: default distribution”.
Default distribution involves Google’s search engine coming preloaded on mobile devices, something the US court said was “extremely valuable real estate”.
In June, Telstra and Optus gave up a share in Google’s advertising revenue following an investigation by the ACCC into Google’s search services in Australia.
The telcos agreed not to renew, or strike new, agreements requiring Google search services to be pre-installed and set as the default search function on devices they supply.
Earlier this month, TPG also followed suit after a court-enforceable undertaking from the industry watchdog.
The trial hearing in the US found that because many users simply stick to searching with the default, Google receives billions of queries every day through those access points, deriving “extraordinary volumes of user data” from such searches.
“It then uses that information to improve search quality. Google so values such data that, absent a user-initiated change, it stores 18 months-worth of a user’s search history and activity,” the 268-page ruling said.
“More users mean more advertisers, and more advertisers mean more revenues. As queries on Google have grown, so too has the amount it earns in advertising dollars.”
The courts found that in 2014, Google booked nearly $47 billion in advertising revenue. By 2021, that number had increased more than three-fold to over $146 billion. Bing, by comparison, generated only a fraction of that amount - less than $12 billion in 2022.
The United States district judge overseeing the trial, Amit Mehta, said Google pays “huge sums” to secure these preloaded defaults.
“Usually, the amount is calculated as a percentage of the advertising revenue that Google generates from queries run through the default search access points,” he said.
“In 2021, those payments totalled more than $26 billion. That is nearly four times more than all of Google’s other search-specific costs combined. In exchange for revenue share, Google not only receives default placement at the key search access points, but its partners also agree not to preload any other general search engine on the device.
“Thus, most devices in the United States come preloaded exclusively with Google. These distribution deals have forced Google’s rivals to find other ways to reach users.”
The ACCC themselves are currently considering the state of competition in general internet search services in Australia as part of the Digital Platforms Services Inquiry (DPSI), with the ninth report due to be provided to the Assistant Treasurer at the end of next month.
The inquiry has previously recommended measures to bolster competition in the digital economy that would work alongside Australia’s existing competition laws to address anti-competitive conduct, unfair treatment of business users and barriers to entry and expansion by potential rivals.
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