Google Admits Anti-Competitive Conduct, Agrees to $55 Million Penalty in Australia

Aug 18, 2025

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Google has admitted to anti-competitive conduct involving its search engine in Australia and agreed to pay a $55 million penalty after reaching illegal agreements with telecommunications giants Telstra and Optus to exclusively pre-install Google Search on Android mobile phones.

The Australian Competition and Consumer Commission announced Monday it had commenced Federal Court proceedings against Google Asia Pacific over understandings that required the telecommunications companies to only pre-install Google Search and block competing search engines between December 2019 and March 2021.

"Conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs or worse service for consumers," ACCC Chair Gina Cass-Gottlieb said. "Today's outcome, along with Telstra, Optus and TPG's undertakings, have created the potential for millions of Australians to have greater search choice in the future."

Google cooperated with the ACCC investigation, admitted liability and jointly submitted to the court that it should pay the penalty, though the final determination rests with the Federal Court.

Revenue-Sharing Arrangements Violated Competition Law

Under the agreements, Telstra and Optus received a share of revenue Google generated from advertisements displayed when consumers used Google Search on their Android phones. In exchange, the telecommunications companies agreed to exclusively pre-install Google Search and prevent installation of competing search engines.

Google has admitted that reaching these understandings was likely to have substantially lessened competition in the Australian market for general search engine services.

"The understandings, which were in place between December 2019 and March 2021, required Telstra and Optus to only pre-install Google Search on Android phones they sold to consumers, and not other search engines," the ACCC said in its announcement.

The revenue-sharing agreements contained platform-wide provisions requiring all search access points on Android devices supplied by Telstra and Optus to be configured with Google Search out-of-the-box. The agreements also prohibited the telecommunications companies from implementing, preloading or suggesting any general search engine service substantially similar to Google Search.

Cooperation Factor Reduces Penalty Amount

Cass-Gottlieb explained that Google's cooperation with the ACCC investigation influenced the penalty calculation, noting that such cooperation typically reduces penalties by 10 to 30 percent depending on when it occurs in the process.

"The ACCC has an approach in the calculation of penalty and it provides an incentive to companies to allow us to get a good consumer-facing outcome more quickly than lengthy protracted court proceedings would take," she said.

When asked about the penalty calculation methodology, Cass-Gottlieb said the ACCC examined the size of the company, the scope of services provided, and applied considerations about the seriousness of the conduct before factoring in the cooperation element.

"Google commenced cooperation while we were still in the investigation phase here," she said, indicating this early cooperation contributed to the penalty reduction.

The $55 million penalty represents one of the highest competition law penalties achieved by the ACCC, with only one higher penalty of $57.5 million currently under appeal.

Court-Enforceable Undertaking Addresses Broader Concerns

Beyond the penalty, Google and its U.S. parent company Google LLC have signed a court-enforceable undertaking to address the ACCC's broader competition concerns relating to contractual arrangements between Google, Android phone manufacturers and Australian telecommunications companies since 2017.

Under the undertaking, Google commits to removing certain pre-installation and default search engine restrictions from its contracts with Android phone manufacturers and telecommunications companies. While Google does not agree with all of the ACCC's concerns, it has acknowledged them and offered the undertaking to address these issues.

"The undertaking to cease and remove the restrictions from the contracts with all Android phone manufacturers, so across the breadth of them, including the major ones supplying in Australia and the telco companies, which will cover Telstra, Optus and TPG, means that we go into the future from now with real choice for consumers," Cass-Gottlieb said.

Telecommunications Companies Previously Settled

The ACCC had previously accepted court-enforceable undertakings from Telstra and Optus in June 2024, and from TPG in August 2024, to resolve concerns about their agreements with Google. The telecommunications companies are not parties to the proceedings commenced Monday.

Under these undertakings, the companies agreed not to renew or create new arrangements with Google requiring its search services to be pre-installed and set as the default search function exclusively on Android devices they supply.

The three telecommunications companies can now configure search services on a device-by-device basis in ways that may not align with Google's settings and can enter into pre-installation agreements with other search providers.

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Timing Coincides with AI Search Revolution

Cass-Gottlieb emphasized the significance of the timing, noting that artificial intelligence-enhanced search tools are revolutionizing information searching and creating new competitive opportunities.

"Importantly, these changes come at a time when AI search tools are revolutionising how we search for information, creating new competition," she said.

The ACCC chair highlighted that Google currently holds over 90 percent market share in general search services, which also encompasses the advertising carried on search platforms.

"We are at a pivotal point in time. At a point in time with AI enhanced search, like you see with Google, Gemini, Microsoft, Bing and Copilot and Brave, for example. And then if you looked at AI agents like ChatGPT, that's also offering now a search function within ChatGPT. Then there's perplexity," she said.

Consumer Impact and Market Access

The ACCC noted that 94 percent of Australian adults aged 14 and over have smartphones, with most product and service searches occurring on mobile devices followed by transactions.

"With AI search tools becoming increasingly available, consumers can experiment with search services on their mobiles," Cass-Gottlieb said. "For rival search providers, it gives greater opportunity for them to offer new services to Australian consumers, increasing competition, and the potential for greater innovation."

The chair described the outcome as providing "a truly significant pivotal opportunity for there to be more competition and more choice" at a critical time when new search technologies are emerging.

Investigation Background and Digital Platform Focus

The proceedings follow a lengthy ACCC investigation after broader concerns about Google's contractual arrangements for Google Search emerged during the ACCC's Digital Platform Services Inquiry report into search defaults and choice screens.

The ACCC conducted a five-year inquiry into markets for digital platform services in Australia and their impacts on competition and consumers, with an update on general search services published in December 2024.

"Co-operation with the ACCC is encouraged. It can avoid the need for protracted and costly litigation and lead to more competition. More competition in markets drives economic dynamism, but the reverse is true when markets are not sufficiently competitive," Cass-Gottlieb said.

Broader Digital Competition Framework

The ACCC has recommended a new regulatory regime to promote competition in digital platform services, with the government accepting in principle the need for new competition-focused legislation.

"In relation to digital platforms, the first important point, in addition to actively investigating and taking enforcement action, we have recommended to government and government in principle has accepted that there should be new competition service-specific targeted legislation," Cass-Gottlieb said.

This proposed framework would enable requirements for interoperability, increased competition, and reduced preferencing of platforms for their own services. The chair noted that traditional investigations take significant time, citing the five-year investigation in this case.

"We also want to proactively, at pivotal times, to be in a position where if the government decides this is a critical intermediary service for Australian business and consumers, that there can be a targeted code put in place so that it will cover this broader choice and opportunity," she said.

Corporate Structure and Liability

Google LLC is a wholly-owned subsidiary of Alphabet Inc. Since at least 2017, Google LLC and its related entities have signed numerous contractual arrangements to distribute Google apps, including Google Search, through mobile application distribution agreements and revenue share agreements.

Google Asia Pacific serves as the contracting counterparty for mobile revenue share agreements in the Asia Pacific region, including Australia, making it the entity liable for the admitted contraventions of section 45(1)(a) of the Competition and Consumer Act.

Enforcement Commitment

Cass-Gottlieb reaffirmed the ACCC's commitment to addressing anti-competitive conduct across the Australian economy, particularly in the digital sector.

"The ACCC stands committed to detect and address anti-competitive conduct across our economy. We have a strong focus on competition issues in the digital economy," she said.

The ACCC emphasized that the penalty represents both a deterrent effect and recognition that cooperation in resolving competition matters benefits consumers through faster resolution and immediate competitive improvements.

Court Proceedings and Documentation

Because the matter was resolved between parties before litigation commenced, the ACCC filed an originating application in Federal Court accompanied by an affidavit and Google's undertaking. The court will determine whether the proposed penalty and other orders are appropriate.

The case demonstrates the ACCC's continued focus on digital platform competition issues, which remain a current priority area for the competition regulator as artificial intelligence transforms search and information services markets.

The outcome establishes a framework for enhanced search competition in Australia's mobile market while addressing anti-competitive practices that the ACCC determined had restricted consumer choice and hindered competition among search service providers.

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