Google ACCC Fine: $55M Penalty Over Telstra, Optus Search Deals

The Australian Competition and Consumer Commission (ACCC) has announced that Google will pay a $55 million fine after admitting it entered into exclusive agreements with Telstra and Optus, two of Australia’s largest telecommunications providers. The regulator found that these deals unfairly reduced search engine competition, harming consumer choice.

According to court filings, the arrangements ran between December 2019 and March 2021. During this period, Telstra and Optus agreed to pre-install only Google Search on the Android devices they sold. In exchange, the telcos received a portion of advertising revenue generated through those searches.

The Federal Court proceedings, which began on August 18, 2025, confirmed that Google accepted liability and agreed to pay the fine. This marks one of the most significant penalties in Australia related to digital platform competition law.

How the Exclusive Deals Worked

The central issue was Google’s contracts with Telstra and Optus. Under the agreements:

• Pre-installation requirement: Android smartphones sold by the telcos came with Google Search set as the only built-in search engine. Consumers were not given a choice at the point of sale.
• Revenue sharing: In exchange, Google shared a percentage of advertising revenue with the telcos. This meant that the more consumers used Google Search, the more money Telstra and Optus earned.
• Locked competition: This arrangement created barriers for rival search engines such as Bing, DuckDuckGo, or smaller regional competitors, which had no comparable visibility on new devices.

The ACCC concluded that these practices “substantially lessened competition” in the Australian search market. Consumers who might have chosen alternatives often didn’t see them because Google was effectively the only default option.

ACCC’s Position: Why It’s Illegal

Australia’s competition law prohibits businesses from making deals that restrict fair competition or shut competitors out of the market.

The ACCC stated that Google’s agreements undermined consumer choice and made it harder for rival search engines to compete. According to ACCC chair Gina Cass-Gottlieb, such conduct often results in “less choice, higher costs, or worse service for consumers.”

The regulator emphasized that default settings matter. Studies worldwide show that most users rarely change default apps or search engines. By ensuring Google Search was pre-installed as the sole option, Google effectively cemented its dominance and ensured continued ad revenue growth.

Google’s Response: Admission, but Not Full Agreement

Google admitted liability in court and accepted the $55 million penalty. However, the company stressed that it did not agree with all of the ACCC’s findings.

A Google spokesperson said the company was “pleased” to resolve the case and highlighted that the contested provisions had already been removed from its commercial agreements in recent years. Google also gave a court-enforceable undertaking to provide more flexibility to device makers and telecom carriers, allowing them to preload competing browsers and search engines.

The spokesperson also argued that Google’s deals helped keep Android device costs lower and ensured innovation in competition with Apple’s iOS ecosystem.

Telcos Under Pressure: Telstra, Optus, and TPG

Telstra and Optus, who directly benefited from the agreements, also came under scrutiny. Both companies, along with TPG, reached separate commitments with the ACCC in 2024 not to enter into similar exclusive search arrangements in the future.

While the telcos were not fined in this case, the undertakings ensure they will avoid entering restrictive deals that could again limit consumer choice in the search engine market.

Broader Implications for Competition and Consumers

This case is more than just a financial penalty for Google. It raises broader questions about how big technology companies maintain dominance in digital markets:

• Consumer choice at risk: When only one search engine is pre-installed, most consumers stick with it, leaving competitors sidelined.
• Impact on innovation: Smaller search engines struggle to reach new users, reducing incentives to innovate and diversify offerings.
• Global parallel: The ruling echoes similar antitrust battles around the world. In the European Union, Google has faced multibillion-dollar fines for making its search engine the default on Android devices. In the United States, regulators are currently pursuing a high-profile case accusing Google of using default deals with Apple and other partners to dominate the search market.

For Australian consumers, the ACCC’s intervention means more opportunity to access competing search engines without being locked into Google by default.

The Rise of AI Search and Why This Matters Now

The timing of the case is also important. Search markets are evolving rapidly with the rise of AI-powered search engines like Microsoft’s Copilot (integrated into Bing) and independent AI tools like Perplexity AI.

By preventing exclusivity agreements, regulators aim to ensure these emerging technologies can compete fairly. Without such intervention, incumbents like Google could lock out AI competitors before they gain a foothold in the market.

This reflects a growing international trend: competition regulators worldwide are increasingly focused on how digital gatekeepers—Google, Apple, Amazon, and Meta—control consumer access to information, apps, and online services.

What Happens Next?

The $55 million penalty agreed upon by Google and the ACCC will now be reviewed by a Federal Court judge, who must decide whether it is an appropriate fine for the misconduct.

If approved, the ruling will stand as one of the largest penalties against a tech giant in Australia, following earlier high-profile actions against Meta (Facebook) and Apple for privacy and consumer law breaches.

Google’s enforceable commitments will also remain under ACCC monitoring, meaning the company must ensure flexibility for telcos and device makers in future contracts.

Summary Table

The ACCC’s action against Google highlights the growing global battle to keep powerful tech companies in check. By fining Google and dismantling restrictive agreements with Telstra and Optus, Australia has sent a clear message: digital markets must remain open and competitive.

For consumers, this means greater choice in search tools, potentially lower costs, and stronger incentives for innovation. For regulators worldwide, it sets another precedent in ensuring the dominance of tech giants does not come at the expense of fair competition.

The Information is Collected from The Hindu and Yahoo.