When you pick up a new Android phone in Australia, Google Search is probably already sitting there as your default search engine. You might not think twice about it. Most of us don’t. But behind that simple interface sits a business arrangement that Australia’s Federal Court just ruled crosses the line into anti-competitive conduct – and it cost Google $55 million to learn that lesson.
If you’re clueless, here’s what actually happened, why it matters for businesses and consumers, and what this ruling tells us about where digital competition is heading in Australia.
In this post, we’ll walk through the court’s findings, explain why default settings have so much power, and explore what this means for anyone running a business in an increasingly scrutinised digital landscape.
What Google Actually Did
Between December 2019 and March 2021, Google struck deals with Telstra and Optus – Australia’s two biggest telcos. The arrangement was straightforward: Google Search would be pre-installed as the default (or only) search engine on Android phones sold by these companies, and the telcos agreed not to pre-install or promote competing search engines.
In exchange, Telstra and Optus got a cut of the advertising revenue Google earned when customers used Google Search on their devices.
On paper, it sounds like a standard commercial deal. Tech companies pay for distribution all the time. But the Australian Competition and Consumer Commission (ACCC) saw something more troubling. They argued these agreements “substantially lessened competition” by blocking rival search engines from reaching users in the most critical moment – when they first turn-on their phone.
Google admitted to the conduct and cooperated with the ACCC’s investigation. The Federal Court agreed with the regulator’s assessment and handed down the $55 million penalty in December 2024. (You can read the full details inthe ACCC’s official media release here.)
Why Defaults Matter More Than You’d Think
Most people never change their phone’s default settings.
You set it up once, maybe customise the wallpaper and icon placements, and you’re done. That inertia is exactly why defaults are so powerful – and why they matter in competition law.
When a search engine is pre-installed and set as default, three things happen.
- First, most users stick with it regardless of whether better alternatives exist.
- Second, network effects kick in – more users attract more advertisers, which funds better products, which attracts even more users.
- And third, competitors struggle to break through no matter how innovative or high-quality their technology might be.
Academic research backs this up. Work examining network effects and advertiser-driven revenue models in search markets shows that defaults create structural barriers that have little to do with product quality. When distribution is locked up, competition can’t even get off the ground.
Google understood this dynamic perfectly. That’s why the agreements weren’t just about pre-installation – they included clauses preventing telcos from promoting alternatives.
Why the Court Called This Anti-Competitive
The Federal Court wasn’t saying Google Search is a bad product. Nobody argued that. The issue was how Google protected its market position through exclusionary agreements rather than competing purely on merit.
- The court focused on three problems. First, by restricting telcos to pre-installing only Google Search, the deals shut rival search engines out at the most important moment – the out-of-the-box experience when someone first uses their phone. That moment shapes behaviour more than any choice screen or app download later on.
- Second, the revenue-sharing arrangement gave Telstra and Optus a financial incentive to keep Google as the exclusive default and avoid promoting alternatives. This actively reinforced Google’s dominance instead of maintaining a neutral marketplace.
- Third, under Australian competition law, conduct doesn’t need to eliminate competition entirely. It only needs to have the likely effect of “substantially lessening competition.” The court found Google’s arrangements crossed that threshold, making the behaviour unlawful.
ACCC Deputy Chair Mick Keogh said: “Our market economy is predicated on businesses competing freely with each other, which is why locking out competing businesses in a way that substantially lessens competition is illegal.”
What This Means for Australian Consumers and Businesses
The $55 million penalty is actually a lot more than a number on a balance sheet. It’s a statement about what regulators will and won’t tolerate from dominant digital platforms going forward.
Beyond the fine, Google and the US-based Google LLC gave the ACCC a court-enforceable undertaking to remove certain pre-installation and default search restrictions from their contracts with Android manufacturers and telcos. Telstra, Optus, and TPG provided similar undertakings in 2024, agreeing they won’t renew or create new exclusive arrangements with Google.
What does this actually mean in practice?
- Telcos have real flexibility now: They can configure search services device-by-device and enter agreements with other search providers other than Google.
- Competing search engines get a fair shot: AI-powered tools and alternative search engines that are rapidly changing how people find information now have a realistic chance at being pre-installed on Android phones sold in Australia.
- Consumers might actually see choices: Over the next few years, your phone’s setup experience could quietly change. Instead of just accepting whatever’s already there, you might see real options to switch between search engines.
- Innovation can finally reach users: For businesses developing or marketing search alternatives, this ruling opens a door that was previously locked. It creates a more level playing field where innovation can actually reach users instead of being buried by default settings before it ever gets a chance.
Why This Matters for Digital Marketing in Australia
If you run a business in Western Sydney, Melbourne, or anywhere across Australia, this ruling has implications beyond competition law headlines. Search visibility, user behaviour, and platform dominance all shape how customers find you – and how much you pay to reach them.
When one platform controls distribution and defaults, it controls attention. That affects advertising prices, the quality of search results, and whether new entrants can survive. A more competitive environment reinforces something we tell clients all the time: don’t rely on a single channel.
This is where thoughtful, diversified SEO strategies for Australian business become essential. Google will likely remain the dominant search player for years to come. But increased competition means user behaviour might shift gradually. Marketers may need to think beyond Google-only optimisation. More importantly, building direct relationships with your audience using email, owned content, and genuine engagement becomes more valuable than ever.
Looking at the Bigger Picture
For businesses spending time and money on digital marketing, the takeaway is fairly simple: flexibility matters.
When a single company controls default settings across millions of devices, the impact goes well beyond individual user preference. It influences which businesses get seen, how expensive advertising becomes, and whether new products or ideas ever get a fair chance to compete.
This ruling makes one thing clear: Australian regulators are watching closely. And when market power is used to shut out rivals instead of being earned through better performance, they’re prepared to step in.
For businesses, the message is simple and clear: build resilience into your digital strategy, diversify your channels and to invest in relationships that aren’t entirely mediated by a single platform.
Ready to Build a Resilient Digital Strategy?
With regulatory shifts, AI-powered search, and evolving user behaviour, the digital landscape is changing fast. Staying ahead now requires partnering with digital strategists who can offer clarity, direction and the right support.
At Netplanet Digital, we help Australian businesses build robust digital marketing strategies that adapt to change without losing their authenticity. Whether you need help with SEO, content marketing, paid ads, or simply navigating the complexities of an ever-evolving digital ecosystem, we’re here to assist you.
