ACCC to investigate state of search engine quality and competition in latest digital platform services inquiry

The consumer watchdog will examine the quality and state of competition in online searches, including how growth in artificial intelligence is affecting the sector and whether Australians should choose their mobile search browser, rather than being pre-determined. It’s the first probe by the Australian Competition and Consumer Commission of the state of search services since 2021, and since then a barrage of changes has dramatically shifted the landscape. Google is by far the dominant player in internet search of the major engines, with nearly 94 per cent in Australia to February, but the ACCC noted comments by the search giant’s US executive that young people are using social media such as TikTok and Instagram to discover information and content. Though the extent to which Australians are following this pattern remains unclear, the ACCC will consider whether digital platforms outside of search engines competitively constrain Google, it outlined in an issues paper on Monday in announcing its examination. “The ACCC wants to understand the impact of these developments on general search services and ultimately, how they affect competition and consumers,” commission chair Gina Cass-Gottlieb said. The regulator is also examining reforms in the UK and the European Union that have put obligations on search engines as a way to promote competition. These models are largely similar to those proposed by the ACCC in its 2021 inquiry, which would have prevented what’s known as “pre-installation” on devices, where companies sign exclusivity deals. For example, Google globally paid $US26.3 billion ($40b) in 2021 to secure its position as a default search engine on browsers and mobile phones, and 36 per cent of its Safari search revenue to Apple to be the default search engine on its devices. The ACCC will look at whether obligations on search engines that would prohibit exclusive pre-installation could increase competition for the services, and if any obligations would be effective if applied in Australia. In the European Economic Area and the UK, Android users are asked to set their default search engine when they purchase their new device, with a raft of providers offered. The ACCC probe will also look at the barriers to enter and expand in the general market. Between September 2021 and February 2024, Bing’s share of desktop search traffic in Australia has grown from 8 per cent to 12 per cent, while Google has fallen from 89 per cent to 86 per cent over the same period. On mobile, Google has retained 98 per cent with others at just 2 per cent. Bing has aggressively expanded its search capacity in recent months driven by the popularity of its ChatGPT and Copilot products. Though the investigation will consider the emergence of search engines fuelled by AI and its impact on the competitive nature of general search, it will not look at AI’s impact on privacy or online safety. It will also consider any changes to search quality over recent years, including reports and studies that suggest websites with low-quality but highly search optimised affiliate marketing content rank much higher in organic search results than otherwise, and how users themselves prioritise search results. Among its questions is whether the difficulty for consumers in switching search engines affects the quality of search services. The commission has opened submissions for the next month and will release a final report by September 30.