Google's $55 million penalty: a new search for a more competitive digital economy

In a decision highlighting the Australian Competition and Consumer Commission's (ACCC) ongoing commitment to addressing competition issues in the digital economy, the Federal Court of Australia has ordered Google Asia Pacific to pay a $55 million penalty for contravening the Competition and Consumer Act 2010 (Cth) (CCA). The penalty was imposed after Google admitted to arriving at two separate understandings, one with Telstra and one with Optus, each containing an anti-competitive provision requiring the telcos to pre-install Google Search on Android mobile phones.

The decision further affirms the ACCC's focus on scrutinising the conduct of large digital platforms, consistent with its current compliance and enforcement priorities. It also serves as a reminder of the commercial, financial, and reputational risks associated with anti-competitive behaviour in Australia.

The case against Google

Following a lengthy investigation, the ACCC commenced proceedings against Google in August 2025. That investigation arose from concerns identified during the ACCC's Digital Platform Services Inquiry's report into search defaults and choice screens. The report found that:

• search engines play a critical role in the digital economy, with Google continuing to be the dominant search engine in Australia; and

• Google's vertical integration and commercial arrangements significantly increased barriers to entry for rival search engines, making it difficult for them to compete, stifling innovation, and reducing consumer choice.

The ACCC's case against Google concerned understandings it reached with Telstra and Optus between December 2019 and March 2021. Those understandings required Telstra and Optus to:

• exclusively pre-install Google Search on Android phones supplied to consumers in Australia; and

• prohibit the pre-loading, promotion, or even suggestion of rival search engines on any Android phone out of the box.

In return, Telstra and Optus received a share of Google's advertising revenue generated from ads displayed to consumers when they used Google Search on their Android phones.

Google admitted that, by arriving at an understanding with Optus and Telstra, it committed two contraventions of section 45 of the CCA, which prohibits anti-competitive contracts, arrangements or understandings. Google and the ACCC made joint submissions to the Court on appropriate penalties.

The Federal Court accepted the joint submissions and imposed:

• $27.5 million for each of the two breaches, totalling $55 million; and

• a contribution by Google to the ACCC's legal costs.

Justice Moshinsky found that Google’s conduct, in reaching an understanding with each of Telstra and Optus, had the likely effect of hindering competition in the market for general search services on Android mobile devices in Australia. By restricting the ability of rival search engines to be pre-installed or set as the default on Android phones, Google's arrangements limited consumer choice and entrenched its already dominant position in the Australian search market. In a lucrative digital economy, where mobile devices represent the largest and fastest-growing distribution channel for general search services in Australia, restricting the pre-installation and default rights of rival search engine providers only further widens the gap between the digital giants and the digital sprites.

ACCC Deputy Chair Mick Keogh welcomed the decision, stating that it “should send a strong message to all businesses that there are serious and costly consequences for engaging in anti-competitive conduct”. He emphasised the importance of free and open competition, particularly in rapidly evolving digital markets.

Court-enforceable undertakings

In addition to the penalties imposed by the Court, Google and the US-based Google LLC provided the ACCC with a section 87B enforceable undertaking on 18 August 2025. The key commitments include:

• that Google and Google LLC will not enter into any new agreement or give effect to any existing agreement with Android original equipment manufacturers (OEMs) or Australian mobile network operators (MNOs) requiring the pre-installation of Google Search or Google Chrome;

• ensuring Google and Google LLC's contractual arrangements allow OEMs and MNOs to determine, for each Android device and search access point, whether and how to preload or set default search engines other than Google;

• ensuring OEMs can choose to license Google applications, including Google Play, separately from the Google Search and Google Chrome browser applications; and

• introducing a competition law compliance program.

The undertakings from Google complement similar undertakings made by Telstra, Optus, and TPG in 2024. The telcos agreed not to renew or enter into new exclusive arrangements with Google that locked in Google Search as the default search engine provider on Android devices supplied by the telcos. The undertakings resolved the ACCC's concerns in relation to the telcos' involvement in the anticompetitive conduct engaged in by Google.

ACCC Chair Gina Cass-Gottlieb stated that the undertakings create "the potential for millions of Australians to have greater search choice in the future, and for competing search providers to gain meaningful exposure to Australian consumers".

The ACCC's digital economy agenda

The decision against Google is part of the ACCC's broader strategy to address competition issues in the digital economy, which is one of its key compliance and enforcement priorities for 2025-26. The decision reinforces three important themes in this space:

1. Digital gatekeepers under scrutiny: The ACCC has been closely looking at competition and consumer issues in particular digital markets since the commencement of its Digital Platform's Inquiry in 2017, so it should come as no surprise that it is willing to challenge and penalise practices that reinforce the dominance of major digital platforms. This scrutiny is set to continue with the Government's implementation of a new digital competition regime on the horizon.

2. Conduct that restricts competition is risky business: Routine commercial agreements, such as revenue-sharing agreements, or even understandings or arrangements that fall short of being a formal agreement, can breach section 45 of the CCA if they restrict or hinder competitors' access to essential distribution channels.

3. Cooperation counts, but penalties still bite: While Google's admissions and cooperation resulted in agreed penalty submissions and avoided lengthy litigation, the $55 million penalty is a reminder of the serious consequences of anti-competitive behaviour.