Australia also wants Google to unbundle search from Android

Enlarge / Let’s see, you landed on my “Google Ads” space, and with three houses… that will be $1,400.

Ron Amadeo / Hasbro

The Australian Competition and Consumer Commission (ACCC) is the latest government regulatory body to take issue with how Google does business. As Reuters reports, the ACCC wants Google to show a “choice screen” to Android users, allowing them to pick a default search engine other than Google Search. The commission also wants to limit Google’s ability to pay Apple and other vendors or platforms to be their default search engine.

ACCC Chair Rod Sims explained the commission’s reasoning in a statement:

We are concerned that Google’s dominance and its ability to use its financial resources to fund arrangements to be the default search engine on many devices and other means through which consumers access search, such as browsers, is harming competition and consumers. Google pays billions of dollars each year for these placements, which illustrates how being the default search engine is extremely valuable to Google’s business model.

Market research firm Kantar says Android has a 60 percent share of the smartphone market, while on iOS and macOS, Google pays Apple an estimated $15 billion per year to be the default search on Safari. Google also pays Mozilla $400 million per year to remain the default on Firefox. Google has a 94 percent share of the Australian search engine market.

Google’s closest search competitor is Microsoft’s Bing, which has something like 2.5 percent market share worldwide. That’s despite being the default search engine on Windows, the world’s second-most-popular operating system. Google recently told an EU court that “Google” is the No. 1 search query on Bing, claiming that stat as evidence that users are choosing Google rather than being forced to use it.

Google has already gone through a similar Android unbundling change in the EU, which saw the company add ballot screens for the default search engine and default browser. The EU also shut down some provisions of Google’s standard “Mobile Application Distribution Agreement” (MADA) that OEMs needed to sign in order to license the Google apps. One change means that Google can’t force an “all-or-nothing” bundling of Google’s apps, so if an OEM wants a single app (like, say, the Play Store), it does not have to include every default Google app on its devices.

Android's EU search ballot.
Enlarge / Android’s EU search ballot.

Google

The EU also said that Google can’t bar OEMs from forking Android. Previously, using the Android codebase in ways Google didn’t approve of would get an OEM kicked out of the Google Play ecosystem. South Korea also took issue with Google’s Android fork restrictions and fined the company $177 million, one of South Korea’s biggest fines ever.

Android’s business model doesn’t charge OEMs directly; instead, it generates revenue for Google through end-user Play Store purchases, Google Search queries, and Google ad impressions. These three areas are such moneymakers that not only can they completely fund Android development, but they also allow Google to offer a revenue-share program for Android OEMs through incentives, like a kickback, for each user’s search revenue.

Google’s response to all these changes was to start charging OEMs for Android if they went along with it. In the EU, OEMs can stick with Google’s preferred terms and the old revenue deals, or they can change things up by paying as much as $40 per device and potentially missing out on revenue-sharing deals.

The ACCC’s move isn’t a requirement yet—for now, it’s a potential measure that the regulator will put out for industry consultation in 2022.