Google has admitted to anti-competitive behaviour in Australia and will pay a court-recommended fine of A$55 million (£29 million) after striking deals that locked rival search engines out of millions of Android phones.

Proceedings launched on Monday by the Australian Competition and Consumer Commission (ACCC) allege that, between December 2019 and March 2021, Google offered Australia’s two largest mobile providers, Telstra and Optus, a share of advertising revenue in exchange for pre-installing Google Search as the sole search option on handsets they sold. In a joint submission to the Federal Court, the company acknowledged the arrangements were likely to “substantially lessen competition” and agreed to the penalty, although the court will set the final amount.

ACCC chair Gina Cass-Gottlieb said the outcome should widen consumer choice. “Conduct that restricts competition is illegal in Australia because it usually means less choice, higher costs or worse service for consumers,” she said.

Cass-Gottlieb added that the fine “created 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”.

Google said it was “pleased to resolve the ACCC’s concerns, which involved provisions that haven’t been in our commercial agreements for some time” and pledged to give Android manufacturers “more flexibility to pre-load browsers and search apps”..

The tech giant has also signed a court-enforceable undertaking to remove restrictive clauses from future contracts with handset makers and telecom operators. Similar undertakings were secured last year from Telstra, Optus and third-ranked carrier TPG, preventing them from signing exclusive search deals.

The action follows a broader ACCC inquiry into digital platform services, which recommended tougher rules to curb the market power of major technology companies. Regulators worldwide are scrutinising default settings on mobile devices, arguing they entrench incumbents and make it harder for alternative services to reach users.

The penalty comes during a turbulent period for Google in Australia. Last week a federal judge largely sided with Fortnite developer Epic Games in a case accusing Google and Apple of blocking rival app stores, while YouTube was recently pulled into new age restrictions on social media access for under-sixteens.

The Federal Court is expected to consider the recommended fine and accompanying undertakings later this year.

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