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COMMENT: ACCC Delivers Hammer Blow As Google Smartpone OS & Voice Dominance Exposed

The release of the Australian Competition and Consumer Report into Digital Companies is a game changer for retailers, distributors and above all organisations such as Google, Facebook and Amazon who could well be taken before Australian Courts for past practises.

The actions recommended in the report could affect every single Android smartphone seller with the likes of Samsung, Nokia, Alcatel and Huawei forced to sell Android OS devices with a browser option from Microsoft with their Edge browser or Firefox bundled in as an option.

Google is a key partner of consumer electronics retailers in Australia in particular JB Hi Fi, The Good Guys and Harvey Norman and they already have a dominant position in the Connected Home market.

Google not only slap big merchandising dollars down on the table for retailers they push their own platforms in their efforts to control the smartphone and Connected Home markets.

The ACCC h found that Google has market power in a number of markets and that this power is unlikely to erode in the short to medium term.

The areas where Google dominate and are a potential threat are in the supply of general search services in Australia which retailers use every day to generate traffic to their web sites.

They also appear to have substantial bargaining power in its dealings with news media businesses in Australia and traffic that is driven to reviews from organisations like SmartHouse and ChannelNews.

The ACCC claims that Google enjoys advantages of scope in accumulating data from consumers using its wide range of services, including Google Search, Google Maps, YouTube and Gmail; and most mobile phones that use the Android operating system. The advantages are compounded by Google’s ability to track consumers on the more than two million websites that use Google advertising services or offer sign-in options through Google.

Google’s position across a range of markets, such as mobile operating systems (Android), and web browsers (Chrome), enables Google to set Google Search as a default option.

Despite this Google is still struggling to be a major player in the smartphone, tablet or speaker markets.

The ACCC claims that data collected by Google increases its market power, and that through a series of acquisitions, Google has obtained further advantages of scope and reduced potential competition. By expanding into related markets, Google has been able to remove possible rivals to its core products which, in the medium term, weakens the constraints from dynamic competition.

The Australian regulator who is set to be given more powers identified that substantial economies of scale and sunk costs and the strength of Google’s brand are barriers to entry and expansion.

An example is that right now, there is only two players in the voice market, Google and Amazon, and both Companies are desperately trying to control and above all dominate Australian homes with new voice controlled connected home technology.

Google already has over 68% share of this market.
They are doing this by providing third party players with a free licence to use their voice technology in speakers, TV’s soundbars that attach to the Google voice platform.

These are large USA Companies who will be able to listen in and have control over homes using this technology.

Their voice and Android OS technology coupled with their search and data capture capabilities underpin Google’s substantial market power and its ability to control significant share of relevant markets and this is what the ACCC wants to get under control in Australia before they have total control.
Right now. 95 per cent of general searches in Australia are performed through Google and Google earns almost 96 per cent of all search advertising revenue in Australia.

Google benefits from its position as the default search engine on both the Chrome browser (owned by Google), and the Safari browser (owned by Apple), which together account for more than 80 per cent of the Australian market for browsers.

The substantial amount paid by Google to Apple for default status on Safari (estimated at approximately US$12 billion in 2019) reflects the value of this default status.

Google Chrome is pre-installed on nearly all Android devices and Google Search is the default option on Google Chrome and Apple’s Safari mobile browsers. Google’s Android and Apple’s iOS operating systems are present on over 40 and 55 per cent of mobile devices in Australia respectively.
This means Google’s search engine is effectively the default search engine on over 95 per cent of Australian mobile devices.

During the past 18 months retailers have benefited from a move by consumers from buying their Android handsets at carriers such as Optus and Telstra to JB Hi Fi and other mass retailers. JB Hi Fi is now the #1 seller of smartphones in Australia as well as being Telstra’s #1 reseller.

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