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Google’s dominance in general search services in Australia has continued despite regulatory and technological changes to search services.

Google has maintained its position as the dominant search engine in Australia with a market share of nearly 94 per cent as recently as August 2024. Its nearest rival, Bing, has just 4.7 per cent of the Australian market.

Google also continues to be the default search engine on the majority of browsers due to its commercial pre-installation and default arrangements with third parties and its ownership of the Chrome browser.

The ����ԭ��’s ninth Digital Platform Services Inquiry report, published today, revisits and reconsiders general search, after it was previously considered in the ����ԭ��’s third DPSI interim report in October 2021.

Limited disruption from generative AI so far

“We are at a critical inflection point where generative AI tools are enabling technological innovations across a range of digital platform services. In general search, we are seeing Google Search, Microsoft Bing and new entrants launching or integrating AI-powered search features,” ����ԭ�� Commissioner Peter Crone said.

“While it is too early to say with certainty, with use of AI constantly developing, the impact of generative AI on market dynamics in general search appears limited so far.”

The report notes that while the integration of generative AI into search is still evolving, Google’s competitors, including Microsoft Bing, are yet to gain meaningful market share from Google.

The report also observes that Google and Microsoft are well placed to leverage generative AI into their search offerings given their significant presence across the generative AI supply chain, including through commercial partnerships.

Increased attention on search quality

“It is important that consumers find information and answers they need quickly, however, search quality is difficult to measure because it means different things to different people,” Mr Crone said.

“This report contributes to the ongoing discussion on search quality by examining a number of elements, including the prominence of ads, optimisation of webpages to improve their ranking by search engine algorithms, personalisation and diversity of results.”

For example, the report considers that search providers dependent on advertising for revenue appear to have incentives to change their search interfaces over time in ways that have made ads more prominent and less distinguishable from non-sponsored content. This is a trend which some consumers may perceive as lowering search quality, at least for some types of search queries.

The report also looks at the apparent increase of AI-generated material on the quality of search results.

“The possible proliferation of AI-generated content is another lens to look at search quality. While some consumers may find the generative AI search experience more useful and efficient, others may be concerned about the accuracy and reliability of AI-generated responses to search queries,” Mr Crone said.

Evolving regulatory landscape

“This report is very timely as there have been significant international regulatory and enforcement developments relevant to general search,” Mr Crone said.

On 5 August 2024, a US District Court ruled in favour of the US Department of Justice that Google had illegally maintained its monopoly in search and search advertising through its exclusive distribution agreements.

In the EU, mandatory choice screens have been introduced, as well as measures aiming to address self-preferencing, under the Digital Markets Act. The UK is also in the process of introducing a new competition regime for digital platforms.

“As the Australian Government is currently consulting on regulatory reform measures proposed by the ����ԭ�� in the fifth DPSI interim report, it is important for us to closely monitor overseas developments while we consider reforms in Australia,” Mr Crone said.

Background

The ����ԭ��’s Digital Platforms Branch is conducting a five-year inquiry into markets for the supply of digital platform services in Australia and their impacts on competition and consumers, following a direction from the Treasurer in 2020. The ����ԭ�� provides the Treasurer with an interim report every six months until the inquiry concludes with a final report, to be provided to the Treasurer by 31 March 2025.

In the fifth DPSI interim report, the ����ԭ�� made a range of recommendations to bolster competition in the digital economy, level the playing field between big tech companies and Australian businesses, and reduce prices for consumers.

The recommendations include new service-specific mandatory codes of conduct for particular ‘designated digital platforms,’ based on principles set out in legislation. The on those measures.