Google’s dominance of internet search and the potential of artificial intelligence to disrupt or entrench it will go under the microscope in the competition watchdog’s second inquiry of the market, announced on Monday.
The inquiry, the latest in the Australia Competition and Consumer Commission’s (ACCC) five-year examination of digital platforms, will help the regulator collect more information in the lead up to reforms of Australia’s competition policy.
It will also give a closer look at a European model the regulator wants to emulate locally, after little progress on the ex ante competition regime put forward by the ACCC last year.
In a new paper published Monday, the ACCC flagged concerns about Google and its only significant search rival Microsoft’s scale and access to large language models helping “maintain and defend their market positions”.
The ACCC notes several smaller AI powered search rivals have failed to crack the market, despite the disruptive potential of AI.
Last year, Microsoft reportedly threatened to cut off access to its search data when rival search provider DuckDuckGo attempted to use it to develop a generative AI tool. The privacy focused rival’s tool was discontinued shortly after.
Months later another potential Microsoft and Google search rival, Neeva, shut down its real-time AI search tool after claiming that despite the value of its product to users, it was too difficult to secure default status on search access points.
The ACCC has asked for feedback on how generative AI is changing search market dynamics, including whether the biggest players “enjoy significant advantages” over smaller rivals.
RMIT University’s research and innovation dean, Professor Mark Sanderson, said the jury is still out on whether generative AI can add competition to the search market.
“Although there’s a great deal of excitement and interest in these new competitors in the search market, there is little evidence that the big search engines like Google and Bing are seeing their market share erode,” he told InnovationAus.com.
Professor Sanderson said internet search engines uses a much more standard keyword based searching technology than the generative AI alternatives, surfacing results to consumers in a quarter of a second.
“That these large language models can take one or two minutes to come up with their response will put a lot of people off from using them regularly,” he said.
The ACCC is also examining AI’s impact on the content of search results in the market probe, which is part of the watchdog’s five-year digital platforms inquiry.
It follows reported increases in low quality AI-generated or marketing content webpages muddying search results. Both types of search optimised content are an increasing problem in search results, studies have found.
Google this month announced it is attempting to crack down on unhelpful AI generated content and expects to reduce the content in search results by around 40 per cent.
Professor Sanderson said the search market leaders are also using using large language models to help train their standard search engines, cutting back previously manual processes and leading to claims of improved results last year.
“The use of large language models seems to be saving Microsoft Bing a lot of money and they said that it was making their search engine more accurate. Google tends to be less public about its activities, but it is likely to be using language models for search engine training as well,” he said.
The ACCC’s announcement of another probe of the search market follows its 2021 inquiry that triggered little action.
The regulator found Google’s market dominance was being helped by its search engine being pre-installed on devices and services, in the case of Apple’s ecosystem under a multi-billion-dollar agreement.
The ACCC called for new powers to prevent the company from signing exclusionary agreements with distributors and for mandatory ‘choice screens’ on devices.
Google has ceded some ground to Microsoft on desktop search since 2021, but still holds an 86 per cent market share. Google holds a 98 per cent share for search on mobiles – the most popular way to get online in Australia.
“We’ve got so used to Google’s dominance in general search that we’ve turned its name into a verb and we no longer think of other possibilities in search,” UNSW associate professor Katharine Kemp said.
“As consumers, we don’t tend to focus too much on what qualities might be missing from the search when Google has become so standard.”
Dr Kemp told InnovationAus.com the lack of rivals means consumers have limited choice on aspects of search, like privacy, and this has flow on effects in services like digital advertising.
“That has impacts for both consumers in the way their data is being used [and] in the way they’re being targeted with advertising, and a lot of Australian businesses in terms of the amount that they have to pay for advertising,” Dr Kemp said.
In an effort to drive competition, the European Union has forced the introduction of choice screens for internet browsers and search engines, allowing users to set default search providers.
Google has implemented a number of changes to comply in Europe, as the Digital Markets Act came into force this month. These include changes to what appears in Google search results and adding the choice screens for its browsers and search services.
ACCC Chair Gina Cass-Gottlieb said the Australian regulator wants to understand the impact of the changes in Europe and ultimately how they affect competition and consumers.
“We’ve seen new laws introduced overseas that place obligations on so-called gatekeeper search engines and the emergence of new technologies, like generative AI, that have changed the way consumers search for information online and may be impacting the quality of the service they are receiving,” she said on Monday while launching the new search inquiry.
The ACCC wants to emulate the European approach through a new ex-ante scheme that would allow it impose service-specific codes for designated digital platforms to prevent anti-competitive conduct. This would include a search code that could limit anti-competitive contact like agreements for default search services or self-preferencing.
Treasurer Jim Chalmers last week said the government will not hesitate to move on competition reforms.
“We’ve got this big competition policy review going on right now,” he said in a pre-budget address.
“It’s got a two year window, but what we’ve said to people is don’t expect us to wait to the end of that two year period to get a nice, glossy bound report, to do a little bit of it and then put the thing on the shelf. We’ve said if there is progress that can be made at any point in that two year period that we’re doing all this work on competition policy, then we’re interested in doing that.”
Submissions to the latest search service inquiry can be made until April 17. A final report will be provided to Treasury in September.
A separate ACCC report on data brokers is due to be handed to the Treasurer by the end of this month.
