UK regulators call Google, Apple search engine deal a ‘barrier’ to competition

Updated: A £1.2 billion payment made by Google to secure default mobile search positions has come under fire.

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UK regulators have criticized a browser deal between Apple and Google as a "significant" barrier to search engine competition. 

On July 1, the UK Competition and Markets Authority (CMA) published a new report (.PDF) examining the current state of the digital advertising market. 

The CMA claims that current laws are not enough to properly manage and regulate large technology companies and their platforms, such as Apple, Google, or Facebook, and in particular, deals between different entities can become barriers to innovation and competition. 

Within the report, the agency highlights a deal made in 2019 between Google and Apple, in which the former paid roughly £1.2 billion ($1.5bn) to become the default search engine on a variety of mobile devices and systems in the United Kingdom alone. 

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According to the regulators, the iPhone and iPad maker received the lion's share of this payment.

"Rival search engines to Google that we spoke to highlighted these default payments as one of the most significant factors inhibiting competition in the search market," the CMA says. 

Other search engines include DuckDuckGo, Microsoft's Bing, and Verizon Media's Yahoo. 

Google accounts for over a 90% share of the search advertising market in the UK, estimated to be worth £7.3 billion ($9.1bn).

The regulators say that Google's dominant position in the search engine market -- in particular, on the majority of mobile devices in the UK -- creates a "barrier to expansion for other search engines."

This situation could be considered a challenge to healthy competition between search engine companies, as being unable to tap into a pool of users already set to Google's default could reduce user base growth, delay search engine result improvements, or reduce monetization by smaller rivals. 

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In addition, the agency cites a "positive feedback loop" between Google's position as the dominant search engine provider and access to default positions, which further reinforces the company's influence across the sector. 

"Given the impact of preinstallations and defaults on mobile devices and Apple's significant market share, it is our view that Apple's existing arrangements with Google create a significant barrier to entry and expansion for rivals affecting competition between search engines on mobiles," the CMA says. 

The CMA concluded that there is a "stronger" case for imposing regulations that encourage competition on larger OEMs and vendors, rather than on smaller entities. 

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The UK regulatory body also says that Google, as well as Facebook, has a competitive advantage when it comes to user data. Both companies rely on advertising to generate substantial revenue streams -- in the former case, Google has access to vast pools of user data generated by multiple services, and in the latter, Facebook has a demographic and social advantage -- when offering advertisers targeted marketing campaign opportunities. 

"Both have access to more extensive datasets than their rivals," the CMA says. "The inability of smaller platforms and publishers to access user data creates a significant barrier to entry."

Update 12.25 pm BST: Google told ZDNet that the company has been working collaboratively with the CMA over the past year, answering hundreds of questions and submitting dozens of papers.

"Digital advertising helps businesses find customers and supports the websites that people know and love," commented Ronan Harris, VP, Google UK & Ireland. "Advertisers today choose from a wide range of platforms that compete with each other to deliver the most effective and innovative ad formats and products. We support regulation that benefits people, businesses, and society and we'll continue to work constructively with regulatory authorities and Government on these important areas so that everyone can make the most of the web."

ZDNet has reached out to Apple and will update when we hear back. 

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