Think tank compares Google to big four in bid for greater online competition

by Mackenzie McCarty23 Jan 2013

Many mortgage brokers rely on internet search engines to provide their contact details to potential clients – but Dr Richard Denniss, executive director of The Australia Institute, a Canberra based think tank, says we need tougher regulations to ensure fair competition in the online sector.

“In the online marketplace, high visibility means featuring prominently in search engine results. Google is by far the most used search engine in the world with more than 85% of global search engine revenue. It’s estimated to be even higher in Australia. The most likely explanation for this remarkable achievement is that most people, including me, think its search engine is the most helpful and easy to use.”

But Denniss says Google’s growing monopoly has the potential to stifle genuine competition.

“The vast majority of consumers click on the first couple of search results. According to a survey conducted by TAI, 46% of respondents said the order in which search results appear ‘always’ or ‘sometimes’ influences their purchasing decisions. Only 15% said they looked past the first page of results.”

So for instance, if a borrower types 'mortgage broker, Melbourne' into a search engine and your name fails to appear on the first page of results, four in five internet users won't find you.

“In Australia, the Australian Competition and Consumer Commission and Google are heading to the High Court to resolve a dispute about Google’s practices.”

Denniss says online marketing is likely to deliver far more competition, and in turn far greater benefits to consumers, than the Trade Practices Act has in recent times.

He says successive governments have done ‘little’ to strengthen the ACCC’s legislative powers - much to the relief of ‘big oligopolies’.

“Online competition will continue to carve huge chunks out of the profit margins and balance sheets of some of Australia’s biggest brands and, at the same time, it will deliver big benefits to both new entrants and old consumers.”

He says companies like Google, Telstra and Australia Post will all play a crucial role in driving competition online, but says regulators, here and around the world, will need to be vigilant if they want the benefits of online competition to flow to consumers rather than to a new generation of monopolists.

“Our regulators have been slow to act as the banks…built market share at the expense of consumers. They shouldn’t repeat the same mistakes in the rapidly evolving online marketplace.”