South African Government Takes Action Against Google’s Market Power

South Africa’s antitrust body is taking regulatory action against Google due to its overwhelming control in the realm of online search.

The watchdog found that Google’s search dominance, owned by Alphabet Inc., “distorted platform competition” in favor of large market players. It recommended a number of remedies focused on improving the visibility of smaller South African businesses in search results to address this.

“Google has an impact on platform competition because it’s where most online journeys start,” said Competition Commission Chairman James Hodge at a press conference on Monday. “Google emphasizes paid results, which means the biggest platforms with the biggest marketing budgets can dominate the Google search page.”

The findings are the result of a wide-ranging investigation into Google and other technology platforms operating in South Africa, which was launched in 2021. The study also looked at companies such as Naspers Ltd’s Takealot, Uber Eats and Apple Inc.’s app. Store.

Google said South Africans are looking for relevant and high-quality search results they can trust on their platform. “This creates choice and generates millions of free visits to South African sites and businesses online every day,” said Google spokeswoman Siyavuya Madikane, adding that the company is reviewing the watchdog’s final report.

The commission also found that Takealot, a local online company owned by Internet group Naspers, should share its marketplace and retail stores, including recommendations for companies investigated in the investigation. Founded in 2011, the Cape Town-based company has grown to become the largest online retailer in South Africa, with a revenue of $827 million in 2022.

A Takealot spokesperson said the company acknowledged the report and was “considering its findings”.

Africa’s most developed economy joins several other major jurisdictions, including the United States, Europe and India, in looking at Google’s dominance of search and ad technology operations.

The watchdog decided that Google needs to introduce a unit that appears in search results to give smaller South African platforms better visibility in terms of search queries. It must also make it easier to identify consumers and support local platforms by adding a ticket identifier and Search Filter for South African businesses.

The company must also offer 180 million rand ($10.2 million) in advertising credits and free training to small platforms to use Google’s paid search functionality to help customer acquisition. It must spend R150 million to support the performance of small and medium-sized businesses and black-owned businesses in organic results to offset what the watchdog described as “competitive disadvantages in Google search”.

It follows a similar investigation into South Africa’s cellphone operators, which led to the competition commissioner ordering dominant wireless operators such as MTN Group Ltd. and Vodacom Group Ltd. to lower their prices in late 2019.