A deal struck between US tech giants Alphabet Inc and Apple Inc to switch default search engines to Google on Safari browsers has created "significant barriers to entry and expansion" for competing firms, the Competition and Markets Authority (CMA) said in a report on Wednesday as reported by Reuters.
Apple also received "the substantial majority" of £1.2bn from Google to secure the deal, the report said, adding that rival platforms had stated such payments were “one of the most significant factors inhibiting competition in the search market”.
The news comes as the CMA urged the UK government on Wednesday to pass laws to break up the monopolies of tech giants such as Google, Facebook and others, stating that current rules were unsuitable “to effective regulation”.
— Competition & Markets Authority (@CMAgovUK) July 1, 2020
According to government figures, weak competition in search and social media platforms resulted in "reduced innovation and choice", the CMA said in a statement.
"Further, if the £14bn spend in the UK last year on digital advertising is higher than it would be in a more competitive market, this will be felt in the prices for hotels, flights, consumer electronics, books, insurance and many other products that make heavy use of digital advertising. The CMA found that Google’s prices are around 30% to 40% higher than Bing when comparing like-for-like search terms on desktop and mobile," the UK watchdog said in a press release.
Google and Facebook also had a "profound impact" on publishers relying on their services "for almost 40 percent of all visits to their sites", potentially 'squeezing' shares for digital advert revenues and "undermining their ability to produce valuable content", it added.
"If the market power of these firms goes unchecked, people and businesses will lose out," it said.
"Our clear recommendation to government is that a new pro-competitive regulatory regime be established to address the concerns we have identified and regulate a sector which is central to all our lives," the report concluded.
The news comes after US reports last week suggested that the Department of Justice and other officials had reportedly filed a lawsuit against Google on antitrust violations set to be announced in the coming weeks.
According to Politico, Google had been accused of monopolising advertising and search engine markets via Apple and other mobile manufacturers by requiring the search engine to be the default on Android handsets.
Further research from Tax Watch UK found that eight US tech giants, including Cisco, Google, Facebook, Microsoft and others, had only donated 0.2 percent of total revenues kept in tax havens. According to data, Apple was the biggest offender with $246bn stashed in offshore accounts, followed by Microsoft and Cisco, respectively.