Competition Commission nails Google and

The Competition Commission has found that Google’s dominance and business model distorts platform competition in South Africa, and imposed several constraints on the search giant.

It also took a dim view of price parity requirements platforms like impose on customers, preventing them from listing services and products more cheaply on rival sites.

This was in the commission’s Online Intermediation Platforms Market Inquiry report, released on Monday.

Launched in February 2021, the publication of the final report was delayed by several months after the Competition Commission published a provisional report with recommendations in July 2022.

“Google Search is a de facto monopoly, accounting for over 90% of all general search across desktop, tablet and mobile devices,” the report states.

“Given its importance for customer acquisition, visibility on the Google search is critical and impacts on discoverability and website traffic.”

It also noted that Google’s search result ranking matters as consumers are likelier to click on the first results if they are most relevant to the query.

Furthermore, Google Search has evolved to provide more prominence to paid results — and Google’s own properties — relative to organic results for commercial search.

“This is reflected in the large and growing spend on Google paid results by platforms,” the commission stated.

“Whilst paid ads are on a cost-per-click auction basis and technically allows any platform to contest for a click, large platforms have considerable advantages, including budget size, contesting more popular commercial search terms given the higher returns on clicks, and the additional quality measures used in determining the outcome all favour established platforms.”

To address the distortion the commission found Google causes, it has imposed remedial actions focusing on improving paid and organic result visibility for smaller South African platforms.

These remedial actions include:

  • Google must introduce a new platform sites unit or carousel to display smaller South African platforms relevant to the search on organic results. This must be free and in a content-rich display. For example, Google must show local travel platforms in a travel search in a new rich-content carousel.
  • It must introduce a South African flag identifier and South African platform search filter to help consumers identify and support local platforms.
  • To address its findings regarding the distortion caused by paid Google results, the company must provide R180-million in advertising credits for small platforms to use in customer acquisition, with free training to optimise advertising campaigns.
  • Google must also provide R150-million in training, product support and other measures for small and medium enterprises, and black-owned online firms.
  • Google must stop “self-preferencing” its own products.

“In certain platform categories, such as shopping and travel, there is the additional distortion of Google providing services that compete with its customers for consumer attention,” the commission found.

“Google has strong incentives to capture this specialist search traffic and has the ability to do so given that the majority of traffic originates on Google search, where it designs the search page and algorithm.”

According to the report, Google can influence where and how its own shopping and travel units appear on the search page relative to competitors.

“Google’s Shopping Unit appears at the top of all search results, and its travel units at the top of organic results with a new paid hotel unit now appearing at the top of all search results,” it stated.

“The evidence demonstrates these units attract a large growing share of consumer traffic, and for Shopping this has been found to distort competition in the EU.”

The inquiry found that Google “self-preferencing” its own shopping and travel units on its search results page distorts competition.

“In the interests of both regulatory compliance for Google and oversight by the Commission, Google is required to implement in [South Africa] measures taken in Europe to comply with similar provisions in the Digital Markets Act to address self-preferencing.”

Price parity and

Regarding price parity, Competition Commission acting deputy commissioner and chairman of the inquiry, James Hodge, specifically called out

Hodge said they saw the practice of platforms imposing price parity in several markets, especially the accommodation and travel industry.

These include “wide price parity” conditions prohibiting establishments from placing cheaper listings anywhere except

“Wide price parity is now generally accepted to be a hardcore restraint of trade and has removed these clauses in the EU but persists in applying them in South Africa and elsewhere,” Hodge said.

“In essence, the clause prevents other platforms from competing with on price.”

Hodge said this harms consumers and impedes other online travel agents from charging a lower booking commission to hotels in exchange for lower prices, hurting competition. also imposes “narrow price parity” that blocks hotels and other establishments from pricing lower on their own websites for online bookings.

The Competition Commission’s report stated that the ability of hotels to price lower on their direct channel is important to reduce dependency on, as it provides a reason for consumers to book directly.

“Under narrow parity, there is no reason for consumers to book direct as there is no advantage, and potentially a disadvantage where there are loyalty discounts and a generous cancellation policy on,” the report states.

“This dependency on enables it to extract higher commission fees directly or through loyalty programmes and other schemes that provide greater visibility and customer acquisition, or punish hotels that deviate with low ranking.”

The inquiry found that’s price parity clauses impede competition and ordered it to end them, and inform all hotels and accommodation providers in South Africa on its platform of the change.

In addition, the commission found that is not doing enough to promote tourism to historically black communities, distorting competition from these communities.

“To address this distortion, it is required to put in place substantial programmes to provide funding of initiatives in the identification, onboarding, promotion and growth of SMEs that are black-owned and/or in black communities on the platform.”

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