ACCC launches inquiry into AI’s role in search service competition

The Australian Competition and Consumer Commission (ACCC) is spearheading an inquiry into the state of competition within the general internet search services sector, with a particular focus on the burgeoning influence of generative AI and international regulatory reforms.

This move comes as part of the ACCC’s five-year digital platform services inquiry, which is scrutinising the rapidly evolving digital landscape and its implications for market competition and search service quality.

This news comes against the backdrop of significant changes since the ACCC’s last examination of search services in 2021, including the introduction of laws overseas targeting gatekeeper search engines and the advent of generative AI.

In a push for industry feedback, the ACCC has released an issues paper inviting comments from consumers, businesses, and industry stakeholders.

This paper aims to dissect the competitive dynamics at play in Australia’s search services market, examining how technological advancements like AI and legislative changes abroad are reshaping user experiences and service standards.

This includes how search services are utilised, what consumers value from this experience, the quality of these services, and the impact of competitive practices on the market.

The rise of generative AI and its impact on search

The emergence of AI-powered technologies and international regulatory measures targeting major search engines represent significant shifts that could redefine the essence of search services and their market structure.

The ACCC’s concerns regarding generative AI and search services center around the quality of search results and the potential for market dominance by a few major players. There’s an underlying fear that without adequate competition, the evolution of search services could disproportionately benefit those with the resources to invest in advanced AI technologies, leaving smaller businesses at a disadvantage.

This is particularly pressing in the context of generative AI, where the technology’s ability to generate content and answers could skew search results in favour of larger entities capable of leveraging this technology more effectively.

ACCC chair Gina Cass-Gottlieb emphasised the transformative nature of these developments, noting their potential to alter how consumers access information online and the quality of the service they receive.

“Significant changes have occurred since the ACCC last examined search services in 2021. We’ve seen new laws introduced overseas that place obligations on so-called gatekeeper search engines and the emergence of new technologies, like generative AI, that have changed the way consumers search for information online and may be impacting the quality of the service they are receiving,” Cass-Gottlieb said.

“The ACCC wants to understand the impact of these developments on general search services and ultimately, how they affect competition and consumers.”

For small businesses, these changes could mean new opportunities for innovation and growth, as well as the need to adapt to a shifting online marketplace where visibility and access to customers are increasingly influenced by AI and regulatory practices.

For small businesses, the outcome of this inquiry could inform future regulations and industry practices that support a more competitive and fair digital environment, enabling these enterprises to thrive alongside larger players.

The ACCC encourages small businesses, along with other stakeholders, to share their experiences and perspectives, ensuring that the future of internet search services aligns with the needs of all market participants, fostering innovation, competition, and equitable access to digital resources.