Apple probably didn't default to it's own search engine because it doesn't exist.I don't know the solution they're after. Someone has to be the default, what an annoying customer experience it would be to have one more thing to set during phone setup. It's not like Apple's defaulted it to their own search engine, like Google does on Android.
Seems like the Australian gov't is trying to dig into Apple's pockets under the guise of competition. Wrong headed in my opinion.