The way you played it is OK.
How do I combat this opening by white (1.e4 - e5, 2.bc4)

This is the Bishops opening. I like to respond with 2...Nc6 in order to avoid an immediate 3.d4 exd4 4.Nf3 which gives White a slight initiative. After that depends on Whites third move 3.c3, 3.d3 , 3.Nf3 I continue develop towards the center. Furthermore 2...Nc6 allows to meet an early Qh5 with g6 and in some lines you may consider Na5 to trade it off with the light square bishop.

Thanks for that info @Bishop_g5, I like the idea of the Knight move first, and avoiding the middle pawn exchange. I think that's where the trickery comes from for me, as I often pull my Knight away which is preventing the Qg4/h5 move. Nice!

The way you played it is OK.
Yeah this one worked out. But I do think I was lucky, the last few moves he played really quickly - all under 10 seconds and I don't think he calculated properly. But I've had games where I've been the one to do that, and dropped a Knight or something. I do like Bishop_g5's move order though.

3...d5 is quite speculative, and should not work against normal moves. A better idea is 3...c6 when Black is fine by either 4.Nf3 d5 5.Bb3 Bb4+! (trying to put a white pawn, not knight at c3) or 3...c6 4.Nf3 Be7 and continuing Phlidor-style, since white has not put any pressure on the center by omitting d4.
And there is nothing wrong with 2...Nf6 first. After 3.d4 exd4 4.Nf3 Bb4+! Black is already at least equal. Only grabbing the second pawn at once requires caution.

2...Qh4 is a beginner's move.
e4 can be protected by natural developing moves, as well as any potential threat against f2- and then the queen will simply be exposed at h4.
The game you have dispayed is a blunderfest.

The OP could have a look at Bu's games against Carlsen and Svidler. Think they are annotated a bit on chessbase site.

As someone else mentioned, 3...d5 is questionable. Of the 69 master games that continued 4 exd5, White won 46, Black won 10, and 13 were draws.
Back in the '90's, when the Bishop's Opening had been out of favor for 60 years, the high school team I coached researched it, practiced it, and rode it to three straight county titles and three straight State Scholastic Championship team trophies.
3...d5 didn't worry us. 3...Bc5 gave us the hardest time: our goal was to play 4 Nc3 and 5 f4, transposing to a favorable-for-White position in the King's Gambit Declined, before playing Nf3.
I have played a bunch of games tonight, and have run in to this opening far more often than usual. King's pawn forward, I do a move and then white square bishop targets f2, and you just know the queen is coming out to play in the immediate future.
Here is a game I played (as black naturally), and this one turned out OK:
However I feel like he made some odd moves and I was lucky. Can anyone tell me what the correct way to counter this is?