Australia Moves to Strengthen Fair Competition with Tough New Penalties for Big Tech Firms

Australia has initiated a legislative proposal aimed at imposing significant financial penalties on major technology firms for behaviors that inhibit fair competition and restrict consumer choices. The suggested fines could reach up to AUD 50 million (approximately $33 million or around Rs. 279 crore), targeting companies that undermine competition and make it difficult for users to switch between services. The Labour government, leaning towards the center-left, is focusing on the substantial influence of Big Tech. Recently, parliament enacted legislation that prohibits social media usage for children under the age of 16. The new proposal would give Australia’s competition authority the power to ensure compliance, investigate anti-competitive online behaviors, and impose fines on infringing companies, as indicated by Assistant Treasurer Stephen Jones during a forthcoming speech.

The current legal framework is challenged by the dynamics of the digital economy, according to Jones, who spoke at the McKell Institute in Sydney. He emphasized that leading platforms have the ability to raise prices, limit choices, and utilize deceptive methods to keep consumers tied to specific products. This creates an environment where innovation from emerging players becomes nearly unattainable.

Major tech firms like Apple, Google, and Meta, which hold significant shares in app downloads and advertising revenues, have not yet commented on the proposed legislation. The consultation phase for this initiative is set to conclude on February 14, paving the way for further discussions to develop the draft legislation.

Mirroring the European Union's Digital Markets Act, this proposed law aims to facilitate easier transitions for users among different services, including social media applications, web browsers, and application stores. The government plans to identify platforms that pose the greatest threat to competitive fairness based on guidance from the Australian Competition and Consumer Commission.

• Initially, the focus will be on app marketplaces and advertising technology services for specific obligations.
• These obligations may include restrictions on elevating poorly rated applications in search results.
• They will also address the preferential treatment of a company’s own services in comparison to those offered by competitors.

A report from the competition commission regarding digital platform services in 2022 indicated that Google accounted for 93 percent to 95 percent of online search services in Australia. Additionally, the Apple App Store was responsible for around 60 percent of application downloads, while Google Play Store accounted for 40 percent. Facebook and Instagram, both owned by Meta Platforms, provided 79 percent of social media services within the nation.