How Technology Regulation in Australia Will Affect Your Business

A confluence of events in Australia over the past 18 months has led to increased interest from Government in enhancing regulation of multinational tech companies and digital platforms operating in Australia.

In May 2022 after eight years in opposition, the centre Left Australian Labor Party was elected to Government on a platform of significant reform across a range of sectors and policy areas.¹ This was followed by a series of cyber attacks and subsequent data breaches by malicious actors which included attacks on two high-profile Australian companies among the largest in their sector: private health insurance provider Medibank² and telco Optus.³

2023 has seen the issues of ethical and appropriate regulation of AI,⁴ and improved taxation of multinational companies operating in Australia brought to the fore,⁵ largely precipitated by the mainstream release of ChatGPT,⁶ and the implementation of the Labor Party’s election commitment around multinational tax integrity.⁷

Since coming to office, the Labor Government has initiated a program of legislative and regulatory reform across a number of areas that will impact tech platforms and companies operating in Australia. Given the public attention and potential risks, improved laws and regulations governing the operation of multinational tech and digital platforms operating in Australia, this will continue to be key priority for the Government.

2024 will be a crucial year for regulator changes to tech and digital platforms as a result of the Government’s requirement to respond to various reviews and consultations before the 2025 election

Here are some areas of the reform programs underway which may affect your business:

Digital Platform Services Inquiry 2020-25

Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC) was directed by the then Treasurer in 2020 to conduct an inquiry into markets for the supply of digital platform services.⁸ Reporting at six-monthly intervals starting September 2020 to March 2025, the broad-ranging inquiry covers internet search engine services, social media services, online private messaging services, digital content aggregation platform services, media referral services and electronic marketplace services, as well as digital advertising services supplied by digital platform service providers. It also covers the data practices of both digital platform service providers and data brokers.

Seven interim reports have been released to date, in addition to a number of commissioned research papers on mobile applications and consumer use and views of internet browsers and search engines. The inquiry’s interim reports have produced findings in relation to:

Usage of online messaging platforms, the dominance of market players and their data collection terms and practices.
Market power of Apple’s App Store and Google’s Play Store and the role they play as a gateway for consumers to the digital sphere.
The entrenched and extended market dominance of Google’s search engine service, which has damaged competition, stifled innovation and reduced consumer choice.
Online marketplaces, and how platforms algorithms collect consumer data, and the dispute resolution processes.
Recommendations for regulatory reform, covering mandatory dispute resolution processes and stronger requirements for combating scams, harmful apps and fake reviews.
Consumer and small business occurring across social media services in relation to data collection practices, dispute resolution, scams, lack of transparency for advertisers and inadequate disclosure of sponsored content by influencers and brands.⁹

The ACCC has commenced consultation on these interim reports. Additionally, in late 2022 to early 2023 the Government held public consultation on a series of recommended reforms based on the Inquiry to inform implementation.¹⁰ The recommendations were:

Economy-wide consumer measures, including a prohibition against unfair trading practices and unfair contract terms.
Consumer measures specific to digital platforms, including mandating internal and external dispute resolution processes and obligations on platforms to prevent and remove scams, harmful apps and fake reviews.
A new competition framework which would subject ‘designated’ digital platforms to mandatory codes applying to the services they provide.
Targeted competition obligations for designated digital platforms to be included in the proposed new framework and codes, to address harms such as anti-competitive self-preferencing.

It is likely as the inquiry continues through to 2025 the Government will continue to select and pursue key recommendations from it for reform. It has been complimented by other reforms underway such as the Commonwealth Treasury’s screen scraping consultation on market, consumer and regulatory issues.

Multinational Tax Integrity Package

The Federal Government is committed to the Organisation for Economic Co-operation and Development (OECD)’s ‘Two-Pillar Solution’ for a global 15 per cent minimum tax on multinational enterprises with a turnover of more than EUR750 million. Consultation on implementing it, in addition to a broader Multinational Tax Integrity Package (Package) occurred in 2022, which would:

Strengthen Australia’s thin capitalisation rules to address risks to the corporate tax base arising from the use of excessive debt deductions.
Introduce reporting requirements for relevant companies to enhance the tax information they disclose to the public.
Introduce an anti avoidance rule to deny deductions for payments made to related parties in relation to intangible assets connected with low or no tax jurisdictions.

The Treasury Laws Amendment (Making Multinationals Pay Their Fair Share - Integrity and Transparency) Bill 2023, currently being considered by Parliament, will give legislative effect to the first two elements of the Package.¹¹ The legislation has received support across Parliament and is likely to be passed and take effect this year.

Supporting Responsible AI

The Government opened consultation on responsible regulation of AI technologies this year with the release of the Safe and Responsible AI in Australia discussion paper. Informed by the Chief Scientist’s Rapid Response Report: Generative AI, it canvassed existing regulatory and governance responses in Australia and overseas. The consultation identified potential gaps and proposed several options to strengthen the framework governing the safe and responsible use of AI.¹² In commenting on the paper, the Minister for Industry and Science noted both the significant benefits of the technology and the need for appropriate safeguards.

On 3 November, Australia joined the EU and 27 countries signing the Bletchley Declaration affirming that AI should be designed, developed, deployed, and used in a manner that is safe, human-centric, trustworthy and responsible.¹³ As a signatory, directive will inform any future policy, regulatory or legislative decisions made at jurisdictional level in Australia.

2023-2030 Australian Cyber Security Strategy Discussion Paper and Privacy Reforms

After a series of high-profile cyber attacks in 2022, the Government increased the maximum penalties for serious or repeated privacy breaches from AUD$2.22 million penalty to whichever is the greater of AUD$50 million; three times the value of any benefit obtained through the misuse of information; or 30 per cent of a company's adjusted turnover in the relevant period.¹⁴ In addition, the Minister for Cyber Security has initiated the development of the 2023-2030 Australian Cyber Security Strategy (the Strategy), supported by an Expert Advisory Board.¹⁵

The four key areas of focus for security policy and initiatives are:

A secure economy and thriving cyber ecosystem
A secure and resilient critical infrastructure and government sector
A sovereign and assured capability to counter cyber threats
Australia as a trusted and influential global cyber leader, working in partnership with our neighbours to lift cyber security and build a cyber resilient region

Both the Minister for Cyber Crime and the Attorney General have foreshadowed further reform to Australia’s privacy laws and to strengthen Australia’s data protection laws.

2024 will be a pivotal year for reform to tech Australian regulations, with many stakeholders looking to influence policy outcomes. FTI Consulting’s team of experts can draw upon its global reach and experience navigating regulatory reform to assist organisations with a limited presence in Australia have both a voice in the reform process, and ensure they are prepared for any relevant regulatory changes.

Footnotes:

1: Michael Doyle, “Labor, Anthony Albanese make history with 2022 federal election victory”, ABC News, May 2022.

2: Josh Taylor, “Medibank hackers announce ‘case closed’ and dump huge data file on dark web”, The Guardian, December 2022.

3: Byron Kaye, “Two Australian regulators open investigations into Optus after data breach”, Reuters, October 2022.

4: The Australian Government—Dept of Industry, Science and Resources, “Artificial intelligence”, August 2023.

5: Australian Taxation Office, “Amending Australia's interest limitation (thin capitalisation) rules”, July 2023.

6: Bernard Marr, “A Short History Of ChatGPT: How We Got To Where We Are Today”, May 2023.

7: Jim Chalmers, “Labor's Plan To Ensure Multinationals Pay Their Fair Share Of Tax”, April 2022.

8: ACCC, “Digital platform services inquiry”, September 2021.

9: Id.

10: Australian Government – The Treasury, December 2022.

11: Parliament of Australia, “Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Bill 2023”, August 2023.