One of the most significant challenges facing Australia’s emerging tech sector is that local companies could get swept up in a shift to clamp down on how tech companies operate.

Australia’s technology sector has grown rapidly in recent years, and looks set to continue that growth in the immediate term. But much of that growth has come relatively late in the digital technology boom, in a period where the successful foreign companies that led the start of the expansion are now entrenched global behemoths. Those circumstances present a difficult challenge for an Australian industry that is still in its relative infancy: how to continue scaling rapidly in an environment where governments are looking to reign in tech companies.

This challenge is one of the most significant facing the sector. The regulatory risks we explore in this section will affect a broad range of individual companies, and will have an impact on the sector at large. This dynamic is also a challenge for Australian governments. A thriving local tech sector could yield huge economic advantages for Australia. At the same time, some of the negative social impacts of unchecked technology proliferation have become clearer in the last few years, and there is local and global pressure on governments to regulate technology more actively.

 

Increasing red tape and regulatory restrictions aimed at curtailing the behaviour or market power of global tech firms may address those concerns, but it could also make it harder for Australian companies to catch up to their competitors.

In Australia the political headwinds facing global tech firms have translated into tougher criminal and financial sanctions for violent online content, a boost to law enforcement powers to compel tech companies to provide access to encrypted information, a shift away from incentivising software development, and moves to limit how technology companies use personal data. Taken together, these sorts of measures tend to make it more costly and risky to build a successful tech firm. Established multinational technology companies have vast resources available to meet those costs and risks, while new firms will be disproportionately burdened. Perversely, laws aimed at clamping down on the behaviour of the biggest global tech firms may actually entrench their market dominance.