Last month, the Australian government took firm action to determine whether Australia had a problem with tech monopolies. They are likely to find that this is the case in the country, with non-competitive environments that inhibit innovation and slow international competition.
In August, Federal Treasurer Jim Chalmers and Assistant Minister for Competition Andrew Leigh announced a biennial review by the new Treasury Competition Taskforce. In a sign that the Australian government considers this to be an urgent matter, the taskforce is meant to provide “ongoing” advice to the government, rather than a final report of recommendations at the end of two years.
“We give ourselves the best chance of making our economy more productive and more dynamic if we at the same time make it more competitive, and that’s what today is about,” Chalmers said at the time .
Anti-competitiveness is an ongoing concern in Australia
Chalmers is an alumnus of the Australian National University. In 2020, another economist from the same university, Adam Triggs, warned that the COVID-19 pandemic would exacerbate already significant concerns about uncompetitive markets.
“When we looked at the entire economy and collected data on each sector, we found that more than half of Australia’s markets are concentrated,” Triggs said. “This means that the four largest players control at least a third of the market.”
In several areas of critical importance to the lifestyle of Australians, including banks, supermarkets, internet service providers and health insurance, concentration levels are as high as 80% in some areas.
With limited or no competition, consumers have no choice but to pay high prices for these services, and with the cost of living skyrocketing, news of mega-profits in many of these sectors highlight the negative impact they have on Australian lifestyles and poor customers. the experience they offer.
SEE: Despite the interest in AI to improve customer experienceAustralians seem to prefer human-led interactions.
And especially important for the tech industry, monopolies make it harder for startups and entrepreneurship to thrive. Indeed, this can create barriers to getting started. Australia already struggles to raise entrepreneursand the lack of competition in many technology areas – particularly from large global players – hampers Australia’s ability to develop its own vibrant technology sector.
Big global companies are driving out Australian companies
Both Apple and Google are currently under investigation by the ACCC for the duopoly they effectively have on app payments on mobile devices. Currently, neither allows third-party platforms to process payments for apps on Apple and Android devices, meaning there is little scope for an Australian payments platform in this critical area of work and entertainment productivity.
At the same time, highlighting the fact that social media also acts as an information monopoly, in 2021 Facebook briefly removed the capacity for Australian media organizations to share stories and news on the platform. This had a huge impact on local media and demonstrated how little sovereignty Australians have over national information due to large global monopolies.
The need for total reform to prevent monopolies
In addition to the need to better control international technological platforms, Australia must review its merger laws to prevent the formation of monopolies, according to former ACCC chairman Rod Sims in his final presentation of his role.
Sims noted that Australia does not have a formal merger approval system, meaning organizations here have much lower barriers to mergers and acquisitions than almost any other country Western.
“The ACCC must prove, if a case goes to court, that future negative consequences will occur, about which one can only speculate, against the so-called real world evidence of the necessarily interested parties to the merger, about what happens in the future,” Sims said. “Our merger laws…are not up to par.”
A good example of a time when a more robust approach to M&A activity would have been welcome is the proposal acquisition of Activision Blizzard by Microsoft. While several countries, including the UK, were subject to a due diligence process that nearly resulted in the acquisition being refused, the ACCC had little recourse to act.
And this, even if the agreement has a substantial impact on the national development scene. Activision has a development studio in Melbourne, one of Australia’s largest and best-funded games companies. And game development in Australia is already struggling for the reasons listed above: a lack of resources to compete with global players and limited capacity to grow domestically.
It remains to be seen what, if anything, the Australian Government can do to address Australia’s monopoly problem, across all sectors, including internet services and IT. Australia has a long track record of being able to innovate in areas where monopolistic control has not been established, as companies like Atlassian and AfterPay have proven by exploring new areas of technology at the time.
However, in other critical areas, Australia’s ability to find domestic solutions to directly support people is being undermined by monopolies, which is not a good thing for Australians and local technology professionals. .