Major technology companies will face large fines and the opening up of lucrative digital services under plans for a new digital competition regime announced by the government on Monday.

The new laws could wrestle some control from the likes of Apple and Google by allowing more companies to tap into mobile payments and potentially mandating the availability of alternative app stores.

This would provide consumers with different payment methods inside apps — a contentious issue given the usual 30 per cent fee taken by app stores — while also allowing consumers to delete unwanted manufacturer apps and restricting companies from tying usage of a service to the purchase of another product.

Assistant Treasurer Stephen Jones said the proposed laws would give the government the power — under advice from the Australian Competition and Consumer Commission (ACCC) — to impose obligations on digital platforms to address issues encountered by consumers and businesses.

If designated by the government under the proposed laws, companies would be handed new rules to comply with, including for specific services they offer.

If they did not comply with those rules, they would face fines of up to $50 million, or 30 per cent of their turnover during the breach period, Jones said in a speech in Sydney on Monday night.

“We will remove barriers to consumer switching, which might prevent consumers from using cheaper or better alternatives,” he said.

The proposal reflects similar laws enacted by the European Union in recent years, and comes after Australian digital rights advocates pushed for similar change domestically.

In his speech, Jones said that unlike more traditional markets, the digital economy challenged Australia’s current legal framework.

“It is characterised by the presence of a few, giant corporations with overwhelming market share,” he said.

“The difference in resources and information between these titans and consumers is a chasm that consumers cannot hope to overcome.”

Big Tech platforms could use their dominance to reduce choice for consumers, charge higher prices, and stymie innovation from smaller firms, Jones said.

He also argued companies were “not necessarily competing on having a better product – just on being bigger”.

“We want to lift transparency in a sector that has often been shrouded in secrecy so that consumers get a fair go,” Jones said.

“And that small businesses have a chance to deliver good products to the market.”

Public consultation on the proposed laws will be open until 14 February.

App stores, ad tech under investigation

The first digital services to be investigated for possible designation under the proposed regime were app stores and advertising technology (commonly called ad tech), Jones said.

The government said it was also “seeking views on whether social media should also be prioritised” for investigation under the proposed rules, after parliament last week passed world-first laws to ban Australians under the age of 16 from holding social media accounts.


The proposed laws follow a government promise to more tightly regulate large technology companies. Photo: Shutterstock

In his speech, Jones pointed to Google’s dominance of online search and advertising, noting that ACCC data showed the US company provided more than 93 per cent of general search services between 2012 and 2022.

In August a US judge found Google had created an illegal monopoly in the search engine industry by violating antitrust law and spending billions on contracts to be the default search provider on most devices in the that country.

A US antitrust trial over Google’s ad tech dominance wrapped up at the end of November, and the company could be ordered to sell its Ad Manager platform if it is found liable.

In Australia, Google is facing at least two potential class action lawsuits over its conduct in the online advertising market.

Last week, law firms Maurice Blackburn and Phi Finney McDonald announced they were preparing potential lawsuits against the company, alleging it had used its dominance to maintain an ad tech monopoly and benefit its own commercial interests.

Joel Phibbs, principal lawyer at Phi Finney McDonald, suggested Google’s position in the ad tech space made it harder for news services and advertisers to remain viable.

“Regulation of the ad tech space has not kept up with the rapid growth and dominance of Google,” he said.

“Until recent moves by regulators and class action lawyers globally, Google has exploited its position of dominance to the detriment of publishers and advertisers unchecked.”

News of potential class action lawsuits against Google in Australia came after Canada’s Competition Bureau sued Google’s parent company Alphabet in November over alleged anticompetitive conduct in its online advertising business.

Jones also pointed out that more than 96 per cent of Australians’ mobile devices used Google’s Android or Apple’s iOS operating systems, which run their own app stores.

“With a dominant app store provider, developers are forced to make their apps available on that app store,” he said.

“This reduces the bargaining power of both developers and consumers.”

Google was ordered by a US court in October to allow consumers to use alternative app stores and other in-app payment methods, which the company said it would appeal.

Apple, meanwhile, was hit with an antitrust lawsuit in March by the US Department of Justice, which alleged it had used its market power to “lock in” customers to its product ecosystem.