Tech giants face $50 million fines in app store battle

Firms that attempt to stifle competition in app stores that hurt consumers and eat into the potential profits of emerging small businesses face fines of up to $50 million as the federal government broadens its war against the world’s tech giants.

Assistant Treasurer Stephen Jones will use a speech on Monday to reveal companies such as Apple, Samsung and Google will face increased scrutiny as part of the government’s efforts to lift competition across the entire tech sector.

Apple’s app store and similar stores will be targeted by the government’s overhaul of competition law.Credit: AP

Just days after parliament banned under-16s from social media, Jones will argue that the rise of digital platforms and the handful of companies that control them means the competition laws that protect consumers and smaller businesses need to change.

Under the government’s plan, the Australian Competition and Consumer Commission will be able to examine particular aspects of digital platforms to determine if they require special laws to protect consumers.

If the commission finds a particular problem, the responsible minister can then “designate” that platform, which would pave the way for special rules. Failure to honour those rules would expose the offending company to fines of up to $50 million or 30 per cent of turnover.

Jones will say the government has to act to ensure competition because of the growing importance of digital platforms to the economy.

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

“This approach will achieve an uplift in consumer rights and lead to a more competitive market – allowing consumers to reap the benefits from innovation in the digital services on which we all rely.”

The first areas to be investigated will be app stores and ad tech, amid concerns that tech companies push their own apps to the top of search lists, use hidden fees to eat into the profits of app developers or use information from a competitor’s product in the development of their own applications.

The proposed changes would also seek to remove barriers to consumers switching to different platforms or even deleting apps on their devices.

Jones will say that the proposed changes would deliver more choice and lower prices to consumers while also ensuring small businesses can compete against much larger firms.

The move on digital platforms comes after the passage of world-leading laws last week that will ban the use of social media by people under the age of 16.

Elon Musk, whose X platform will be affected by the ban, has described it as a “backdoor way to control access to the internet by all Australians”.

On Sunday, Prime Minister Anthony Albanese said he was prepared to discuss the ban and its implementation with anyone, but he stressed that parliament had clearly supported the move.

“We’ll talk to anyone,” he said. “But with regard to Elon Musk, he has an agenda. He’s entitled to push that as the owner of X, formerly known as Twitter.

“But we are determined to get this done. The parliament has overwhelmingly passed this legislation and it’s the right thing to do.”

After the passage of 45 pieces of legislation last week, the government will announce on Monday the first review of the nation’s research and development policies.

The review, due to report at the end of next year, will look at ways to lift research and development, examine the links between researchers and industry, and look at how to maximise the value of existing R&D.

It is the first review of the area in almost 20 years and follows a sharp drop in the amount of R&D investment, which now accounts for 1.68 per cent of GDP compared with the OECD average of 2.73 per cent.

Tesla chair Robyn Denholm will head the first review of Australia’s R&D policies in almost 20 years.Credit: Wayne Taylor

The review will be headed by Robyn Denholm, who chairs Elon Musk company Tesla. Other panel members include former chief scientist Ian Chubb and plastic surgeon and burns specialist Fiona Wood, who is a former Australian of the year.

Industry Minister Ed Husic said the review would give the government a pathway to stronger growth.

“It’s been almost 20 years since we asked the hard questions about our R&D performance, despite the alarming slide over the last decade,” he said.

Any increase to R&D tax concessions could hit a budget bottom line that is likely to slip further into the red.

Independent economist Chris Richardson said that Treasurer Jim Chalmers was likely to forecast a deficit of $43.8 billion in his upcoming mid-year budget update. It would be a $15.5 billion deterioration on what Chalmers forecast in May.

Richardson said a combination of factors, including ongoing spending, a fall in iron ore prices, a drop in inflation and a slowdown in migration meant the back-to-back surpluses delivered by Chalmers in his first two years as treasurer would not be followed by another.

He said the government had been blessed with good luck that had delivered it a revenue windfall of $365 billion, of which it had spent $60 billion. But that good luck had ended and was now colliding with ongoing fiscal issues from falling tobacco tax revenue to decisions such as assistance to Western Australia for its GST.

“The carnival is over,” he said. “The simple summary is that recent years have been a wasted opportunity.”

Chalmers said the government had been upfront about the pressures facing the budget.

“We’ve overseen the biggest ever fiscal turnaround in a single term, turning two big Liberal deficits into two substantial Labor surpluses, and that’s a powerful demonstration of the Albanese government’s responsible economic management,” he said.

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