Digital platforms and competition in Australia

Digital platforms are driving productivity and innovation across the Australian economy

• Tech sector labour productivity has grown 38% since 2007, far outpacing the national average of 14%
• By increasing tech adoption across small, medium and large businesses, digital platforms have transformed industries and driven innovation across the economy
• Australia's overall productivity has reached a 60-year low, making tech sector growth and and increased tech adoption critical

Treasury has proposed a new ex ante digital competition regime

• The proposal sets upfront rules for designated platforms without requiring evidence of harm
• The proposal outlines six areas which these rules would target, including interoperability requirements
• This would mark a departure from Australia’s current framework which has prioritised evidence based assessment of harms

International markets are adopting varied approaches to ex ante

• Some countries and regions (the EU in particular) have implemented ex ante measures for digital markets
• Others appear to be taking a ‘wait and see’ approach to ex ante, while some like the US see it as an unnecessary risk to innovation and investment
• The implementation of the EU’s Digital Markets Act has seen implementation challenges, with negative consequences for consumers and the economy

Government must weigh up the potential impacts of ex ante regulation

• There are no free lunches. Ex ante obligations targeting interoperability could require platforms to provide largely unfettered access to third parties, posing risks for privacy, safety and innovation
• There is emerging evidence that incentives for AI innovation have been distorted by ex ante obligations in the EU
• Regulatory frameworks must weigh up these challenges and remain adaptable to emerging technologies

Read the full report here.