Australian Government warns Google and Facebook to expect stricter regulations

The Australian Government is preparing to place stricter rules on US tech giants

Australia’s Treasurer Josh Frydenberg has issued a warning to US tech giants Facebook and Google to expect strict restrictions on their market power.

The warning comes in the wake of the Australian Competition and Consumer Commission (ACCC)’s inquiry into digital platforms, which was delivered to the government last week.

The report by the country’s competition regulator examines the impact of Google and Facebook's market dominance on traditional media companies and consumers. It is widely expected to demand tighter restrictions and competition rules, as well as demanding the tech giants provide greater disclosure of their operations.

The report has been welcomed by Australian media companies and criticised by Facebook.

Speaking to the media this week, Frydenberg stated there were “genuine competition issues" in the $8 billion digital advertising market, which needed to be addressed.

"There are also issues around privacy, about the collection of data and how it's used," Frydenberg told The Sydney Morning Herald.

"And it's clear that the social media companies, and online search engines, are only going to grow over time as the economy becomes more digitalised and the internet even more dominant in commerce. There are genuine competition issues to look at."

The Australian digital economy is dominated by US tech giants with Google attracting 90% of all desktop internet searches and 98% of mobile phone search, while Facebook claims 68% of Australians as monthly visitors to the site.

The ACCC estimates that when an Australian advertiser invests $100 online, the breakdown would provide $47 to Google, $21 to Facebook and $32 to other websites.

Both Google and Facebook report their advertising revenues outside Australia and pay limited tax within the country, a point that is expected to also be addressed by the Government. The current Australian Government has repeatedly made pointed comments about companies paying “their fair share of tax”.

The Government will review the final report from the ACCC and will release its formal recommendations to the public in the coming weeks.

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