Cloud giants, locals divided over Australia’s regulatory settings

AWS and Microsoft have dismissed the need for further regulation in Australia, arguing that their platforms are already subject to a host of legislative and policy frameworks, as the government examines stricter requirements around the hosting of certain datasets.

But one leading local cloud players disagrees and says the market power wielded by Big Tech is impacting Australian companies and innovation. They called for closer scrutiny of the sector to reign in its influence.

As the competition watchdog starts up its latest digital platforms probe, a Senate inquiry is investigating the power and influence of Big Tech in Australia, paying particularly attention to the market share of cloud services.

An issues paper produced by the committee discusses efforts underway to “respond to the regulatory challenges”, including by the United Kingdom’s comms regulator, Ofcom, which is currently studying competition in cloud ecosystems.

Computer data centre

Last week, the Federal Trade Commission in the United States also began looking at cloud providers, with a particular focus on “market power, business practices affecting competition, and potential security risks”.

In its submission to the Senate inquiry, AWS argued that the “cloud sector is already highly regulated” in Australia, citing the government’s Hosting Certification Framework and recent critical infrastructure reforms.

The company also referenced other policy and regulatory reforms in the works, including pending reforms to the Privacy Act and the changes being scoped as part of the Australian Cyber Security Strategy refresh.

“While AWS supports legislation that can better promote an Australian digital economy, government should be mindful of the risk of unintended consequence of new regulation, including possible reduction in legal certainty and barriers to innovation and investment,” AWS A/NZ head of policy Roger Somerville said.

Microsoft said in a separate submission to the inquiry that the “current Australian regulatory system is still evolving, and additional regulatory intervention carries a real risk of duplication and unintended regulatory outcomes”, reiterating AWS’ comments around existing and pending reforms.

“The cloud computing industry is not unregulated. Far from it, Microsoft Azure complies with over 100 different national, regional, and industry-specific regulations worldwide,” Microsoft said in its submission.

“In Australia, Microsoft Azure already complies with an extensive list of regulations related to security, governance, control, compliance, and performance overseen by a network of Government departments and agencies.”

Australian cloud provider Vault Cloud, meanwhile, is pushing for “closer scrutiny and regulation” of the sector to address the new risks and challenges that technology brings, including around privacy and security.

“The current amount of regulation in the technology sector is disproportionately small relative to the risks that the sector poses to Australia’s security,” chief executive Rupert Taylor Price said in Vault Cloud’s submission to the Senate inquiry.

He put this down to several factors, including “unprecedented power, control and influence” of a small handful of large organisations, likening their resistance to regulation with the past behaviour of the tobacco industry.

Mr Taylor-Price also asked the Senate committee to make a point of investigating the market power of Big Tech companies and how this concentration of power is impacting local companies and innovation.

“The inquiry should examine the impact of the concentration of market power by Big Tech companies on Australia’s sovereign capability in the technology sector. It should investigate how the dominance of these companies may impact local technology companies,” he said.

“It should also consider how this concentration of market power may impact Australia’s ability to develop and stimulate innovation in key areas, such as artificial intelligence, cybersecurity, and data analytics, which can create new industries and increase competitiveness in global markets.”

AWS disagreed, saying the cloud services market in Australia is “highly competitive”, while Microsoft said that investment by global tech companies like Microsoft was fuelling the “rapid growth of the Australian software sector”.

Mr Taylor-Price also reiterated the need for Australia to take an explicit approach to data sovereignty and data localisation, citing efforts by countries, like the United States, UK and Germany.

“Interestingly in the US, home to many public cloud services, the US Government does not allow the use of public clouds for sensitive data. Instead, they elect to use special sovereign variants known as ‘Government Cloud’, ‘Community Cloud’, ‘Sovereign Cloud’ or ‘Secure Cloud’,” he added.

The Department of Home Affairs currently is looking at introducing data localisation requirements for certain datasets, which Home Affairs minister Clare O’Neil regards are “really important” to keep data safe.

Do you know more? Contact James Riley via Email.

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