Tech giants’ sharp pushback on proposed competition reform


Denham Sadler
National Affairs Editor

Sweeping reforms proposed by the Australian competition watchdog would “fundamentally change” the iPhone and App Store and lead to “significant consumer detriment”, Apple has said in a submission to government.

A number of the biggest tech companies in the world have made submissions to the Australian Competition and Consumer Commission’s (ACCC) fifth interim report, raising a series of concerns about the proposals put forth in it.

The competition watchdog released a discussion paper in February pushing for a broad range of significant antitrust reforms that aim to curb the market dominance of Big Tech giants.

These included a new regulatory framework targeting digital platforms, merger rule reforms, data-sharing requirements and classifying tech firms as “essential facilities” in line with telecommunications providers.

The ACCC is proposing a “suite of prohibitions and obligations”, including new codes of practices and additional powers for regulators, saying that existing competition and consumer laws are “insufficient” in dealing with Big Tech.

Photo: ArliftAtoz2205 / Shutterstock.com

Tech giant Apple is not happy about the proposals. In its submission to the Australian competition watchdog, Apple said it has “serious concerns” about the potential reforms, claiming they appear to be targeting hypothetical situations and would reduce the incentives for the company to innovate and develop new products.

The reforms would “fundamentally change” the iPhone and the Apple App Store, the company said, and would force it to redesign the iPhone in a way which would benefit only a “handful of powerful developers”, creating a less secure environment for consumers.

“Apple is puzzled that the competition and consumer protection agency would prioritise purported competition concerns which lack cogent evidence of harm, over clear and present severe damage to users that they experience every day,” the Apple submission said.

“That is not what consumers want to see as outcomes of legislative reform – they want stronger, not weaker, protection – from the unlawful conduct which affects the hundreds of thousands of Australians every year whose information is stolen, scammed, traded and exploited to their detriment.

“A sweeping, one-size-fits-all approach to regulation is inappropriate and poses a substantial risk.”

In a separate submission, fellow Big Tech giant Google also raised concerns that the ACCC’s proposed reforms would “dampen incentives to innovate and invest”.

“It would be counterproductive if a new regulatory framework impeded innovation, efficiency and competition to the detriment of consumers, businesses and the economy at large,” the Google submission said.

Google called on the competition watchdog to produce analysis showing that the benefits of the reform agenda would outweigh the downsides, and said that mandatory data sharing requirements would reduce privacy and limits on self-preferencing would damage innovation.

The proposed changes to merger laws proved to be a particular bugbear for Microsoft.

The ACCC is proposing the introduction of bespoke, tailored merger rules for large digital platforms, including a requirement that the watchdog be notified before a merger or acquisition takes place.

Microsoft said the existing system is working effectively, and that there’s no basis to presume that a merger is anticompetitive.

“Microsoft would caution against proposals to reverse the burden of proof on merger parties to establish the lack of competitive harm from a proposed acquisition, or on rules that deem certain acquisitions to be anti-competitive,” the submission said.

“Such reforms have the potential to operate as a ban on mergers absent permission – which does not appear commensurate to the harm sought to be addressed.”

This will damage local startups, Microsoft claimed.

“[A] handbrake on acquisitions will serve as a barrier to entry to many startups, whose investors commit funding in the knowledge that there are a range of exit opportunities, including acquisition by a larger competitor,” it said.

“There are many reasons why a startup may not be able to continue to compete as it matures, but the innovation it has brought to market can nevertheless be optimally deployed to benefit a broader range of customers.

“The unintended consequences of rules that reverse the onus of proof and deem mergers anti-competitive may be to stifle the growth of a vibrant and well-funded startup community, and the innovation that it generates.”

Google also warned of the “chilling or prohibition of pre-competitive mergers” in its submission.

“This could in turn dull incentives to innovate by removing exit and growth options for startups and other strategic partnerships,” the Google submission said.

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