Keeping check on big tech is welcome news

After many years of almost free rein, big tech multinationals are finally feeling the heat of government regulation. It is not before time.

For too many years, big digital companies have shopped around the world looking for low-tax countries to park much of their revenue, handing them huge financial gains. Last week Google finally relented and agreed to pay almost half a billion dollars to Australia’s tax office after having its accounts closely scrutinised going back a decade from 2018. The ATO has also raked in more than $1.2 billion from Microsoft, Apple and Facebook during the past two years under tougher anti-tax avoidance laws for multinationals with annual global income of more than a $1 billion.

Tech giants are under increased scrutiny in Australia.
Tech giants are under increased scrutiny in Australia.Credit:Bloomberg

Australia is not alone in tightening its grip on tax revenues, with France going a step further and agreeing to a new digital tax, forcing mostly big US tech companies to hand over 3 per cent of all revenue accrued within the country. UK Prime Minister Boris Johnson has backed a similar tax in Britain. US President Donald Trump was quick to defend the American companies, threatening to hit France with increased tariffs on many of its products.

But most countries agree that more needs to be done to clamp down on big tech companies, with the OECD leading a push to introduce a new global tax regime to ensure they pay their fair share. Prime Minister Scott Morrison made it known it will be a point of discussion when he visits India’s Narendra Modi and Japan’s Shinzo Abe next month.


The tax take is not the only issue giving digital companies a headache. The Coalition government recently put in place a series of reforms to tackle their market power, boost transparency and to ensure fair competition. The most contentious rule forces them to negotiate with traditional media companies under a new code of conduct to tackle the vexed issue of revenue-sharing and the influence of online algorithms. This comes after the Coalition passed legislation earlier this year threatening huge fines for social media companies and jail for executives if they fail to rapidly remove “abhorrent violent material” from their platforms.

While Australia is certainly at the forefront of the big tech crackdown, the most consequential threat to their future lies at home. US Democratic presidential candidate Elizabeth Warren is leading the charge for those who believe big tech has become too big. She supports breaking some of them up by winding back mergers, such as Facebook’s purchase of Instagram, and enforcing tighter rules around competition. For operators of online marketplaces such as Amazon or Google, she is proposing stopping them offering services that compete with other players on those platforms. This would mean Apple couldn’t offer apps that compete with similar services on its App Store, or Google couldn’t offer its own hotel reviews in search results.

Big tech is synonymous with the fastest and most universal technological leap in human history. Google search, mobile phones and Facebook are now ubiquitous in most parts of the world. It has created enormous financial windfalls and control over many aspects of how we view and interact with the world. It has taken some years for governments to catch up with how to ensure that these powerful multinationals contribute to the local economy financially and safeguard the local society from the more intrusive and detrimental aspects of the technological changes. While there is more work to be done, we should be encouraged that the Australian government has made a start.

  • The Herald’s editor Lisa Davies writes a weekly newsletter exclusively for subscribers. To have it delivered to your inbox, please sign up here

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