Washington – A new report by the CCIA Research Center aims to offer policy guidance to decision-makers on the potential economic implications of Australia’s New Digital Competition Regime, and in anticipating its possible risks on the Australian economy.
The New Digital Competition Regime proposed by The Australian Government would implement upfront requirements and ex ante regulation for designated digital platforms that hold a “critical position in the Australian economy.” The proposal is based on recommendations made by the Australian Competition and Consumer Commission (ACCC) as part of its ongoing inquiry into digital platform services covering online search engines, social media, digital advertising, app marketplaces, and other digital services, and is inspired in part by the European Union’s controversial Digital Markets Act (DMA). The proposed regime risks regulating based on an assumption of harm and consumer benefit, rather than based on a detailed and timely assessment of competition, market power, and consumers’ interests.
The report estimates four different economic effects of the proposed regime on the Australian economy:
- Between AUD $4.4 billion to $16.8 billion in Lost Consumer Welfare: The report measures consumers’ lost benefits resulting from delays in the launch of products and innovations caused by the New Digital Competition Regime.
- Between 0.41 to 1.64 percentage points in reduced Labour Productivity: The report estimates the overall effect of reduced investments in the tech sector on Australia’s total labour productivity.
- Between AUD $10.6 billion to $21.1 billion in Direct and Indirect Effects on GDP: The report estimates the changes in the economic activity of the tech sector and other sectors resulting from the New Digital Competition Regime.
- Between 5.2% to 17.4% in Lost Investments: The report estimates the potential reduction in investment in digital services in Australia resulting from delays in the launch of new digital products and services caused by the New Digital Competition Regime.
The following quote may be attributed to Trevor Wagener, CCIA’s Chief Economist and Director of the Research Center:
“The economic analysis of the proposed Australian New Digital Competition Regime identifies the perils of sweeping ex ante regulation based on assumptions rather than case-by-case assessment of competition, market power, and consumers’ interest. If adopted as proposed, both the Australian GDP and Australian consumers’ welfare each could decline by more than $10 billion AUD, labour productivity growth could decline by up to 1.64 percentage points, and investment in digital platform services could decline by more than one sixth.”
