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Australia's Big Tech Face-off Just the Beginning

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.


"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

map showing Victoria, Australia

The state of Victoria completed an inquiry on cannabis earlier this year. Will it actually change anything for the drug?

In August, the government of Victoria, Australia, released the results of its inquiry into the use of cannabis, taking into account 1,475 written submissions, dozens of expert witnesses and two minority reports.

A few months on, Australia-focused cannabis investors are wondering whether the document's findings will have an impact on cannabis use in the state, or even in the country as a whole.

The short answer? Probably not. But there's more to the story than that.


Why did Victoria conduct a cannabis inquiry?

Back in May 2019, Victoria's Legislative Council Legal and Social Issues Committee agreed to complete an inquiry on cannabis in the state. Although it was initially due for completion in March 2020, the deadline was extended twice, first to March 2021 and then again to August 2021.

Chaired by Reason Party Member of Parliament Fiona Patten, whose party supports legalising cannabis, the committee broadly looked at two streams of cannabis policy reform. One, the legalisation of cannabis for adult personal use, and two, a legalised and regulated cannabis market.

The report puts forth 17 recommendations and 21 findings, but Patten said after its release that the Labor-heavy committee banded together to water down certain recommendations prior to the drafting of the report.

For example, according to reports from the Age, the first recommendation of legalising cannabis for adult personal use in Victoria became "Recommendation 1: That the Victorian Government investigates the impacts of legalising cannabis for adult personal use in Victoria."

Evidence from the inquiry suggests that legalising cannabis would keep young and vulnerable people out of the criminal justice system, with state parliament estimates suggesting Victoria would save AU$725 million over 10 years in police and justice costs.

Key highlights from Victoria's cannabis inquiry

Recommendations from the report broadly fall several categories: investigating a legalised and regulated market; health and safety; and education for minors.

Here's a wrap up of the main items the Victorian government was told to look at:

  • Investigate the impact of legalising cannabis for adult personal use in Victoria.
  • Consider referring an inquiry to Victorian Law Reform Commission to investigate state and Commonwealth laws inhibiting legislation and regulation of the cannabis market.
  • Provide ongoing funding to alcohol and drug sector organisations for drug diversion programs, and further funding to areas in regional and rural Victoria.
  • Implement a road safety campaign about the dangers of driving under the influence of cannabis.
  • Look at alternative testing methods for "drug driving," as current methods mean THC can be detected in a person's system long after being "affected by the drug," especially in the case of medicinal cannabis patients.
  • Advocate to the National Cabinet to remove unnecessary barriers for accessing medicinal cannabis.
  • Seek expert help on school drug education, avoid stigmatising users and promote help-seeking behaviour.

Minority reports included in Victoria's inquiry

Liberal Democrat David Limbrick, who participated in the inquiry, was "extremely disappointed" with the last-minute changes mentioned above and submitted a minority report in favour of legalisation.

It broadly supports the public policy Liberal Democrats have towards cannabis which is: "The Liberal Democrats support the legalisation of use, cultivation, processing, possession, transport and sale of cannabis, with protection of minors and penalties for driving while impaired."

A second minority report is also included — it comes from the Liberals and Nationals, both of which are firmly against legalising cannabis in order to protect public health and children. Signed by three members, it states that legalising cannabis only provides ready access and no deterrent to prevent cannabis use. They further wrote:

"The Liberals and Nationals support drug education programs warning of the harms of illicit substances, we support diversion programs that help get people off drugs, and we support other support services for those addicted to drugs. However, we do not support legalising cannabis."

Victoria Police Assistant Commissioner Glenn Weir told the inquiry in June that the use, cultivation and trafficking of marijuana causes "significant harm," and said he is firmly opposed to legalisation.

Will the inquiry impact cannabis legalisation in Australia?

Any hopes of legalisation were quickly dashed after the report's release by Victorian Premier Dan Andrews, whose focus is on job creation and economic recovery from the coronavirus pandemic.

Speaking to reporters after it came out, he said he has "no intention" of legalising cannabis.

"If you want to know why, then have a look at the sections in the mental health royal commission that talk about dual diagnosis, drug-induced psychosis," he told reporters outside parliament.

"Others have a different view, they're entitled to have a different view, but as the leader of the government I've just made the government's position very clear."

The lack of support by major state parties for the Victorian inquiry may speak to a wider delay nationally for supporting decriminalising and legalising cannabis. Combined with the narrow defeat of the cannabis legalisation referendum in New Zealand, it does not look like legalisation is likely anytime soon.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.