The Australian government looks set to open up a new front on which to fight big tech companies, turning its gaze to how Silicon Valley handles billions of dollars worth of transactions each and every day.
Treasurer Josh Frydenberg is seeking new powers that would allow Canberra to dictate terms to companies like Apple and Google over how they operate their mobile wallets and how they cooperate with local financial institutions, according to The Australian Financial Review (AFR).
The move would help consolidate power over payments in Canberra, effectively wresting control from the Reserve Bank of Australia (RBA). It would enable Treasury to create new rules and force tech companies to comply with them.
“Ultimately, if we do nothing to reform the current framework, it will be Silicon Valley alone that determines the future of our payments system, a critical piece of our economic infrastructure,” Frydenberg told the AFR.
It comes as policymakers increasingly scrutinise the outsized influence of tech platforms in Australia which are often subject to different regulations. The campaign is spearheaded by a parliamentary commission into ‘Mobile payment and digital wallet financial services’.
Late last month, CBA boss Matt Comyn told the Committee that it was “cause for concern” that Apple controlled 80% of the digital wallet payments market, calling for greater local regulation of the $US2 trillion company.
At the heart of the feud is the near-field communication (NFC) chip in Apple phones, the technology that enables iPhone users to ‘tap and go’.
Without access to the chip, banks are forced to pay a fee to Apple every time a mobile payment is made via the iPhone’s mobile wallet. As mobile payments represent a growing piece of the payments market, it is an arrangement that has frustrated banking incumbents.
Apple has fired back, claiming in a Committee submission that Comyn’s comments deliberately mischaracterise Apple’s business in a bid to squeeze out competitors.
“Central to some banks’ advocacy for open access to NFC is the pursuit of an anti-competitive model that’s detrimental to the customer experience, and an opposition to fair and reasonable fees,” it wrote.
Similarly Google wields significant influence in the payments sector via its own eponymous wallet.
Further reform will be guided by the Payments System Review, which has made 15 recommendations currently being assessed by the Morrison government. Significantly, the Review did not pull any punches when it came to criticising the RBA and other regulators’ lack of intervention in the market, including its hands-off approach to the buy now, pay later (BNPL) space.
The conclusions open the doors for a more proactive approach, with Canberra apparently thinking it is best placed to spearhead such an effort.
It follows a range of recent battles to curtail the influence of Silicon Valley. The media bargaining code was finalised earlier this year in an attempt to redistribute power within the local media landscape. Home Affairs meanwhile has warned Google and Amazon need to ensure they aren’t helping finance dangerous extremists.
The Parliamentary Committee into Mobile Wallets will continue with its public hearings on Thursday when the Council of Small Business Organisations Australia (COSBOA) is due to appear.