startups

Startups worried ACCC’s proposed merger law changes could halt investment – The Australian Financial Review


“The problem with regulating this level of M&A is that it will create uncertainty as to whether any Australian startup can achieve a liquidity event. In lieu of this, they may have to promise to funders that they will IPO well before they are ready to.

“Beyond this, while the regulator is only considering this with Facebook and Google, it sets up precedence for them to consider similar policies with other industry leaders”

Research from CB Insights in 2016 revealed that 95 per cent of startup exits globally were through acquisitions.

Locally music discovery startup We are Hunted was acquired by Twitter in 2013, while last year Google bought Melbourne-born data science platform Kaggle.

Carbar co-founder Desmond Hang says an acquisition is the most likely exit for most founders. manda ford

Even local tech successes that have opted to stay private, or pursued an IPO have often been made acquisition offers behind closed doors. Canva, which cracked the $US1 billion valuation status almost 12 months ago, confirmed that it has been made offers, but would not reveal who the would-be acquirers were.

Fintech Australia chairman Alan Tsen said an exit to a major tech player like Google and Facebook was an outcome many founders hoped for and a policy change like this could have a chilling effect on investment in startups.

“Policy like the one the ACCC is suggesting is misguided and takes a narrow view of how to motivate competition in the sector,” he said.

“I predict that this is likely to have a magnitude of order larger impact on the chilling of investment in startups than, for example, the Assistance and Access Bill (AABill) – which says a lot as to how poorly thought through this is.

“To reduce the range of possible outcomes for startups is a blunt policy instrument which is likely to have a number of unintended second order impacts.”

Other preliminary recommendations made by the ACCC included creating a new regulatory body to judge things like the fair display of news stories and ads on Google and Facebook, as well creating a digital platforms ombudsman with the ability to rule on disputes between local companies and global platforms.

The report also suggested implementing requirements for the platforms to obtain informed consent for harvesting data and to bring in new privacy laws similar to Europe’s General Data Protection Regulation (GDPR).

While the tech giants are still coming to terms with the possibility of these changes in Australia, on Wednesday France also announced that it was pushing ahead with a new tax on Google, Apple, Facebook, and Amazon starting on January 1, which is expected to raise €500 million for the nation next year.



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