Australia Signals Crackdown on App Stores & AI
Australia's government is signaling it may go after app stores and search engines as part of a broader AI-age crackdown. As governments worldwide increase scrutiny of digital platforms, SaaS and martech founders face a more intense regulatory environment around data privacy and AI usage. This move suggests a new front of compliance challenges for tech companies operating down under.
This regulatory action stems from Australia's Online Safety Act, with new, legally enforceable industry codes taking effect on March 9. Internet services, including AI chatbots, that fail to restrict access to harmful content for users under 18 face potential fines of up to A$49.5 million (US$33 million). The move follows Australia becoming the first country to ban social media for teenagers in December, citing mental health concerns. The eSafety regulator has noted reports of children as young as 10 using AI-powered interactive tools for up to six hours a day. A Reuters review found that a week before the deadline, more than half of the 50 most popular text-based AI products had not made any public steps to comply with the new age verification rules. This widespread non-compliance is prompting the regulator to consider enforcement action against "gatekeeper" services. The strategy involves pressuring major distribution platforms like Apple's App Store and Google's search engine to block AI services that are not compliant. This shifts the enforcement burden from numerous individual AI developers to a few dominant platforms. This AI-focused regulation is part of a much broader, multi-year effort by the Australian Competition and Consumer Commission (ACCC) to scrutinize digital platforms. The ACCC's Digital Platform Services Inquiry has examined competition, consumer harms, and the market power of Big Tech in areas from ad tech to app marketplaces. The ACCC has also raised specific concerns that the integration of generative AI into search engines could spread misinformation and that the technology's development is becoming heavily concentrated among a few global tech giants. Apple has already begun implementing age verification checks in its Australian App Store, blocking users under 18 from downloading apps with an R18+ rating. While some large AI services have started to roll out age assurance systems, others have indicated they may block Australian users entirely to ensure compliance.
