Multinational Firms Shunning Australia over Encryption Regulations: Government Contractor

IT firm, Vault Cloud that holds data for the Australian government’s departments has sent out warnings stating that the encryption laws set by the company are pushing multinational companies to move away from Australia, and choose to store their assets in competitors such as China and Russia.

Vault Cloud currently provides online storage to select sections of the federal government such as the Australian Department of Defense, stated that multiple companies were giving up on the country owing to the limited market, and an increased perception of the regulation compliance, which is becoming a burden in the country.

This development follows the issuance of a controversial law in 2018, which gave the agencies of the federal government powers to force IT firms into giving the government access to encrypted communications from user accounts, especially related to law-enforcement purposes.

According to Rupert Taylor Smith, the head of Vault Cloud, the lack of transparency in the process being used by the government, meant that businesses are unable to estimate the costs and challenges involved in compliance. In addition, there are also growing concerns about the powers given to the Home Affairs Minister to delete data from reports on the operation of the law, before being published.

Reduced Number of Local Operators Push Australian Companies to Look Abroad

Vault Cloud made a submission to the parliamentary committee review of the 2018 laws, which stated that companies had started to avoid Australia after the regulations were passed. Consequently, the shortage of operators in the country has resulted in Australian companies having to use IT infrastructure located overseas. As an unintended consequence, personal and sensitive data of Australians is increasingly moving to foreign lands.

According to the government guidelines on cyber security, outsourced cloud or IT services that are located out of the country could be subject to covert and lawful collection without the knowledge of the organization.

On the other hand, the Department of Home Affairs has made a submission stating that Australia has not become an unattractive location for businesses as a result of changes in digital security laws.