Research finds up to 75% of tech businesses could be hit negatively by encryption bill

Research funded by the Australian government has come to some startling conclusions regarding the impact of the contentious encryption bill that was recently passed.

The survey found that the majority of tech firms operating in Australia are staunchly opposed to the legislation, which they argue could have a catastrophic impact on their business’ bottom line.

As reported by George Nott, “the corner is most keenly felt by those companies that export overseas… [and] will result in the perception that their products are less secure.”

The findings of the AustCyber research, which was carried out by the Australian Strategic Policy Institute (ASPI) can be accessed here. Key findings include the fact that nearly three-quarters of companies that took part in the search say the encryption bill will “damage the reputation of their products, while a similar number are worried about potential conflicts between the bill and laws in other countries in which they operate.”

Close to half of the respondents added that the bill will impact their operations negatively, either reducing revenue or value lost in damages to their reputation or attractiveness to future investors, considering that Australia is leading the charge with the encryption bill.

One third of the companies interviewed for the research – from large corporations funnelling down to small-scale start-ups – believe the bill will result in the loss of existing companies, with 40% of companies adding it will cause brand damage.

These results act to strengthen the case made recently by the Parliamentary Joint Committee on Intelligence and Security, that Australian IT and technical firms will be worse-off following the introduction of the legislation, and could “profoundly undermine” Australian software and hardware developers’ reputations on the global market.

Extel, an electronics manufacturer based in Sydney has warned of a $3-billion hit to export revenue, while other tech firms have warned they’ll move their operations offshore to an environment more conducive to the realities of the IT and cyber security landscape.

One of the biggest problems that tech and security businesses are now facing is that this legislation could ultimately make their products and services unattractive on the global market. The problem is compounded by the bill’s vagueness and ambiguities, which have become a focal point for the industry’s frustration.

Some are even drawing parallels to the Chinese national intelligence law that forces corporate enterprises to assist the intelligence services with any, and every piece of their data, descriptions of their practices and means of data encryption to investigators.

Francis Galbally, Non-Exectuvie Chairman at Senetas – renowned worldwide for its network and encryption services - recently criticised the bill’s negative impact for Australian tech businesses, stating that “foreign governments and competitors will use the mere existence of this legislation to claim that Australian cyber security products are required to use or collaborate in creating encryption back doors.”

Michelle Price, CEO of AustCyber called the results “compelling”, and confirmed that the government-funded group is now working on the industry’s fears.

“There’s a clear opportunity to improve communication across the ecosystem and between government and industry. The public debate in the lead-up to and immediately following the passing of the legislation has resulted in perceptions – and misconceptions – that, if unaddressed, have the potential to harm the economic viability – and growth – of Australia’s cybersecurity sector," Price said.

The organisation works with around 280 Australian cyber security companies, and is set to release a series of questions, on the behalf of the companies it works with to put to government surrounding the bill’s many unknowns.

“There remains a number of areas of concern that have not yet been adequately addressed.” AustCyber said in a statement.

AustCyber’s co-chair, Doug Elix said in a joint statement with Price, “at this stage, it is important to recognise that there are many unknowns regarding the content and implementation of the legislation.”

“It is unwise to jump to conclusions, or make assumptions that could unnecessarily perpetuate a sense of uncertainty from creators and consumers of cyber security products and services.”

At this point in time and considering the bill’s ambiguities, the most appropriate summation of the bill’s impact is that only time will tell. It remains to be seen whether the government will take heed of the warnings put forward by Extel, or Francis Galbally of Senetas, who say the bill will have a catastrophic impact of the profitability and competiveness of their businesses.

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