The Framework

Australia’s local content requirements aim to boost the domestic screen industry by mandating that streaming services invest in Australian content. While details are still being finalized, proposals include requiring subscription and advertising video-on-demand (SVOD) services to allocate a percentage of their revenue to Australian programming.[1] Unlike free-to-air television, SVOD services currently lack local content quotas. The government has proposed models such as an expenditure model, where services must spend a percentage of their revenue on local content, and a revenue model, requiring 10 percent of Australian revenue to be invested in new local productions. The policies are intended to promote cultural significance, enhance Australia’s global brand, and support the local economy, but implementation remains complex and delayed.

Implications for U.S. Technology Companies

These policies create significant challenges for U.S. tech companies. First, they impose higher costs on U.S. streaming services, requiring additional investment in Australian content that may not align with global content strategies, impacting profitability. Second, they create market barriers, favoring Australian content over U.S. productions, potentially reducing the competitiveness of American platforms. Third, they may conflict with the Australia-United States Free Trade Agreement (AUSFTA), which prohibits preferential treatment of digital products based on national origin. This could expose U.S. companies to legal disputes and additional regulatory burdens, complicating operations in Australia.

How China Benefits

The regulatory burden on U.S. streaming services could indirectly benefit Chinese firms by creating market openings. As U.S. companies struggle with compliance costs, Chinese firms—especially those in emerging formats like micro-dramas—could exploit regulatory gaps to expand their influence. Additionally, if Australia’s policies set a precedent, other countries may adopt similar local content rules, further fragmenting the global digital market. This shift could weaken U.S. leadership in digital trade norms, encouraging the growth of alternative ecosystems where Chinese tech firms gain greater prominence.

Endnotes