Computer services are increasingly becoming a central part of a business, and that’s what the Australian government is looking to get rid of.
As of last week, the Federal Government announced it will scrap the computer services industry’s market cap and leave a huge hole in the market, leaving only small and established players such as Oracle and Cisco.
The Government is proposing to scrap the market cap of the Computer Services Industry Association (CSAI), which represents the computer-software companies which provide computer services to government and other organisations.
The scrapping of the CSAI’s marketcap is expected to affect up to 300 Australian companies that provide computer and network services to federal, state and local government, businesses and schools, as well as the private sector.
The Federal Government has estimated the scrapping would leave around 1,300 smaller companies that supply software and hardware to the private and public sectors with little or no competitive edge.
The changes will mean small and marginal companies such as Cisco and Oracle will be left out of the market.
The government has proposed to scrap all CSAIs market cap in 2019, which would mean that all the companies listed in its own list of “major market share holders” would be out of a job.
The CSA I has the highest market share in the country with around a third of the country’s computer market.
It has more than 90 per cent of the total computer market in Australia, according to data compiled by CSA International.
It is not yet clear how the Government will determine which companies will be hit the hardest.
The Australian Competition and Consumer Commission (ACCC) is considering whether to investigate whether there is an unfair competition problem with the Government’s proposed changes to the market share calculations.
It could take up to 18 months for the Commission to make a decision on whether the government has acted unlawfully, according the ACCC.
The ACCC declined to comment.
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