What does Google’s $1 billion investment in Australia mean for the local tech scene?

Global tech Goliath Google has announced a $1 billion investment in the Australian tech scene, in a move that both proves the ongoing maturing of the sector and contributes to it.

The Digital Future Initiative will see $1 billion invested into local infrastructure and research and development. Google will also work closely with the CSIRO to tackle big challenges in the energy, environmental and climate change space.

Speaking to SmartCompany, co-founder of AirTree Ventures Daniel Petre says the investment will have a “very positive” impact on the local tech and startup community.

Bringing more world-class R&D talent into the ecosystem will have “significant positive flow-on effects,” he adds.

And for Google, the step probably wasn’t too far a stretch, he notes. The organisation already has significant operations here with more than 2000 employees, and it’s well aware of the quality of talent on the ground.

Global tech companies embrace Australia

Google is not the only international tech company investing in Australia.

This week Israeli startup EasySend announced it is launching Down Under with an office in Sydney, and San Francisco-founded hiring, payroll and compliance platform Deel has launched in Australia and New Zealand.

Deel’s head of expansion for ANZ tells SmartCompany the founders saw “tremendous potential for innovation” in the region.

SMEs in both Australia and New Zealand are “the backbone” of their respective economies, he adds, “and the startup scene is becoming more and more vibrant every day”.

Earlier this month, DevOps and cyber security startup Sysdig announced its own Sydney opening.

And back in August, US SMS communications platform Podium launched Down Under, with co-founder Eric Rea citing existing traction and the “rich, vibrant small business market” as reasons.

This is also indicative of a maturing tech ecosystem. While these businesses may not have Google’s headline-making clout, they bring expertise and talent into the country, creating tech jobs and bolstering the tech economy.

Kate Pounder, chief of the Tech Council of Australia, says this activity speaks to Australia’s success as a growing tech centre for the APAC region.

It also brings fresh opportunities, making Australia all the more attractive to multinational corporations, thereby creating yet more jobs and more traction.

Google’s investment is “a great illustration of this dynamic in action”.

Petre agrees we will likely see more US and international companies setting up local R&D operations, in particular.

In part that’s because pay rates here are lower here than in some US regions, he concedes, but businesses get bang for their buck.

“Australian tech talent is globally recognised as world class.”

Google’s changing relationship Down Under

In a statement, Google Australia managing director Mel Silva said the investment is intended to bring additional tech resources and capabilities to Australia, while also “investing in the infrastructure that benefits people and businesses, and helping the best talent thrive here”.

Analysis suggests the investment could create more than 6,500 jobs directly and 28,000 indirectly. The total economic impact could total $6.7 billion.

It’s something of a turnaround in Google’s relationship with Australia. In January this year, parent company Alphabet was threatening to pull its search engine from the country if the government passed laws forcing it to pay media companies for content.

Ultimately Google instead struck up partnerships with some of the country’s major news organisations, including Private Media, publisher of SmartCompany.

On Tuesday, Prime Minister Scott Morrison called Google’s investment “a $1 billion vote of confidence in our economic recovery”.

He also suggested it is a vote of confidence in his own digital strategy, which he said “puts business, investors, entrepreneurs in the driver’s seat to realise the opportunities that are ahead”.

Here however, Petre calls “bullshit”, suggesting Morrison has historically done more to hamper the tech sector than to help it.

“Cool your jets, ScoMo,” he says.

“This is not about you but about the tech sector, independent of you, making its mark.”

Private Media, the parent company of SmartCompany, is a current participant of the Google Showcase program. Content from SmartCompany and other Private Media brands is featured on Showcase as part of a commercial partnership.