Google Australia chief says SMEs to benefit from shift to digital economy

Google Australia managing director Nick Leeder says small and medium businesses are set to become some of the biggest benefactors of the rise of the internet economy, and that while the move to internet business comes at a cost, it also produces more opportunities than risks.

Leeder’s comments, which were made during an interview with Business Spectator, also come alongside warnings for bricks-and-mortar retailers, with Leeder saying that traditional industries need to start innovating quickly.

The predictions come just days after Google released a new report in conjunction with Deloitte that examined the contribution of the digital economy to Australia’s overall GDP.

“With the cloud computing stuff coming through, small businesses can get access to the same kind of IT firepower for a fraction of the price that was previously the domain of only very large businesses,” Leeder said.

“So, it flattens things out and it means that they’re able to kind of compete suddenly with people,” he said, also saying that he expects the number of new small businesses being founded to rise.

Leeder’s comments come just a day after the Productivity Commission released a report in which it recommended a number of reforms in order to make the retail industry more competitive, as it faces off against international competition.

However, Leeder says the economy is now undergoing a “disruptive change”, and says that “there are certainly some jobs that are lost”.

But he also argues that because of the growth of new industries, specifically in the digital economy, “the ratio of creation of jobs to destruction stands at about 2.6 jobs created for every job that’s lost”.

“So, in the net sense, this is a positive change in terms of jobs, but there’s no question that it’s disruptive and it does impact some parts of the economy.”

Retailers are increasingly concerned, with thousands of jobs already cut from the industry this year due to the collapses of several companies, including RedGroup Retail and Colorado, along with the closure of 50 Premier Investments stores.

“I think the reality is this is such a profound change to the way things get done that any business that thinks that this isn’t going to have an impact on them is really not getting it,” Leeder warns.

“I do think this is like the arrival of electricity, it just changes so many things and that rewiring ripples through the economy and it probably comes in a number of waves as people really understand how to use the technology and understand what is possible. So, I don’t think anyone is off the hook.”

Leeder also made comments on the country’s future broadband plans, saying the company believes it is in everyone’s best interests to focus on fixed-line instead of wireless.

“So, looking forward on where the capacity needs to sit, we see that a range of technologies can provide that, but you’re always left with a very big need for speed and capacity up and back and that has to come from somewhere.”

“That’s where, you know, our engineers are saying that that fibre, the backbones are very important, so you can have wireless devices off the end of it, but you still need the super big trunks that carry data backwards and forwards.”

Finally, Leeder also commented on the growth of Google+, and said it differs from other social networks by allowing users to differentiate between separate groups of friends.

“You have people you work with. You might have people you went to university with. And you’re not actually exactly the same person with each of those groups, so then it allows you to stream the interactions that you have with these different circles of people that you know.”