Australia-Japan ties: tech opportunities and legal risks for Japanese companies

Japan, as Australia’s fourth-largest foreign investor, has agreed to strengthen bilateral collaboration with Australia, including in the growing technology sector. This will facilitate closer collaboration between the two countries on critical technologies, artificial intelligence, digital ecosystems, research and development and cybersecurity. Japanese companies seeking to capitalise on these opportunities should take into account a range of evolving legal and regulatory developments.

On 4 May 2026, Australia and Japan signed the Australia-Japan Joint Declaration on Economic Security Cooperation (Declaration), reaffirming both countries’ commitment to economic security cooperation, including in the technology sector. In parallel, both governments agreed to the Australia-Japan Strategic Cyber Partnership (Cyber Partnership), which seeks to strengthen cyber defences and resilience, improve shared awareness of cyber threats, enhance collaboration on critical technologies, and advance cyber governance across government and the private sector.

While the Declaration covers many areas of collaboration between the two countries, including natural resources, sustainable infrastructure and economic resilience, this article focuses on technology-related opportunities and maps them against the key legal and regulatory developments that Japanese companies should consider. These developments are relevant not only to technology firms but also to Japanese companies supplying products or services in Australia where a technological element is present or technology is integrated into business processes. This includes operators across industries and sectors such as automotive, consumer goods and services, financial services, real estate, gaming, mining and resources, renewable energy, tourism, clinical research, and beyond.

Opportunities and considerations for Japanese-Australian collaboration

Critical and emerging technologies

As technology underpins every sector and advances in fields such as artificial intelligence (AI) shape daily life, it is unsurprising that the Declaration places emphasis on opportunities for collaboration in emerging technologies.

The Declaration includes a commitment to concrete cooperation between governments, national laboratories, the private sector and academia on critical and emerging technologies such as AI, data centres, quantum computing, biotechnology, space, undersea cables and telecommunications. Moreover, secure connectivity has been identified as essential to growth and prosperity, with the Declaration committing to foster a safe, secure, and trustworthy AI and digital ecosystem. This includes collaborative efforts in AI and digital infrastructure such as telecommunications, undersea cables, data centres, and the all-photonics network.

The emphasis on safe, secure and trustworthy AI and digital ecosystems resonates with the direction of recent regulatory developments in Australia. At a high level, Australia’s approach aligns with Japan’s framework under the Act on the Promotion of Research and Development and Utilisation of Artificial Intelligence-Related Technologies and the Basic Plan on AI. Both seek to maintain an open and investment-friendly environment for participation in the AI and digital sectors, while mitigating risks to the safety and security of such environments. Nevertheless, there are nuances that will affect the products and services Japanese companies deliver in Australia, as well as their broader localisation strategies.

For example, while Japan has recently unveiled a bill to reform the Act on the Protection of Personal Information, including strengthened protections for children’s data, Australia has been a step ahead in this space. This includes the introduction of a world-first social media ‘ban’ for individuals under 16 years of age. Further, the Privacy (Children’s Online Privacy) Code 2026, currently under public consultation, will apply to services likely to be accessed by children, as well as to services primarily concerned with children’s activities. It will require entities offering online services involving the personal information of children to implement changes to technical, operational, organisational and consent processes to ensure compliance. Examples include modifications to online default settings, the embedding of ‘best interests of the child’ considerations into privacy workflows, and the provision of age-appropriate privacy policies and notices.

The changes relating to children represent only one component of broader reforms to data governance, technology regulation and the protection of individuals. Australia has introduced a statutory privacy tort and a requirement to disclose automated decision-making in privacy policies from 10 December 2026, and further privacy reforms are upcoming. As connected devices are recognised as a risk area by the regulator, Japanese companies selling Internet of Things (IoT) devices in Australia may need to make changes to their product functionality, user journey, and sales and marketing practices.

Commitments between Japan and Australia also extend to the ‘digital ecosystem’, which comprises not only technology but also people and processes. This underscores the need for risks across the entire value chain of Japanese companies to be reviewed holistically.

One area in which Japanese companies have strengthened compliance in recent years is ensuring that their standard form contracts conform to Australia’s unfair contract terms regime, and that their broader sales practices, including both pre- and post-sale activities, align with the Australian Consumer Law. These obligations are fairly unique and may diverge materially from the Japanese consumer protection framework. Japanese companies will need to adapt their standard operating procedures accordingly. Further review will be necessary as Australia introduces new unfair trading practices legislation, which targets conduct that unreasonably manipulates consumer decision-making and causes material detriment, including specific prohibitions on unfair subscription traps and hidden fees.

A further compliance area relevant to Japanese companies concerns sending commercial electronic messages to customers. This is particularly significant against the backdrop of a marked increase in regulatory enforcement actions concerning direct marketing practices, including proceedings initiated against overseas entities operating within Australia.

Research and development

The Declaration commits both countries to strengthen research collaboration and academic exchange, including cooperation among national laboratories, the private sector and academia on critical and emerging technologies. These technologies encompass artificial intelligence, data centres, quantum computing, biotechnology, space, undersea cables and telecommunications.

The Declaration also recognises the importance of access to key research infrastructure, particularly in STEM fields, for advancing research and development. It further commits the parties to exploring measures that would facilitate such collaboration and access.

Australia provides a supportive research environment for Japanese companies, underpinned by measures such as tax incentives. These arrangements have encouraged Japanese companies to undertake clinical research in Australia and engage in academic exchange, for example through collaborative programs between universities in both countries. However, research activities are regulated by multiple facets of Australian law and ethical guidelines, including privacy laws, which are particularly relevant where sensitive information such as health data is involved in the research activities or where data is to be transferred back to Japan. These considerations will influence how Japanese companies structure their investment frameworks and partnerships.

Depending on the nature of the research activities, the technologies and the sectors involved, Japanese companies should also consider Australia’s stringent export control requirements applicable to certain critical technologies, as well as the Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act), which governs the protection of critical infrastructure. The SOCI Act is under a consultation process for reforms, which are expected to impose more prescriptive obligations on responsible entities managing designated categories of critical infrastructure assets in relation to cyber, physical, and supply chain risks. These risks are particularly material for Japanese companies seeking to leverage opportunities or conduct research in the defence sector, as the Declaration specifically identifies this sector as an area of collaboration to strengthen collective resilience and economic security.

Irrespective of the nature of the research or investment, ownership of critical and emerging technologies will be a key factor in structuring and financing research and development and related investments, particularly in light of the prevailing geopolitical environment. This includes consideration of Australian laws on foreign investment approvals. This is particularly relevant as the Declaration specifically refers to strengthening collaboration on managing risks related to foreign ownership, control, and influence, as well as other threats posed by critical and emerging technologies.

Green technology

Energy, critical minerals, food and metals processing have traditionally been sectors with significant Japanese investment in Australia. Consistent with this, the Declaration contains commitments to expand Japanese investment, partnership and participation in these sectors. We anticipate that a key focus arising from these commitments will be the prioritisation of green technologies, with the objective of establishing transparent, diversified, secure, sustainable, trustworthy, reliable, economically efficient and resilient supply chains that are fundamental to economic security, as recognised in the Declaration.

Similar to Japan, Australia does not currently have a single, overarching legislative regime governing green technologies. Instead, the regulatory framework is fragmented, comprising corporate disclosure and reporting requirements, anti-greenwashing provisions, and an evolving federal environmental assessment framework. Where Japanese entities enter into partnerships with Australian companies, it is typical for environmental, social, and governance obligations to flow down through contractual arrangements. In addition, financial incentives, grants and concessional financing mechanisms may be available to encourage the adoption and commercialisation of green technologies, further shaping investment and operational decisions in this sector.

Cyber resilience

Australia and Japan have, under the Cyber Partnership, committed to cooperate across the full spectrum of cybersecurity issues. The Cyber Partnership is structured around four pillars:

• hardening cyber defences by enhancing information sharing on cyber threats;
   
• building a resilient region and exercising global partnership by strengthening and coordinating cyber security capacity building efforts in the Indo-Pacific region;
   
• strengthening public-private partnerships by enhancing information sharing between both governments and industry to improve cyber resilience and cyber response capability; and
   
• enhancing collaboration on critical technology security, including in relation to AI.

Considerations for Japanese companies extend not only to post-incident response, including whether to notify relevant regulators and affected individuals, having regard to the differences between Japanese and Australian requirements. They also include preventing such incidents in the first instance. Prevention measures include implementing security controls, conducting cyber simulation exercises, and adopting data minimisation practices.

Australia’s regulatory framework for cybersecurity continues to evolve. For example, the Cyber Security Act 2024 (Cth) establishes minimum cybersecurity standards for certain consumer-grade IoT devices and requires manufacturers to provide a statement of compliance confirming that these products are secure by design. It also imposes an obligation on specified businesses to report ransomware and cyber extortion payments. Further, if the proposed removal of both the small business exemption and the employee records exemption occurs under the next tranche of privacy reforms, it is expected to broaden the applicability of notification requirements under the current regime.

These developments will also have implications for contracts between Japanese companies and their Australian counterparties. Australian partners are likely to demand more stringent data protection, notification safeguards, or security controls in commercial agreements to ensure alignment with the expanded regulatory obligations and to manage their own compliance risk. This shift will require Japanese companies to review and strengthen their internal governance, incident response protocols, and data handling practices when engaging with Australian counterparties.

Next steps for Japanese companies operating in Australia

The Declaration and the Cyber Partnership constitute a significant step toward deepening bilateral collaboration between Australia and Japan. Collectively, they provide a practical framework that will guide future investment in emerging technologies within Australia.

Japanese companies operating in Australia, or planning to establish a presence, are recommended to adopt a proactive approach to governance. This will help mitigate regulatory risk, strengthen stakeholder confidence, and position them for sustained engagement in the Australian market. Achieving this requires aligning both internal policies and external activities with Australia’s legal and regulatory landscape, particularly in areas undergoing rapid development, such as privacy and data protection, artificial intelligence, critical infrastructure security, cybersecurity, foreign investment requirements, and environmental, social and governance obligations.

Effective compliance also extends beyond legal obligations. To succeed in the Australian market, Japanese companies must also adapt their internal policies, procedures and practices to accommodate cultural differences and account for variations in consumer expectations. This includes developing communication strategies that reflect local norms, embedding stakeholder engagement into decision-making processes, and ensuring that products and services align with Australian standards of fairness, transparency and accountability.