Data Centres and Energy

The IEA Electricity 2024: Global trends Analysis and forecast to 2026 report states 

Global electricity demand from data centres could double towards 2026 

We estimate that data centres, cryptocurrencies, and artificial intelligence (AI) consumed about 460 TWh of electricity worldwide in 2022, almost 2% of total global electricity demand. Data centres are a critical part of the infrastructure that supports digitalisation along with the electricity infrastructure that powers them. The ever-growing quantity of digital data requires an expansion and evolution of data centres to process and store it. Electricity demand in data centres is mainly from two processes, with computing accounting for 40% of electricity demand of a data centre. Cooling requirements to achieve stable processing efficiency similarly makes up about another 40%. The remaining 20% comes from other associated IT equipment. 

Future trends of the data centre sector are complex to navigate, as technological advancements and digital services evolve rapidly. Depending on the pace of deployment, range of efficiency improvements as well as artificial intelligence and cryptocurrency trends, we expect global electricity consumption of data centres, cryptocurrencies and artificial intelligence to range between 620-1 050 TWh in 2026, with our base case for demand at just over 800 TWh – up from 460 TWh in 2022. This corresponds to an additional 160 TWh up to 590 TWh of electricity demand in 2026 compared to 2022, roughly equivalent to adding at least one Sweden or at most one Germany. ... 

Data centres are significant drivers of electricity demand growth in many regions

There are currently more than 8 000 data centres globally, with about 33% of these located in the United States, 16% in Europe and close to 10% in China. US data centre electricity consumption is expected to grow at a rapid pace in the coming years, increasing from around 200 TWh in 2022 (~4% of US electricity demand), to almost 260 TWh in 2026 to account for 6% of total electricity demand. Growth will be driven by increased adoption of 5G networks and cloud-based services, as well as competitive state tax incentives. 

China's State Grid Energy Research Institute expects electricity demand in the country’s data centre sector to double to 400 TWh by 2030, compared to 2020. We forecast electricity consumption from data centres in China to reach around 300 TWh by 2026. Regulations are being updated to promote sustainable practices in current and future data centres to align them with decarbonisation strategies. A major source of data centre growth is expected to come from the rapid expansion of 5G networks and the Internet of Things (IoT). 

In the European Union, data centre electricity consumption is estimated at slightly below 100 TWh in 2022, almost 4% of total EU electricity demand. Around 1 240 data centres were operating within Europe in 2022, with the majority concentrated in the financial centres of Frankfurt, London, Amsterdam, Paris, and Dublin. With a significant number of additional data centres planned, as well as new deployments that can be expected to be realised over the coming years, we forecast that electricity consumption in the data centre sector in the European Union will reach almost 150 TWh by 2026. 

Almost one-third of electricity demand in Ireland could come from data centres by 2026 

In Europe, the data centre market in Ireland is developing rapidly as their electricity consumption grows along with new policies and initiatives. Electricity demand from data centres in Ireland was 5.3 TWh in 2022, representing 17% of the country's total electricity consumed. That is equivalent to the amount of electricity consumed by urban residential buildings. At this pace, in a high case scenario, Ireland’s data centres might double their electricity consumption by 2026, and with AI applications penetrating the market at a fast rate, the sector could reach a share of 32% of the country’s total electricity demand in 2026 if most of the approved projects are able to be connected to the system. This assumes that at the same time efficiency gains in other sectors continue to take place. 

Ireland’s stock of data centres, currently at 82, is expected to grow by 65% in the coming years, with 14 data centres under construction and 40 approved to start the building phase. Ireland has one of the lowest corporate tax rates in the European Union (12.5%), which is an advantage for the sector’s expansion in the country. By contrast, European OECD countries’ average corporate tax rate is 21.5%. 

The rapid expansion of the data centre sector and the elevated electricity demand can pose challenges for the electricity system. To safeguard the system’s stability and reliability, Ireland’s Commission for Regulation of Utilities published in late 2021 its decision on the new requirements applicable to new and ongoing data centre grid connection applications with three assessment criteria to determine if the connection offer can be made. First, the location of the data centre with respect to whether they are within a constrained region of the electricity system. Second, the ability of the data centre to bring onsite dispatchable generation and/or storage equivalent, at least, to their demand. Third, the ability of the data centre to provide flexibility in their demand by reducing it when requested by a system operator. For the third clause, data centre operators that offer their servers for hire will have to update their contracts to reflect the new regulations. These requirements showcase the local government’s inclination to grant connections to those operators that can make efficient use of the grid and incorporate renewable energy sources with a view of decarbonisation targets. ... 

Denmark currently hosts 34 data centres, half of them located in Copenhagen. As in Ireland, Denmark’s total electricity demand is forecast to grow mainly due to the data centre sector’s expansion, which is expected to consume 6 TWh by 2026, reaching just under 20% of the country’s electricity demand. Denmark is the hub for a new pan-European initiative, Net Zero Innovation Hub for Data Centers. The hub offers a space for collaboration between suppliers, operators and governments to enable progress towards the sector’s innovation and decarbonisation while meeting increasing regulatory demands. 

Data centres in Nordic countries – such as Sweden, Norway, and Finland – benefit from lower electricity costs. This is attributed to lower cooling demand due to their colder weather, and to lower electricity prices in comparison to other major data centre hubs, such as Germany, France and the Netherlands. The largest actor amongst Nordic countries is Sweden, with 60 data centres, and half of them in Stockholm. In August 2023, plans for a nuclear-powered data centre were announced utilising small modular reactors (SMR) technology on the east coast of Sweden, with a commissioning date envisaged for 2030. Given decarbonisation targets, Sweden and Norway may further increase their participation in the data centre market since almost all of their electricity is generated from low-carbon sources. 

In the United States, the largest data centre hubs are located in California, Texas and Virginia. In the case of Virginia, their economy was dominated in 2021 by the data centre sector expansion, attracting 62% of all of the state’s new investments and providing more than 5 000 new jobs. Northern Virginia is the largest data centre market in the country, collecting USD 1 billion in local tax revenues per year, with growth trending higher as companies, such as Amazon’s planned USD 35 billion expansion by 2040, continue to increase their investment in the state. New legislation is aimed at tightening regulations on data centre developments, including zoning rules, mandatory environment and resource impact assessments, as well as guidelines on water usage. In US northeastern states, the regional transmission organisation PJM expects data centres to increasingly drive electricity demand, forecasting a rise in summer peak load from 151 GW in 2024 to 178 GW by 2034. 

Artificial intelligence and cryptocurrencies are additional sources of electricity demand growth 

Market trends, including the fast incorporation of AI into software programming across a variety of sectors, increase the overall electricity demand of data centres. Search tools like Google could see a tenfold increase of their electricity demand in the case of fully implementing AI in it. When comparing the average electricity demand of a typical Google search (0.3 Wh of electricity) to OpenAI’s ChatGPT (2.9 Wh per request), and considering 9 billion searches daily, this would require almost 10 TWh of additional electricity in a year. 

AI electricity demand can be forecast more comprehensively based on the amount of AI servers that are estimated to be sold in the future and their rated power. The AI server market is currently dominated by tech firm NVIDIA, with an estimated 95% market share. In 2023, NVIDIA shipped 100 000 units that consume an average of 7.3 TWh of electricity annually. By 2026, the AI industry is expected to have grown exponentially to consume at least ten times its demand in 2023. ... 

In 2022, cryptocurrencies consumed about 110 TWh of electricity, accounting for 0.4% of the global annual electricity demand, as much as the Netherland’s total electricity consumption. In our base case, we anticipate that the electricity consumption of cryptocurrencies will increase by more than 40%, to around 160 TWh by 2026. Nevertheless, uncertainties remain for the pace of acceleration in cryptocurrency adoption and technology efficiency improvements. Ethereum, the second largest cryptocurrency by market cap, reduced its electricity demand by an amazing 99% in 2022 by changing its mining mechanism. By contrast, Bitcoin is estimated to have consumed 120 TWh by 2023, contributing to a total cryptocurrency electricity demand of 130 TWh. Challenges in reducing electricity consumption remain, as energy savings can be offset by increases in other energy consuming operations, such as other cryptocurrencies, even as some become more efficient. 

Efficiency improvements and regulations will be crucial in restraining data centre energy consumption 

The revised Energy Efficiency Directive from the European Commission includes regulations applicable to the European data centre sector, promoting more transparency and accountability to enhance electricity demand management. Starting from 2024, operators have mandatory reporting obligations for the energy use and emissions from their data centres, and large-scale data centres are required to have waste heat recovery applications, when technically and economically feasible, while meeting climate neutrality by 2030. An earlier EU regulation, applicable since 2020, sets efficiency standards for data centres enabling better control over their environmental impact. A self-regulatory European initiative created in 2021, called the Climate Neutral Data Centre Pact, sets targets to achieve climate neutrality in the sector by 2030. More than 60 data centre operators have signed on to the pact, including large operators like Equinix, Digital Realty and Cyrus One. 

In the United States, the Energy Act of 2020 requires the federal government to conduct studies on the energy and water use of data centres, to create applicable energy efficiency metrics and good practices that promote efficiency, along with public reporting of historical data centre energy and water usage. The Department of Energy (DOE) is supporting the local production of semiconductors and is funding the development of more efficient semiconductors over the next two decades. More efficient semiconductors reduce cooling requirements, thus supporting the decarbonisation of the sector. At a state level, regulators in Virginia and Oregon have already imposed requirements for better sustainability practices and carbon emissions reductions. 

Chinese regulators will require all data centres acquired by public organisations to improve their energy efficiency and be entirely powered by renewable energy by 2032, starting with a 5% share mandate for renewables in 2023. 

New fields of research can help increase efficiency and reduce energy consumption in data centres 

The primary drivers of data centre electricity demand are the cooling systems and the servers themselves, with each typically accounting for 40% of the total consumption. The remaining 20% is consumed by the power supply system, storage devices and communication equipment. The adoption of high-efficiency cooling systems has the potential to reduce electricity demand in data centres by 10%. Other cooling research shows that a 20% reduction in consumption can be achieved when operating with direct-to-chip water cooling and specific low viscous fluids to cool all other components. Machine learning can help reduce the electricity demand of servers by optimizing their adaptability to different operating scenarios. Google reported using its DeepMind AI to reduce the electricity demand of their data centre cooling systems by 40%. 

In the long term, replacing supercomputers with quantum computers could reduce electricity demand of the sector if the transition is supported by efficient cooling systems. Quantum computers deliver more and faster processing power than supercomputers while consuming less energy, but they need to be cooled to temperatures near absolute zero (-273°C) while supercomputers can operate at 21°C. 

Data centres are evolving towards more sustainable and efficient operations, including transitioning to Hyperscale Data Centres, which can run large-scale operations without a significant increase in electricity consumption. This transition is also financially attractive, with the global market for Hyperscale Data Centres projected to double in size by 2026 compared to 2023, reaching a value of USD 212 billion. 

Another promising field of research for decarbonising data centre operations involves time and location shifting of electricity demand. Software developments can allow operators to temporarily shift power loads with carbon-aware models that relocate data centre workloads to regions with lower carbon intensity at selected times. Simultaneously, such methodology has shown the probability of increasing the operational affordability by reducing costs of consuming low- emissions energy around the clock by up to 34%. Results of this methodology combined with other energy efficiency measures in place and on-site low-emission energy production have demonstrated that data centres can achieve a 64% share of carbon-free energy in their total electricity consumption, according to Google’s 2023 Environmental Report.

Demographics

Bourdieu, anyone? 'Climbing the Ivory Tower: How Socio-Economic Background Shapes Academia' (CESifo Working Paper Series No. 11577) by Ran Abramitzky, Lena Greska, Santiago Pérez, Joseph Price, Carlo Schwarz and Fabian Waldinger comments

We explore how socio-economic background shapes academia, collecting the largest dataset of U.S. academics’ backgrounds and research output. Individuals from poorer backgrounds have been severely underrepresented for seven decades, especially in humanities and elite universities. Father’s occupation predicts professors’ discipline choice and, thus, the direction of research. While we find no differences in the average number of publications, academics from poorer backgrounds are both more likely to not publish and to have outstanding publication records. Academics from poorer backgrounds introduce more novel scientific concepts, but are less likely to receive recognition, as measured by citations, Nobel Prize nominations, and awards. 

Legal Privilege

The joint Attorney-General’s Department (AGD) and Treasury discussion paper 'Review of the Use of Legal Professional Privilege in Commonwealth Investigations' comments 

 On 6 August 2023, the Australian Government announced a joint Attorney-General’s Department (AGD) and Treasury review of the use of legal professional privilege (LPP) in Commonwealth investigations to present options for government to respond to concerns that some claims of privilege are being used to obstruct or frustrate investigations undertaken by Commonwealth agencies. This review is part of a larger package of responses to strengthen regulatory arrangements to ensure they are fit for purpose in light of the systemic issues raised by the PwC matter. 

Key Issues 

1. LPP is fundamental to our legal system 

LPP is a long-standing principle of the Australian legal system which supports access to justice and the rule of law. LPP protects the confidentiality of certain communications that are made for the dominant purpose of giving or receiving legal advice (advice privilege) or for use in or in relation to existing or reasonably anticipated litigation (litigation privilege) – this is referred to as the ‘dominant purpose test’ for LPP. LPP belongs to the client, not their lawyer. A communication can be oral, written or recorded. A client can be an individual, company or other entity such as a government agency (the client). Lawyers owe professional duties to their client, which include an obligation to protect the confidentiality of the client’s information. 

LPP is recognised by common law and statute, including in the Evidence Act 1995 (Cth) (Commonwealth Evidence Act) where it is called ‘client legal privilege’. The Commonwealth Evidence Act applies to all proceedings in the federal courts. It provides that evidence will not be adduced if, on the client’s objection, the court finds that doing so would result in the disclosure of certain types of confidential communications or documents made or prepared for the dominant purpose of legal advice or litigation. 

The common law of LPP (also sometimes referred to as ‘client legal privilege’) applies more broadly, including in non-court processes such as Commonwealth investigations. The common law also applies to the pre-trial stages of a proceeding to which the Commonwealth Evidence Act applies (for example, producing documents under a subpoena). Under the common law, LPP is ‘an immunity from the exercise of powers which would otherwise compel the disclosure of privileged communications’. This means that where the common law of LPP applies, a person generally cannot be compelled to disclose communications that are covered by LPP in a Commonwealth investigation. Disputes about whether a communication is privileged are determined by a court. 

LPP does not apply in all circumstances. For example, legislation can modify the common law, including as to when and how a person can claim LPP. It can also provide that LPP does not apply during a particular type of investigative process, even where the dominant purpose test is met (noting however this is a rare occurrence). LPP can also be waived by the client, and does not apply to communications made in furtherance of an illegal or improper purpose. 

LPP promotes the public interest by encouraging clients to make full and frank disclosures to their lawyers, ensuring there is a relationship of confidence between the parties to support the effective provision of legal representation and advice. Without LPP clients may be reluctant to discuss matters frankly and may therefore not receive proper legal advice and representation. 

Commonwealth investigations underpin trust in our systems 

Commonwealth regulatory and enforcement agencies have an important role in ensuring safety and maintaining the economic and social wellbeing of the Australian community. Parliament has passed legislation which gives Commonwealth agencies particular functions and powers, including powers to ensure compliance with legislative requirements and to respond to instances of non-compliance. There is a public interest in Commonwealth regulatory and enforcement agencies carrying out their functions, and exercising relevant powers, effectively. For example, it is in the public interest to promote public confidence in regulated firms, sectors and professions, safeguard critical systems, markets and government revenue, protect the rights and safety of Australians and ensure the delivery of public goods and services. 

To support their functions, Commonwealth regulatory and enforcement agencies often have enabling legislation which provides for compulsory information-gathering powers in their civil, administrative and criminal investigations. The kinds of compulsory information-gathering powers available to Commonwealth agencies depend on the agency’s functions, applicable legislation and the seriousness of the conduct being investigated. For example, a search warrant may be issued under the Crimes Act 1914 (Cth) and executed by a police officer in relation to all Commonwealth offences. Some Commonwealth agencies have regulatory functions which trigger the monitoring and investigation powers in the Regulatory Powers (Standard Provisions) Act 2014 (Cth), which include entry, search and seizure powers that can be exercised where consent is given by the occupier of the premises or where a warrant has been issued. Commonwealth regulators can often issue a notice to produce documents or answer questions related to their investigations.  Other Commonwealth agencies also have bespoke information-gathering powers, including the power to inspect documents or books. Commonwealth agencies may also undertake voluntary information-gathering processes, such as issuing requests for information. The compulsory information-gathering powers of Commonwealth regulatory and enforcement agencies are not absolute. There are safeguards and limitations on the use of these powers in Commonwealth legislation and under the common law. One example of a statutory safeguard is a legislative requirement to apply for a warrant to ensure judicial oversight of the exercise of particular powers. Common law safeguards include privileges such as the privilege against self-incrimination and LPP. 

3. LPP claims can be made in Commonwealth investigations A 

person can claim LPP under the common law in almost all civil, administrative and criminal Commonwealth investigations. In rare instances Commonwealth legislation abrogates LPP, and this legislation has been subject to Parliamentary debate and scrutiny by relevant Parliamentary committees. The process for claiming common law LPP in a Commonwealth investigation will differ based on the information-gathering power exercised. For example, the recipient of a compulsory production notice must be given a reasonable opportunity to claim privilege on their behalf or, in the case of lawyers, on behalf of their clients. If there is a dispute about LPP that cannot be resolved between the agency and the person and/or their legal representative, either party may apply to the court to determine the dispute. 

4. There are concerns about some LPP claims in Commonwealth investigations 

LPP has a fundamental role in the Australian legal system and Commonwealth regulatory and enforcement agencies consulted in the initial phase of this review have emphasised that they recognise the importance of LPP. AGD and Treasury acknowledge that many individuals and entities who make LPP claims during Commonwealth investigations do so appropriately and in accordance with the law. However, there is concern that some LPP claims are being used improperly in Commonwealth investigations. 

Stakeholders, including regulatory and enforcement agencies, have observed instances of behaviours related to LPP which have the effect of obstructing and frustrating Commonwealth investigations. For example, this may include claiming LPP over communications where the party does not have a reasonable basis for asserting that the communication is privileged, failing to engage with agency requests for additional information in a timely way, or making broad claims over communications requested or seized by an agency. 

These behaviours can have various impacts on Commonwealth investigations. It is important to note that while these behaviours may impact Commonwealth investigations, this does not mean that they are intended to obstruct or frustrate an investigation. There can be many reasons why a particular LPP process is time consuming or complex – this does not necessarily mean that the LPP claim is improper. However, as outlined further below, there is concern that bad actors may seek to take advantage of current LPP processes that can be complex, lengthy and costly to intentionally obstruct or frustrate Commonwealth investigations. There is also concern that current processes may not always support people who are trying to claim LPP appropriately and in good faith, but are considering a large volume of communications that may be relevant to a compulsory information-gathering process. The purpose of this section is to explore the environmental, behavioural and procedural issues that stakeholders have identified with the use of LPP claims in Commonwealth investigations. This analysis is supported by stakeholders’ qualitative feedback. While quantitative data about the scope of these issues is limited (including because issues often only become apparent if a dispute is resolved by the courts or the disputed communication becomes available through other means), some relevant illustrative data does exist. For example, the large market segment of the Australian Taxation Office, as at the preparation of this paper, has around 27 active cases with unresolved LPP claims totalling around 133,000 claims. Approximately 75% of these active cases involve claims made over a year ago. Issues related to the use of LPP claims in Commonwealth investigations have also been directly raised by stakeholders, and in reviews and inquiries over decades. 

4.1 The changing operating environment 

AGD and Treasury heard from all stakeholder groups consulted that the landscape in which Commonwealth investigations are undertaken and legal services are provided is changing, and this is creating challenges for Commonwealth agencies, clients and lawyers in relation to LPP and Commonwealth investigations. Advances in technology mean that large volumes of electronic material can be within the scope of compulsory information-gathering processes exercised during Commonwealth investigations. Stakeholders noted that the number of communications subject to some information-gathering processes can be in the hundreds of thousands, and that terabytes of data may be received by Commonwealth agencies exercising their investigatory functions. This can make it more time consuming and expensive for clients and lawyers to review material requested or seized by a Commonwealth agency, in order to identify privileged communications. It may result in delays and broad claims of LPP over large categories of communications, which can impose compliance costs and slow down Commonwealth agencies’ investigations. It can also increase reliance on digital and AI tools to support document review. While relying on AI and digital tools can make identifying privileged communications more efficient, without adequate oversight and appropriate review, it may result in improper LPP claims. 

The way legal services are sought and provided has also changed. In recent decades there has been a growth in multi-disciplinary firms that concurrently provide legal and non-legal services to clients. Services may include consulting, assurance, transaction support, and/or taxation consulting. Clients also continue to seek legal services from traditional law firms and also from lawyers who work in-house. However, clients may choose to seek advice from several professional advisers on a single issue (for example, lawyers, accountants, consultants). These ways of seeking and providing services often require lawyers to work closely with professionals from other disciplines. This can result in the creation of communications that have a range of purposes, which can make it more difficult to assess whether the dominant purpose test for LPP is met. The mere fact that a lawyer has drafted or possessed a communication will not in itself meet the dominant purpose test or substantiate a claim for LPP. Documents prepared by that lawyer may still need to be assessed for LPP in order to respond to a compulsory information-gathering process. 

The following case study demonstrates some difficulties that Commonwealth regulatory and enforcement agencies may encounter when dealing with numerous LPP claims, including the time and resource intensive nature of disputing LPP claims and the delays in progressing the underlying investigations in relation to which the LPP claims are being made. 

Commissioner of Taxation v PricewaterhouseCoopers [2022] FCA 278: In February 2019, the Commissioner of Taxation commenced an audit of a PwC client (Flora Green, the second respondent). In the course of the audit, the Commissioner of Taxation issued notices to produce to a PwC Australia partner and the second respondent. In response, LPP was claimed by PwC Australia (on behalf of its clients), Flora Green or other members of the same multi-national enterprise over approximately 44,000 documents. 

In 2022, a decision of the Federal Court of Australia considered LPP claims made over approximately 15,500 disputed documents. In its decision, the court noted that whether the disputed documents were privileged was to be determined by reference to the content, context and relevant evidence relating to each document. The court considered a sample of 116 documents and more than half of those were found not to be protected by LPP. The court noted that the fact services were provided by a multi-disciplinary partnership was a critical part of the context in the case. The court also identified some documents that appeared to be “routed” through a lawyer to obtain the protection of LPP. 

4.2 Procedural and behavioural concerns in the LPP claim process 

Stakeholders consulted in the initial phase of this review have noted that issues related to LPP claims can arise at various stages of a Commonwealth investigation. The purpose of this section is to explore these issues. To support this analysis, Figure 1 outlines a high-level summary of the key phases for LPP claims in Commonwealth investigations. This figure is indicative only, noting that processes differ across investigations and the steps involved in a particular LPP process will depend on the circumstances and applicable legislation. For example, the process may differ if LPP is claimed during an oral interview. 

... 

LPP Claim Phase 

In the LPP claim phase clients and lawyers assess the information captured by a particular compulsory information-gathering process, and provide relevant documents and information or assert LPP claims. Where LPP is claimed, Commonwealth regulators and enforcement agencies may ask the person claiming LPP to provide information to support their claim. Commonwealth agencies seek information about LPP claims in order to determine whether the claim has been made on reasonable grounds or ought to be disputed (for example, a claim may be disputed because the agency is concerned that LPP has been claimed over material that is not privileged). Agencies consulted have emphasised they do not seek to compel the production of privileged communications (such as legal advices) where LPP applies. 

Under some legislation, parties are required to provide information to the agency about their LPP claim. For example, under the Australian Securities and Investments Commission Act 2001 (Cth) a lawyer must provide particulars about certain LPP claims. If a lawyer fails to provide this information, the Australian Securities and Investments Commission can apply to the court to make an order for the person to comply with this requirement. However, this type of legislation is rare. More often, Commonwealth regulatory and enforcement agencies publish or provide voluntary guidance about the information a person should provide when making an LPP claim. As this guidance is voluntary, it may not always be followed. This can delay Commonwealth investigations, particularly if the Commonwealth agency has to make several requests to the person for further information about their LPP claim. In some cases where information about the LPP claim is not provided voluntarily, a Commonwealth agency may apply to the court to seek that information, so that it can determine whether to dispute the LPP claim. This can delay the Commonwealth investigation. In many cases, legal action may not be pursued having regard to time and costs involved. 

Feedback indicates that there can be many reasons why there are delays in assessing and claiming LPP, and why information requested by an agency to support an LPP claim may not be provided. In some cases, it may appear that a party is attempting to obstruct or frustrate investigations; for example, in order to conceal evidence, delay the Commonwealth agency from identifying individuals/entities involved in wrongdoing or the breadth of wrongdoing, or avoid penalties or reputational damage. However, we have also heard that there are other reasons why delays may occur. This may include growing complexity in organisational arrangements, or information-gathering processes that capture a large volume of communications (as explored above). Different types of information (or information in different formats) may be required or requested in relation to LPP claims, depending on the type of Commonwealth investigation – we have heard this can impact time and cost for those responding to an information- gathering process. Some parties may also be concerned that voluntarily providing certain information about a communication to a Commonwealth agency might waive LPP. 

AGD and Treasury have heard that there may be changes to existing LPP claim processes that could improve these matters. For example, it has been suggested that greater consistency between LPP processes across Commonwealth investigations could reduce the time taken to claim LPP or provide information about an LPP claim in Commonwealth investigations. In some cases, there may be opportunities for Commonwealth agencies to work more collaboratively with a person or their lawyers to clarify what information they are seeking or identify categories of communications (noting that this already occurs in some cases and will not be appropriate in all instances). Statutory clarification may support lawyers and their clients to confidently provide particulars to a requesting agency, without fear of waiver. If LPP claims are made without a proper basis or with an improper intent, legislative change may also be needed to deter this behaviour (see Remedies and/or Penalties below). 

Dispute Resolution Phase 

Stakeholders have expressed a common concern that existing processes for resolving disputes about LPP can be lengthy and costly for all parties involved. There are no standard rules for resolving disputes about LPP claims during Commonwealth investigations. Regulators and enforcement agencies consulted have reported that it can take years to resolve LPP claims once a compulsory information-gathering process is initiated. 

Currently, where a Commonwealth agency disputes an LPP claim, this may be resolved in several ways. The agency and the person claiming LPP may agree to resolve the matter through alternative dispute resolution (ADR). One example is arbitration of the dispute by an independent third party such as a barrister. ADR may offer a quicker form of resolution compared to seeking a decision in court. ADR may also be employed if a court has only determined privilege claims in respect of a sample of the disputed documents. However, there may be a limit to the number of communications an independent third party can feasibly review which, given the large volumes of information potentially involved, may limit the effectiveness of this voluntary process. ADR can also involve substantial costs to parties and may not be appropriate in all circumstances. For example, if a decision about privilege could have significant or precedent-setting implications for one of the parties, they may prefer to have their dispute determined by the court. 

If one of the parties applies to the court to resolve the dispute, these processes can be lengthy and costly. This may be due to the time needed to prepare a case to be brought before the court, or the reality of large document cases, where it may not be feasible for the court to review and rule on thousands of LPP claims. In these instances, the court may consider a sample of the communications in dispute. While the sampling of communications can help mitigate some of these volume related pressures, we have heard that there are limitations in the practice of selecting sample communications for the court to consider. One reason for this is that one party (the person claiming privilege) has access to all of the communications in dispute and the other (the Commonwealth agency) does not and may be required to a select a sample without seeing the communications. 

These lengthy processes can undermine enforcement action, particularly where there are statutory time limits for bringing action. For example, the promoter penalty laws in the Taxation Administration Act 1953 (Cth) require the Commissioner of Taxation to bring an application to the Federal Court of Australia within a specified period. Some stakeholders have suggested that issues about delay could be addressed by implementing new mechanisms to support the court process, for example through the adoption of court-appointed LPP examiners who would consider the underlying communications and adjudicate claims, or through the appointment of special registrars to consider LPP disputes. 

Remedies and/or Penalties 

If a person breaches a Commonwealth law, they may be subject to a criminal, civil or administrative penalty. Criminal and civil penalties are imposed by the courts, where a breach is proven beyond reasonable doubt (for criminal penalties) or on the balance of probabilities (for civil penalties). Administrative penalties can be imposed by an agency or regulator. 

There are existing Commonwealth penalties that may apply in relation to LPP claims. For example, under the Criminal Code (Cth) it is a criminal offence to knowingly give false or misleading information to a Commonwealth entity (for example, when information is provided to comply with a notice to produce).  Under the Australian Securities and Investments Commission Act 2001 (Cth), if a lawyer fails to provide required particulars about an LPP claim, there is a penalty of 3 months imprisonment.  Some other Commonwealth legislation, including the Taxation Administration Act 1953 (Cth), makes a person liable to pay an administrative penalty for making false or misleading statements.  The Tax Agent Services Act 2009 (Cth) also provides a range of sanctions for registered tax practitioners that breach code of conduct obligations relating to honesty and integrity, and making false or misleading statements. 

In addition to existing penalties in Commonwealth legislation, lawyers also have professional obligations, including duties as officers of the court and under state and territory legislation. If a lawyer breaches these professional obligations, they may be subject to disciplinary action. Based on consultation to date, AGD and Treasury are not aware of any disciplinary matters involving misuse of LPP by a lawyer. AGD and Treasury have heard from some Commonwealth agencies that current settings may not adequately deter improper LPP claims. We have heard that possible options to address this may include expanding existing penalties or creating new targeted penalties in Commonwealth legislation to deter improper LPP claims (these could include criminal, civil or administrative penalties). However, it has also been noted that improper behaviour related to LPP may never become known unless, for example, a client makes a complaint that they were not properly advised about LPP or communications that have been subject to an LPP claim later become available through another means.

The resultant discussion questions are 

1. Do you agree with the key issues identified in this paper? Are there other key issues you think should be considered in relation to the use of LPP claims in Commonwealth investigations? 

2. Are there options for reform that you think should be considered in relation to the use of LPP claims in Commonwealth investigations? For example, options for reform related to guidance and training, LPP claim processes, dispute resolution, or remedies and/or penalties. 

3. Are there approaches in other jurisdictions that you think AGD and Treasury should consider? 

4. What risks should the government consider when evaluating options for reforms to the operation of LPP processes in Commonwealth investigations? 

5. Do you have any other views you wish to share at this time (noting that there will be a further opportunity to provide comment on possible options for reform in 2025)? 12

Rule Of Law

'The Origins of “The Rule of Law”' by Jeremy Kessler in (2025) 87  Law and Contemporary Problems comments  

This Article offers a novel account of the origins of “the rule of law” in the English-speaking world. The phrase itself likely entered the language as a literal translation of the Latin regula juris. Prior to the early seventeenth century, however, the phrase appears to have been used exclusively to refer to the specific legal rule or maxim most relevant to the resolution of a particular kind of dispute. The more general and abstract use of the phrase – to refer to an ideal of political morality or an ideal type of governance – first appeared in the public record around 1610. It did so in the context of English common lawyers’ criticism of royal economic regulation limiting commodity production and circulation. The ideal type of governance that these common lawyers had in mind was the rule of common-law rules. They believed that the “chief subject or object” of these rules was the freedom of Englishmen to dispose of their possessions and professional skills as they wished, and to profit thereby. The earliest advocates of “the rule of law” thus found themselves in the vanguard of a cross-class project that sought to privilege the equal liberty of commodity exchangers over other long-recognized political, religious, and economic entitlements. Consequently, the original rule of law – the rule of common-law rules – came with a set of libertarian and egalitarian expectations, in addition to expectations of publicity, clarity, regularity, and so on. 

When A.V. Dicey popularized “the rule of law” in the late nineteenth century, he claimed to be restating age-old English common sense. While this claim exaggerated the continuity and coherence of English legal history, Dicey’s conception of the rule of law did indeed track the original, early-seventeenth-century conception in significant respects, including its libertarianism, its market-oriented egalitarianism, and its commitment to the supremacy of the common law. For both Dicey and his early modern precursors, the key to the equal liberty of English subjects was the centrality of common law courts to the settlement of disputes, whether between private parties, or between private parties and public officials. Contemporaneous critics of Dicey’s conception thus rightly understood him to be defending a legal worldview that dated to the early days of competitive capitalism. Yet the appeal of that worldview persists. 

In the middle of the twentieth century, Anglophone legal philosophers did craft an alternative: a more austere and generalizable conception of the rule of law, one freed from the libertarian, egalitarian, and common-law sensibilities of Dicey and his precursors. While an intellectual coup, this minimalist conception has proven unsatisfying not only to legal practitioners but also to a growing number of legal theorists, including some of the minimalist conception’s erstwhile defenders. For these critics, Jeremy Waldron foremost among them, the minimalist conception fails to capture common-sense understandings of both law and the rule of law. But why does the contemporary common sense to which Waldron appeals so closely echo the concerns of common lawyers in 1610? 

This Article argues that the answer lies in the limited yet significant socio-economic context shared by early modern common lawyers, late nineteenth century jurists, and contemporary legal theorists. That shared context is the dominance of commodity exchange, which has characterized capitalist societies since their emergence in sixteenth and seventeenth century Europe. The common lawyers who first used the phrase “the rule of law” to denote an ideal of political morality were responding to a profound and lasting social and economic transformation. That transformation – the penetration of commodity exchange into ever more domains of social life – gave rise to demands for the rule of law four hundred years ago, and continues to shape discourse about the rule of law today.

Surveillance

'Big brother: the effects of surveillance on fundamental aspects of social vision' by Kiley Seymour, Jarrod McNicoll and Roger Koenig-Robert in (2024) 1 Neuroscience of Consciousness argues 

Despite the dramatic rise of surveillance in our societies, only limited research has examined its effects on humans. While most research has focused on voluntary behaviour, no study has examined the effects of surveillance on more fundamental and automatic aspects of human perceptual awareness and cognition. Here, we show that being watched on CCTV markedly impacts a hardwired and involuntary function of human sensory perception—the ability to consciously detect faces. Using the method of continuous flash suppression (CFS), we show that when people are surveilled (N = 24), they are quicker than controls (N = 30) to detect faces. An independent control experiment (N = 42) ruled out an explanation based on demand characteristics and social desirability biases. These findings show that being watched impacts not only consciously controlled behaviours but also unconscious, involuntary visual processing. Our results have implications concerning the impacts of surveillance on basic human cognition as well as public mental health. .. 

In recent years, we have seen an exponential increase in human surveillance. We now live in a world with closed-circuit television (CCTV) in public spaces, trackable mobile devices, and the monitoring of our activities through artificially intelligent technology and the ‘Internet of Things’ (the interconnected system of our devices and sensors collecting and sharing data through the internet). Data on what we do, what we say, and where we go can be monitored and made available to third parties (Zuboff 2015, Cecez-Kecmanovic 2019). With the advent of emerging neurotechnology, even our mental privacy is at risk (Farahany 2023). Despite this proliferation of surveillance technology, there is limited research on its effects on human psychology, including fundamental capacities like the basic perceptual processing of our sensory environment. 

Literature available on the topic of human surveillance and being watched suggests that it elicits changes in overt behaviour. For instance, a large body of evidence on ‘audience effects’ suggests people act in a more prosocial manner when they believe they are being watched. When people think their behaviour is monitored, they are more giving (Hoffman et al. 1996, Haley and Fessler 2005, Pfeiffer and Nowak 2006, Rigdon et al. 2009, Powell et al. 2012, Nettle et al. 2013, Bateson et al. 2015), more likely to share (Baillon et al. 2013, Oda et al. 2015), and less likely to steal, cheat, litter, or direct their gaze to provocative images (Tourangeau and Yan 2007, Zhong et al. 2010, Risko and Kingstone 2011, Francey et al. 2012, Nettle et al. 2012, Nasiopoulos et al. 2015). It is argued that these behavioural changes act to uphold the reputation of the individual and protect from negative social consequences (Izuma 2012, Nettle et al. 2013, Conty et al. 2016). 

In addition to the changes in social behaviour, a feeling of being watched commonly invokes discomfort in people (Panagopoulos and Van Der Linden 2017) and increases vigilance, self-consciousness, and the fight-or-flight response (e.g. an increase in heart rate and skin conductance) (Kleinke and Pohlen 1971, Nichols and Champness 1971, Gale et al. 1975, Putz 1975, Reddy 2003, Conty et al. 2010b, Helminen et al. 2011, Baltazar et al. 2014). It has also been shown that surveillance in the workplace induces negative effects on productivity (Gagné and Deci 2005), likely due to impacts on attention and working memory (Senju and Hasegawa 2005, Conty et al. 2010a, Risko and Kingstone 2011, Wang and Apperly 2017, Colombatto et al. 2019). Interestingly, it seems to be an implied social presence rather than a true presence of the observer that is important here, with simple photos of watching eyes or a mere belief that someone is watching eliciting the behavioural changes (Putz 1975, Haley and Fessler 2005, Bateson et al. 2006, Burnham and Hare 2007, Rigdon et al. 2009, van Rompay et al. 2009, Risko and Kingstone 2011, Lawson 2015, Nasiopoulos et al. 2015, Colombatto et al. 2019). 

While the effects of surveillance on social behaviour are well-documented, it is unclear how being watched impacts more fundamental capacities not subject to explicit, overt, and conscious control of the individual. For instance, being able to rapidly detect when someone or something is looking at you is a profound and hardwired human faculty requiring specialized neural mechanisms that operate largely outside of conscious control (Brothers 1990, Perrett and Emery 1994, Baron-Cohen 1995, Emery 2000, Calder et al. 2007, Hietanen et al. 2008, Senju and Johnson 2009, Bayliss et al. 2011, Burra et al. 2013, Carlin and Calder 2013). In fact, this heightened sensitivity to another’s gaze is thought to underlie a feeling of being watched that can be experienced in the absence of any surveillance and commonly reported in the population (Freeman et al. 2005, Taylor et al. 2009, Bebbington et al. 2013, Harper and Timmons 2021). Given the adaptive significance, we hypothesize that these mechanisms are further engaged when one knows they are being watched. Indeed, evidence from clinical research suggests that patients with schizophrenia who experience persecutory delusions (i.e. erroneous beliefs about being watched) show increased perceptual sensitivity to the self-directed gaze of others (Rosse et al. 1994, Hooker and Park 2005, Tso et al. 2012, Langdon et al. 2017). 

In the current study, we test whether being watched influences perceptual processing of the sensory environment, namely the processing of eye gaze. Specifically, we ask whether being monitored makes the visual system more sensitive to this essential visual and social cue. Using a technique known as breaking continuous flash suppression or b-CFS (Tsuchiya and Koch 2005), we temporarily suppressed photographs of faces from visual awareness. The time the face takes to break through the suppressive mask and become visible to the participant is typically treated as an index of its salience. In previous experiments using b-CFS, it has been shown that the visual system prioritizes the detection of faces with direct gaze over faces with averted gaze, suggesting visual cues used to discriminate eye gaze direction are preconsciously processed by the visual system (Stein et al. 2011, Yokoyama et al. 2013, Seymour et al. 2016). In the current study, we examined whether being watched influenced the speed at which these gaze signals reach conscious awareness by means of a detection task (i.e. stimulus on the left or right). We hypothesized that if being surveilled facilitates basic sensory processing of eye gaze, then participants who had evidence of being monitored during the task (i.e. experiencing the presence of CCTV) would detect self-directed gaze signals faster than participants who did not.

Meta Settlement

Amid excitement about today's announcement of a settlement between Meta Inc and the OAIC privacy and regulatory analysts might wonder whether Meta got off lightly: a trivial amount and the ending of litigation in the Federal Court. 

The Enforceable Undertaking reads

1. Background 

1.1. This enforceable undertaking is given by Meta Platforms, Inc. (Meta) to the Australian Information Commissioner (Commissioner) under section 114 of the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act) in conjunction with the discontinuance of Federal Court of Australia Proceeding No NSD 246 of 2020 (the Civil Penalty Proceedings) against all Respondents, on a without prejudice basis and without any admission of liability. The Civil Penalty Proceedings followed investigations by the OAIC concerning the Cambridge Analytica Incident, the facts of which are described below together with a background to the Civil Penalty Proceedings. 

1.2. Meta offers this enforceable undertaking in its capacity as the provider of the Facebook service to users in Australia from 14 July 2018 onwards. Prior to 14 July 2018, and during the period in which the Cambridge Analytica Incident described below occurred, Meta Platforms Ireland Limited provided the Facebook service to users in Australia. 

The Cambridge Analytica Incident 

1.3. In April 2010, Meta launched the Graph Application Programming Interface (Graph API). The Graph API allowed third party apps to access, with permission from users who installed the third party app using the Facebook Login tool, certain information, e.g., their name, birthdate, etc., from installers of the app and their friends (if both users’ privacy settings allowed it). Under the first version of Graph API (Graph API Version 1), which was in place from 21 April 2010 to 30 April 2015 for pre-existing apps, third party apps could request access to certain information (1) from the installing user’s account; and (2) that the installing user’s Facebook friends had chosen to share with the installing user. The Graph API would provide the information sought on an automated basis, so long as the installing user authorised the request, the user and their friends had not opted out of the Facebook platform (which would allow the user to opt out of providing access to information to third party apps), subject to the privacy and application settings of the user and their friends. 

1.4. In November 2013, Dr Aleksandr Kogan, a professor at Cambridge University, launched a third party app relevantly known as “thisisyourdigitallife” (the Life App) using Graph API Version 1. Before doing so, Dr Kogan agreed to Meta’s terms of service and its terms for developers of third party apps using the Facebook platform and the Graph API. The Life App, which presented itself to users as a quiz app, requested via a dialog box at the time of installation, installing users’ permission to access certain categories of their information as well as certain categories of information that their Facebook friends shared with them. 

1.5. In December 2015, upon learning from media reports that Dr Kogan and his company, Global Science Research Limited (GSR), may have been transferring user information to Cambridge Analytica (UK) Ltd, a British data analytics company, and its parent company, Strategic Communication Laboratories (together, SCL) (in contravention of contractual obligations owed to Meta), Meta launched an investigation and terminated the Life App’s use of the Graph API and access to Facebook Login. 

1.6. Based on this investigation, Meta concluded that Dr Kogan and GSR had violated its terms in several respects. Meta subsequently obtained certifications that Dr. Kogan, GSR, and other third parties (including SCL) with whom Dr Kogan had shared user information had deleted the information. The information that was transferred to SCL related primarily to users in the United States. Neither Meta, nor Meta Platforms Ireland Limited, are aware of any evidence that Dr Kogan provided SCL with information on Facebook users from Australia. 

The OAIC’s Investigation and the Civil Penalty Proceedings 

1.7. On 5 April 2018, the Commissioner initiated an investigation under section 40(2) of the Privacy Act 1988 (Cth) (Privacy Act) in relation to reports that Australian users’ information may have been improperly shared with Cambridge Analytica (UK) Ltd via the Life App. During the investigation, which extended to Meta, Meta Platforms Ireland Limited and Facebook Australia Pty Ltd, the Commissioner raised concerns that Meta may have interfered with the privacy of Australian individuals in contravention of Australian Privacy Principles (APPs) 1.2, 5, 6, 10 and 11 of the Privacy Act (Investigation). 

1.8. On 9 March 2020, the Commissioner commenced the Civil Penalty Proceedings and concluded the above investigation. In the Civil Penalty Proceedings, as further particularised in the Amended Statement of Claim dated 2 June 2023, the Commissioner alleged that Meta’s systems and practices raised concerns about the protection of personal information of Australian Facebook users in relation to the Cambridge Analytica incident, and that, based on its Investigation, Meta and Meta Platforms Ireland Limited may have contravened section 13G of the Privacy Act through serious or repeated breaches of APPs 6.1 and 11.1. The Commissioner alleged that, throughout the time the Life App was available to Facebook users, approximately: 1.8.1. 53 Facebook users located in Australia installed the Life App; and 1.8.2. 311,074 Facebook users located in Australia could have had their personal information requested by the Life App as friends of installing Facebook users. 

2. Meta’s Response to the Cambridge Analytica Incident 

2.1. Meta acknowledges: 2.1.1. that under the Privacy Act, Meta must not do an act, or engage in a practice, that breaches an APP; 2.1.2. the Commissioner’s concerns identified in paragraphs 1.7 and 1.8. 

2.2. Meta represents, and the Commissioner acknowledges, that: 2.2.1. Meta no longer permits third party app developers to access from Meta an installing user’s friend’s information, unless that friend has also installed the app and authorised it to have access to that information; 2.2.2. since the period relevant to the Civil Penalty Proceedings, being 12 March 2014 to 1 May 2015 (Relevant Period), Meta has dedicated significant and increased resources to monitoring third party apps and enforcing Meta’s terms and policies; 2.2.3. since the Relevant Period, Meta substantially reduced the number of information fields available that third party app developers (via Facebook Login) may request an installing user’s permission to access, examples of information fields that have been removed include: (i) the installing user’s friends’ information, excluding the circumstances specified in paragraph 2.2.1; and (ii) the installing user’s religion, political views and relationship details; 2.2.4. since the Relevant Period, Meta has continued to implement granular data permissions processes to allow a user who installs a third party app to decide which categories of certain information they will share with the third party app; and 2.2.5. Meta monitors the compliance of third party app developers of consumer apps with Meta’s Platform Terms through measures including, but not limited to, ongoing manual reviews and automated scans, and regular assessments, audits, or other technical and operational testing at least once every 12 months. 

3. Meta’s Enforceable Undertaking to the Commissioner 

3.1. Meta offers this enforceable undertaking to the Commissioner under section 114 of the Regulatory Powers Act, including to address the concerns in paragraphs 1.7 and 1.8. 

3.2. This undertaking comes into effect when: 3.2.1. it is executed by Meta; and 3.2.2. this undertaking, so executed, is accepted by the Commissioner (the Commencement Date). 

3.3. This undertaking ceases to have effect upon the completion of the Payment Program (as defined at paragraph 4.1 below). 

4. Undertaking to Establish Payment Program 

4.1. Meta undertakes to implement a payment program open to Eligible Australian Users in recognition of the Commissioner’s concern that those users may have suffered loss or damage as a result of interferences with their privacy arising from the conduct the subject of the Commissioner’s concerns as identified in paragraphs 1.7 and 1.8 above in accordance with Parts 5 and 6 of this enforceable undertaking and fulfill each of its obligations set out in Parts 4 to 7 of this enforceable undertaking (Payment Program). 

4.2. Meta undertakes to: 4.2.1. engage an independent third party administrator (the Administrator); 4.2.2. direct the Administrator to administer the Payment Program in accordance with: 4.2.2.1. Parts 5 and 6 of this enforceable undertaking; and 4.2.2.2. any instructions for the Payment Program given to the Administrator by Meta (Scheme Instructions); and 4.2.3. complete the Payment Program within 2 years from the Commencement Date or such longer period as agreed between the Commissioner and Meta. 

5. Eligible Australian Users 

5.1. A person is an “Eligible Australian User” if the person: 5.1.1. held a Facebook Account at any time during the period of 2 November 2013 and 17 December 2015 ( Eligibility Period) 5.1.2. was located in Australia for 30 days or more during the Eligibility Period; and 5.1.3. during the Eligibility Period, either: 5.1.3.1. installed the Life App using Facebook Login; or 5.1.3.2. did not install the Life App but was Facebook friends with another Facebook user who had installed the Life App using Facebook Login. 

5.2. Subject to paragraphs 5.3 to 5.5, an Eligible Australian User can register with the Administrator as a “ Claimant ” under the Payment Program if they submit to the Administrator within the registration period prescribed by the Administrator (Registration Period) a valid Registration Form and evidence in such form as prescribed, verifying that the person: 5.2.1. is an Eligible Australian User under paragraph 5.1; 5.2.2. holds a genuine belief that as a direct consequence of the conduct the subject of the Commissioner’s concerns identified in paragraphs 1.7 and 1.8, they have suffered loss or damage, being either: 5.2.2.1. specific economic and/or non-economic loss and/or damage (beyond a generalised concern or embarrassment) (Class 1); or 5.2.2.2. a generalised concern or embarrassment (Class 2). 

5.3. The Registration Form will be prepared by the Administrator in consultation with Meta and may set the standard of verification and evidence that a Claimant must provide for each eligibility criterion by the end of the Registration Period, including by way of statutory declaration or identity verification as considered appropriate. 5.3.1. For paragraphs 5.1.3 and 5.2.2.2, Meta must direct the Administrator to not require more than a valid statutory declaration. 

5.4. Notwithstanding paragraphs 5.2 and 5.3, the Administrator may, in its absolute discretion, determine that a person will not be: 5.4.1. an Eligible Australian User where the Administrator is unable to verify that the person meets the requirements of Part 5 of this enforceable undertaking based on the information available to the Administrator; 5.4.2. a Claimant where the Administrator determines that: 5.4.2.1. the person provided the Administrator with false information, or that the person’s registration is otherwise fraudulent; 5.4.2.2. the person has previously registered as a Claimant; 5.4.2.3. if the person registered to receive payment from Meta, or any of its affiliated or related entities, in a proceeding, investigation or other legal action in any jurisdiction outside of Australia that relates to, or arose out of, the factual background detailed in paragraphs 1.3 to 1.6 of this enforceable undertaking, such as the US settlement of In re: Facebook, Inc. Consumer Privacy User Profile Litigation, Case No. 3:18-md-02843-VC (N.D. Cal.); or 5.4.2.4. the person is not otherwise eligible in accordance with the Scheme Instructions. 

5.5. For the avoidance of any doubt, a person: 5.5.1. is not a Claimant if the person has not registered in accordance with paragraphs 5.2 and 5.3 during the Registration Period; and 5.5.2. cannot register as a Claimant in both Class 1 and Class 2. 

6. Payment Program 

6.1. Meta undertakes to, within 60 days of the Commissioner filing a Notice of Discontinuance in the Civil Penalty Proceedings, pay an amount of $50 million (the Contribution Amount) to the Administrator for the Administrator to use to make payments to Claimants (Payments) in accordance with paragraphs 6.2 to 6.9. 

6.2. Following the payment of the Contribution Amount by Meta in accordance with paragraph 6.1, Meta will: 6.2.1. notify the Commissioner that the Contribution Amount has been paid to the Administrator; 6.2.2. direct the Administrator to make information available on a website established by the Administrator regarding the Payment Program, including how Eligible Australian Users can register with the Administrator as a Claimant; 6.2.3. use reasonable best efforts to: 6.2.3.1. identify, based on Meta’s available records, persons that may be Eligible Australian Users; and 6.2.3.2. facilitate electronic notice of the Payment Program to those persons; 6.2.4. direct the Administrator to take reasonable steps to publicise the Payment Program within Australia. 

6.3. The Payment that a Claimant receives will depend on whether the Administrator determines that the Claimant is a Class 1 or Class 2 Claimant. 

6.4. In performing its obligations under Parts 5 and 6, the Administrator will apply any Scheme Instructions, including any cap to apply to Payments made to Claimants and the principle that all Class 2 Claimants be paid the same amount. 

6.5. Subject to the Scheme Instructions, following the end of the Registration Period, the Administrator will: 6.5.1. evaluate and determine, using evidence available to the Administrator at that time, in the Administrator’s absolute discretion whether: 6.5.1.1. a person is an Eligible Australian User (in accordance with Part 5); and 6.5.1.2. if a person registers as a Claimant in Class 1, the person has provided sufficient supporting evidence to substantiate their claim that they have suffered loss or damage in Class 1; 6.5.2. determine the number of Claimants in each of Class 1 and Class 2; 6.5.3. commence the process for determining the Payment that each Class 1 and Class 2 Claimant is entitled to receive, in accordance with this Part 6; and 6.5.4. notify Meta that the process referred to in paragraph 6.5.3 above has begun, at which point Meta will within 24 hours notify the Commissioner thereof. 

6.6. The Scheme Instructions will provide for the Administrator to include a timely internal review avenue for: 6.6.1. any decision by the Administrator to reject a Claimant’s Class 1 registration and allocate the Claimant to Class 2; and 6.6.2. assessment of any Payment amount that is to be made to a Claimant in Class 1. 

6.7. Following the conclusion of the process in 6.5, in accordance with paragraphs 6.3 and 6.4, the Administrator will: 6.7.1. finalise its determination including any internal review of any Payment that is to be made to a Claimant in either Class 1 or Class 2; 6.7.2. once all determinations are completed in accordance with paragraph 6.7.1, notify Meta of: 6.7.2.1. the total number of Claimants; and 6.7.2.2. the aggregated amount to be distributed to all Claimants; and 6.7.3. make a timely Payment to each such Claimant. 

6.8. Following receipt of the notification set out at paragraph 6.7.2, Meta will within 24 hours notify the Commissioner thereof. 

6.9. If the total aggregate sum of Payments made to Claimants under paragraph 6.7 is less than the Contribution Amount, Meta will direct the Administrator to pay the residual amount to the Australian Government’s Consolidated Revenue Fund. 

6.10. If, when performing its obligations under Parts 5 and 6 of this enforceable undertaking, the Administrator informs Meta that it will not be able to comply with any deadline specified in this undertaking, Meta will: 6.10.1. promptly inform the Commissioner, and the OAIC, of the extent and reasons for the delay; 6.10.2. in consultation with the Administrator, determine a date by which the Administrator will reasonably be able to complete the actions specified; 6.10.3. propose the modified date(s) to the Commissioner and seek to agree any necessary extension; and 6.10.4. cause the Administrator to notify Claimants of the delay and the amended date(s) agreed with the Commissioner (if applicable). 

7. Compliance 

7.1. Subject to any confidentiality obligations owed by Meta, the OAIC may request in writing from time to time and Meta will provide to it, documents and information that are reasonably necessary for the purpose of assessing Meta’s compliance with Parts 4 to 6 of this enforceable undertaking. 

7.2. Meta will use its best endeavours to provide documents and information in response to any request under paragraph 7.1 within 14 days of the request. 

8. Other matters 

8.1. Meta acknowledges that the Commissioner: 8.1.1. will publish this enforceable undertaking as well as a summary of the undertaking, on the OAIC website; 8.1.2. may issue a statement on acceptance of this enforceable undertaking referring to its terms and to the circumstances which led to the Commissioner’s acceptance of the undertaking; and 8.1.3. may from time to time publicly refer to this enforceable undertaking, including any breach of this enforceable undertaking by Meta. 

8.2. Meta acknowledges that: 8.2.1. The Commissioner’s acceptance of this enforceable undertaking does not preclude the Commissioner’s power to investigate, power not to investigate further, or the exercise of any of the Commissioner’s functions under the Privacy Act in relation to: (i) the representative investigation opened by the Commissioner under sub-section 40(1) of the Privacy Act on 21 October 2019 (referred to by the Commissioner using the reference number CP18/01262); or (ii) any contravention that concerns conduct that is outside the scope of the Civil Penalty Proceedings or Investigation. 8.2.2. If the Commissioner considers that Meta has breached this enforceable undertaking, the Commissioner may apply to the Federal Court or Federal Circuit Court to enforce the undertaking under s 115 of the Regulatory Powers Act. 

8.3. The Commissioner’s acceptance of this enforceable undertaking is not a finding that Meta has contravened the Privacy Act or the APPs. 

8.4. Meta gives this enforceable undertaking on a without prejudice basis, and without any admission of liability as to the matters raised in the Investigation or Civil Penalty Proceedings. Any representations made or acknowledgments given by Meta in this enforceable undertaking, whether express or implied, are made without prejudice or admission of liability. In giving this enforceable undertaking, neither Meta nor any of its affiliated or associated entities are precluded from taking any position or relying on any facts or factual statements in any legal or regulatory proceedings in Australia or in any other jurisdiction in relation to any matter that was within the scope of the Commissioner’s investigations referred to in paragraphs 1.7 and 8.2.1, the Civil Penalty Proceedings or which otherwise relate to the Cambridge Analytica Incident described at paragraphs 1.3 to 1.6. 9. 

Confidentiality 

9.1. The Commissioner acknowledges that information provided by Meta, or the Administrator, to the Commissioner and OAIC in accordance with this enforceable undertaking may contain sensitive commercial information (Commercial-in-confidence Information). 

9.2. The Commissioner acknowledges that any such Commercial-in-confidence Information is provided by Meta, or the Administrator, in confidence. 

9.3. The Commissioner: 9.3.1. will only publish or otherwise disclose any Commercial-in-confidence Information with Meta’s written agreement, unless otherwise required by law; and 9.3.2. will only use any Commercial-in-confidence Information for the purpose of exercising the Commissioner’s powers, or performing functions or duties in the Privacy Act.

Scenarios

'Corporate Scenarios: Drawing Lessons from History' by Madison Condon in (2025) 48 Seattle University Law Review 277 comments 

 As corporations are increasingly pressed to reveal information about their exposure to climate-related risks, they are often asked to undertake and disclose the outcome of “scenario analysis.” In this exercise, corpora- tions, including financial institutions, examine how their business would fare under different pathways the future may take. One oft-used scenario, for example, is the International Energy Agency’s “Net-Zero by 2050: A Roadmap for the Energy Sector.” This Essay presents a history of the use of scenarios as a corporate planning tool, particularly in the oil industry, arguing that it is key for understanding our present moment and the role of today’s scenarios in corporate governance. Scenarios are a useful tool, but who makes them matters. 

While it has been used as a corporate planning tool throughout the past five decades, the golden age of scenario analysis was in the 1970s. Royal Dutch Shell famously adopted scenario analysis as a means for navigating geopolitical risk, arguably helping it outperform peers through shocks like the 1973 oil crisis. By the end of the decade, most of the largest U.S. and multinational corporations employed scenario analysis, especially those in capital intensive businesses with long-term horizons, like the extractive industries. The adoption of scenario analysis represented a shift away from quantification—it was a technique for addressing unprecedented events and discontinuities that were challenging to capture with data. Planning through scenarios also represented an acceptance of the contingency of the future. 

In the era of climate change, scenario analysis, as a method for planning, has reemerged with a force, particularly in the financial sector. While initially pushed as a voluntary risk management tool by investors, assessment of climate risk via scenario analysis has now become a standard requirement of financial regulators around the world. In the United States, Treasury regulators ask large banks to undertake climate scenario analysis. The Federal Reserve unveiled its first climate scenario exercise in 2023. Large banks, in turn, have established Climate Scenario Design teams. 

Recently, the most widely used financial climate scenarios have come under attack for a host of methodological reasons, including their gross underestimation of climate damages. These critiques often focus on the quantification assumptions underlying the scenarios, as well as the influence and predominance of neoclassical economics at the expense of other disciplinary expertise, including climate science. This Essay joins the growing number of voices calling for scenario analysis to go back to its narrative and interdisciplinary roots. Some initial projects in this vein have started to appear, with expert roundtables producing alterative story-lines given snappy titles like “Meltdown” and “Green Phoenix,” resembling those of the 1970s. 

Scenario analysis is useful today for the same reasons it was initially developed: as an approach to planning under deep uncertainty, a way to synthesize expert knowledge across disparate fields, and a means of overcoming the limits of quantification. This Essay agrees that it will be an invaluable tool in the chaotic climate years to come. But the history outlined in this Essay also highlights how the act of predicting the future can work to shape it. Scenarios are political — not just technological or natural — projections of the future. What counts as “expert knowledge” and which experts are invited to participate in scenario building are fundamental first steps that drive scenario outcomes.Further, scenarios are performative in that the act of predicting the future can work to shape it. 

The Essay proceeds as follows. Part I presents a short history of scenario analysis as a corporate planning tool, a story more bizarre than most corporate histories. It then explains how corporate scenarios came to shape, rather than predict, global environmental governance. Part III turns to the proliferation of climate scenarios in the financial world and seeks to offer some lessons from their corporate history. Part IV concludes.

Capture

'Political Power and Market Power' (NBER Working Paper No. 33255, 2024) by Bo Cowgill, Andrea Prat and Tommaso Valletti comments 

Brandeis (1914) hypothesized that firms with market power will also attempt to gain political power. To explore this hypothesis empirically, we combine data on mergers with data on lobbying expenditures and campaign contributions in the US from 1999 to 2017. We pursue two distinct empirical approaches: a panel event study and a differential exposure design. Both approaches indicate that mergers are followed by large and persistent increases in lobbying activity, both by individual firms and by industry trade associations. There is also weaker evidence for an association of mergers with campaign contributions (PACs). We also find that mergers impact the extensive margin of political activity, for example, by impacting companies’ choice to establish their first inhouse lobbying teams and/or first corporate PAC. We interpret these results within an oligopoly model augmented with endogenous regulation and lobbying. 

Lobbying and campaign finance are essential elements of modern democracy (Ansolabehere et al., 2003; Cage, 2020; Grossman and Helpman, 1994). On the positive side, they can help elected officials gather information needed to make policy choices and can help voters become informed about candidates. However, they also raise legitimacy and fairness concerns, as agents with greater wealth can exercise greater influence over the political process. In this paper, we study the link between political influence and industry concentration. This link is important for two reasons. First, businesses represent the largest source of lobbying spend. According to data from OpenSecrets, businesses accounted for 87 percent of total lobbying spending in the US in 2019 and 36 percent of contributions from Political Action Committees (PACs) in the 2017/18 political cycle (where labor and ideological contributions also contributed a big share). 

Second, in recent years there has been rising concern that industrial concentration not only affects consumers directly through market power (potentially raising prices and reducing quantities), but also indirectly through politics (Wu, 2018; Zingales, 2017). Apprehension over the political influence of concentrated industries has appeared throughout the history of antitrust (e.g., Brandeis, 1914; Khan, 2017; Pitofsky, 1978). Incumbent firms could lobby politicians to erect barriers to entry and protect their market power. This is another form of consumer harm, but one that flows through the channel of regulation. If lobbying exhibits economies of scale, a rise in market concentration should lead to an increase in lobbying activity. If this hypothesis is correct, market power begets political power. 

To guide the empirical analysis (the core of this paper), we begin with a simple theoretical model capturing the relationship between market concentration and political influence. The model examines an oligopoly in which firms’ profits may be affected by regulation. Firms engage in lobbying activity to influence their regulation using the menu auction model by Grossman and Helpman (1994). 

We use our model to study how the political and product market equilibria change when two firms merge. A merger is a discrete event that leads to a change in concentration. We provide broad conditions for a merger to increase political influence activity. The intuition is that market competition within an industry partly dissipates the rents that accrue to firms from regulatory protection. By softening competitive pressure, a merger tends to increase the incentive of firms to lobby for regulation. Our model generates predictions for the merging entities and for the industry as a whole. It also distinguishes between the impact of mergers both at the extensive margin (firms’ choice to lobby at all) and the intensive margin (how much to lobby). 

The core of the paper studies data spanning almost two decades, 1999-2017, and asks whether mergers are associated with an increase or a decrease in political influence activities. We examine SEC-registered companies, matching each company with data about both its federal lobbying and its campaign contributions in the US (both before and after mergers). Lobbying money is mostly spent to influence specific administrations and committees, whereas PACs are geared towards getting a party or a politician elected. 

To investigate how political influence spending varies with a merger, we pursue two empirical approaches. In the first, we use a panel event study design (Athey and Imbens, 2022; De Chaisemartin and d’Haultfoeuille, 2020; Freyaldenhoven et al., 2021; Gentzkow et al., 2011; Goodman-Bacon, 2021). Qualitatively, identification in this approach relies on the idea that mergers are endogenous, but depend on fixed (or slow-moving) variables whose trends we control for. The identification assumption is that, after conditioning on all these other factors, mergers come from idiosyncratic shocks that are unrelated to the returns of political spending. Our second research design is a differential exposure design (Borusyak and Hull, 2023; Breuer, 2022; Goldsmith-Pinkham et al., 2020) that uses a logic similar to the Bartik (1991) instrumental variable design. Like other Bartik-like designs, ours employs a combination of time-varying shocks and initial characteristics of companies that are exposed differentially to those shocks. For time-varying shocks, we use economy-wide pro-merger shocks, following the well-documented pattern of mergers arriving in waves (Gort, 1969; Nelson, 1959; Weston et al., 1990). These waves span multiple sectors and have several proposed causes ranging from macroeconomic shocks to technology shocks. 

In both designs, our results suggest that mergers are positively associated with an increase in firms’ spending on political influence activities. The average merger is associated with a $70K to $180K increase in the amount spent on lobbying per period (half year) after the merger, or approximately 15% to 35% of the average per-period spend of merging firms. The average merger is also associated with an approximately $4K to $10K increase in campaign contributions per period, but this association is not statistically significant in all specifications. In particular, we link mergers to the extensive margin of influence – i.e., a firm’s choice to establish political operations at all. At the beginning of our sample, only 8% of firms lobbied, and only 5% of firms had a corporate PAC (a vehicle for corporate campaign contributions). 

During our sample period, the average merger is associated with a 1.5 to 2.1 percentage point increase in setting up an in-house lobbying operation for the first time in the company’s history (at least since government lobbying records were kept). Merging is similarly associated with a 1.6 to 1.9 percentage point increase in initiating a corporate PAC. Once initiated, political operations are highly persistent. Following the establishment of an in-house lobbying operation, an average business lobbies in 87% of the remaining periods in our sample. Once a business sets up a PAC, the average PAC is active in 76% of remaining periods. Kerr et al. (2014) find similar results about persistence. 

Across multiple specifications and outcomes, the association of mergers with influence activities is significantly stronger if the merging companies are larger, and if the merging companies belong to the same industry. Our results are consistent with the idea that lobbying scales with firm size. We find a similar positive association between mergers and political activity by the industry as a whole, and with the political spend of industry trade associations. Finally, we pursue several robustness checks, highlighting two here. First, we consider a possible mis-specification problem. Merging firms may ramp up their influence activities before the merger, perhaps to increase the chance of the transaction being approved by regulatory authorities. However, we find little evidence in the data for such an anticipation effect. 

This null result may be a reflection of the fact that most mergers during our sample period were not scrutinized by US antitrust authorities (Wu, 2018). 

Second, we measure whether firm-level political risk changes with mergers. Following a merger, firms may face more scrutiny from regulators if the merged entity becomes a politicized target of attack. The merged firm may increase lobbying, not because of rent dissipation and externalities (as in our theoretical framework), but because of a new adversarial environment. Hassan et al. (2019) develop methods for quantifying firm-level political risk based on the contents of quarterly earnings conference calls. Using this data, we find no evidence of higher political risk after a merger.