The Morrison government has directed the consumer watchdog to undertake both a long-term inquiry into digital platforms and an 18-month investigation into advertising technology.
These inquiries are in response to the Australian Competition and Consumer Commission's final report into digital platforms handed down in December 2019, which found their market power had grown substantially.
This was having an impact on competition and implications for news media businesses, advertisers and consumers.
"Digital technologies are going to be an increasingly important part of our economic and social landscape," Treasurer Josh Frydenberg said in a statement on Saturday.
"Our reforms will ensure we get the balance right and position Australia as a leading digital economy."
Opposition Leader Anthony Albanese said this is a major issue and digital giants like Google and Facebook need proper regulation.
"This is the new economy," Mr Albanese told reporters in Perth.
"Regulation has not kept up with it and the government needs to do more."
Mr Frydenberg says the government agrees with the ACCC to further inquire into digital platforms until March 31, 2025.
An interim report will be provided on September 30, 2020.
At the same time, the advertising technology, or ad-tech, inquiry will be completed by August 31, 2021 with an interim report due on December 31, 2020.
This inquiry will focus on the technologies used to supply online advertising to Australian consumers and how they gather information about consumers and use it to target them with highly personalised advertising.