The Communications Alliance, including companies such as Telstra and Optus, and also tech giants Google and Apple, have warned the Australian government of "difficult choices" in case the cybersecurity bill is passed.
The main concern of the companies is that they won't be informed about government-ordered software running on their own devices, according to SBS, citing officials.
"It's possible, for example, that an engineer in a telecommunications company could be ordered to alter the network or services to create vulnerabilities or backdoors and not be able to tell senior management about that," CEO John Stanton said in an interview.
The bill is aimed at tracking the movement of Australians returning home from fighting in Syria and Iraq and to lessen the number of extremists online, according to the prime minister.
The Muslim community in Australia has already been angered following Morrison's comments on the bill.