The Japanese government is preparing legislation to enforce tech giants like Apple and Google to allow third-party app stores and payment systems within their mobile operating systems, this move aims to curb the dominant position of these companies in the Japanese market and promote fair competition.
Key Points of the Legislation
Scheduled to be sent to parliament in 2024, the legislation will restrict platform operators from keeping users within their ecosystems and deter competition, focusing primarily on four areas: app stores, payments, search engines, browsers, and operating systems, the Japanese Fair Trade Commission will have the authority to impose fines for violations, potentially up to 6% of the revenue earned from the problematic activities, aligning with the current anti-monopoly law.
Impact on Tech Giants
The legislation will primarily impact multinational giants like Apple and Google, while it’s unlikely to apply to any Japanese company, Apple’s strict policy of only allowing apps from its store and mandating in-app purchases to go through its system, with a 30% commission, has been a significant point of contention, similarly, Google, while allowing third-party app distribution platforms, insists on using its billing system.
Government’s Vision for Market Fairness
The Japanese government sees these practices as reinforcing the companies’ dominance in the mobile market, the proposed legislation intends to force these companies to allow third-party app stores and payment systems, provided they are secure and protect user privacy, this move aims to break down the walled gardens of these tech platforms and encourage more competition and innovation in the mobile app market.
Expected Outcomes and Industry Reactions
With the mobile app market in Japan expected to grow significantly, the legislation is seen as a step towards diversifying the market and providing consumers with more choices, additionally, the legislation aims to prevent search engine operators from preferentially treating their services, which could significantly impact how companies like Google prioritize their services in search results.
In conclusion, Japan’s proactive approach toward regulating tech giants reflects a growing global trend of governments scrutinizing the market power of these companies, as the legislation progresses, it will be crucial to observe how it reshapes the tech landscape in Japan and potentially sets a precedent for other countries.
