Antitrust curbs to require tech giants to allow third-party app platforms and billing.
TOKYO — Japan is preparing regulations that would require tech giants like Apple and Google to allow outside app stores and payments on their mobile operating systems, Nikkei has learned, in a bid to curb abuse of their dominant position in the Japanese market.
Legislation slated to be sent to the parliament in 2024 would restrict moves by platform operators to keep users in the operators’ own ecosystems and shut out rivals, focusing mainly on four areas: app stores and payments, search, browsers, and operating systems.
The plan is to allow the Japan Fair Trade Commission to impose fines for violations. If this is modeled on existing antitrust law, the penalties would generally amount to around 6% of revenue earned from the problematic activities. The details will be worked out this spring.
The government will determine which companies the legislation applies to, based on criteria such as sales and user numbers. It is expected to affect mainly multinational giants, with no Japanese companies likely to be caught in the net.
Apple does not allow apps to be downloaded onto iPhones through channels other than its own App Store. In-app payments also go through Apple’s system, which takes a cut of up to 30%. And although Google permits third-party app distribution platforms, it still generally requires apps to use its billing system.
These effective monopolies on in-app payments can lead to users paying more for the same content or services on mobile devices than on personal computers.
The Japanese government sees this model as solidifying the companies’ dominance in the mobile market. The legislation aims to force them to allow third-party app stores and payment systems as long as they are secure and protect user privacy.
Japanese companies would be able to run dedicated game stores on iOS devices, as well as use payment systems with lower fees from Japanese fintech companies.
According to the Ministry of Internal Affairs and Communications, Japan’s mobile app market is forecast to expand to $29.2 billion in 2023, up by roughly half from 2018.
The search-related provisions of the proposed legislation would bar search engine operators from giving preferential treatment to their own services. This could, for example, ban Google from always putting its own flight-booking or restaurant reservation tools at the top of search results.
Japan’s plans follow measures like the European Union’s Digital Markets Act. That legislation, set for full implementation in 2024, bans “gatekeepers” from favoring their own tools in search results, with violators facing fines of up to 10% of their global turnover for the previous fiscal year.
In the U.S., it was reported last week that Google has agreed to pay a $700 million settlement in an antitrust case involving its app store.