Japan's Antitrust Law Targets Apple and Google: Promoting App Store Competition and Strengthening User Choice

Japan's Antitrust Law Targets Apple and Google: Promoting App Store Competition and Strengthening User ChoiceOn March 31st, the Japan Fair Trade Commission (JFTC) announced that the "Act on Promotion of Competition in Smartphone Software," slated for implementation this year, will target Apple (including its subsidiary iTunes) and Google. This move aims to break Apple and Google's duopoly in Japan's smartphone operating system and app distribution market, fostering fair competition and empowering users with more choices

Japan's Antitrust Law Targets Apple and Google: Promoting App Store Competition and Strengthening User Choice

On March 31st, the Japan Fair Trade Commission (JFTC) announced that the "Act on Promotion of Competition in Smartphone Software," slated for implementation this year, will target Apple (including its subsidiary iTunes) and Google. This move aims to break Apple and Google's duopoly in Japan's smartphone operating system and app distribution market, fostering fair competition and empowering users with more choices. Passed in 2024, the act is scheduled for full implementation by the end of 2025.

Apple and Google control over 90% of Japan's smartphone OS market, creating a de facto duopoly. This highly concentrated market structure has hindered the entry of smaller IT companies, stifling innovation and limiting consumer choice. The JFTC hopes the act will create a fairer and more accessible market environment for domestic SMEs, promoting the overall health of the industry.

The act prohibits Apple and Google from erecting barriers in app distribution and payment systems that impede market entry. This means they can no longer leverage their market dominance to force developers to use their proprietary app stores and payment systems, or impose unfair conditions on those using alternative platforms. This will break open their closed ecosystems, creating opportunities for other app stores and payment providers, ultimately benefiting consumers through increased choice and more competitive pricing and services.

To ensure effective implementation, Apple and Google are obligated to submit annual compliance reports to the JFTC. This allows the JFTC to monitor their actions in real-time and address any violations promptly. Furthermore, the act mandates that Apple and Google provide choice screens, allowing users to select services like search engines from multiple providers, further enhancing user autonomy. Users will no longer be passively subjected to Apple and Google's default options.

To support the new law's implementation, the JFTC will drastically increase its digital workforce. Reports indicate a tripling of staff dedicated to the digital sector, reaching a total of 50 personnel. This significantly boosts the JFTC's regulatory capacity, enabling more effective enforcement and addressing the increasingly complex digital market landscape. The increase also underscores the JFTC's commitment to tackling digital market monopolies.

Apple, in response, expressed concerns about potentially having to provide features developed with its commitment to user privacy and security to companies that may not share those same commitments. Apple emphasized its dedication to user privacy and security and stated it will cooperate with the JFTC in implementing the law. This suggests that the act's implementation may pose challenges to Apple's existing business model and operational strategies.

This new act has profound implications for Japan's digital economy. It will not only promote fair competition in the smartphone app store market but also set a precedent for other digital sectors, signaling a stronger regulatory focus on fair competition. Breaking monopolies and fostering innovation ultimately benefits Japanese consumers and the entire digital ecosystem, driving the digital economy towards a healthier and more vibrant future.

The act has sparked considerable industry discussion. Some believe it will positively impact innovation and create more opportunities for SMEs; others worry about potential negative impacts on large tech companies business models and unforeseen consequences. The act's effectiveness and its impact on Japan's digital economy require further observation. The JFTC's regulatory strength and enforcement efficiency will be crucial to its success.

Addressing Apple's concerns, the JFTC may need to develop more detailed regulations to balance competition promotion with protecting user privacy and security. Careful consideration is needed to avoid negatively impacting user experience. The JFTC must also enhance communication and coordination with businesses to ensure smooth implementation and minimize negative impacts.

In conclusion, Japan's "Act on Promotion of Competition in Smartphone Software" marks a significant step in digital economy regulation. It will reshape Japan's smartphone app market and provide valuable lessons for other countries grappling with digital market monopolies. Ongoing observation of its implementation and its impact on Japan's digital economy is crucial. This will be a long and complex process requiring collaborative effort to achieve fair competition.