Key Takeaways:
- The Japanese government is set to introduce legislation that will bar tech giants like Apple and Google from preventing third-party app stores and payment systems on their mobile operating systems
- The new law, expected to be implemented early next year, also bans internet search engines from giving preferential treatment to their in-house tools and services
- Japan is modeling the forthcoming legislation on the EU’s Digital Markets Act, which fines multinational violators up to 10% of their global turnover from the previous fiscal year
Japan is reportedly preparing regulations requiring tech giants like Apple and Google to allow third-party app stores and billing systems on their respective mobile operating systems – iOS and Android.
According to a report by Nikkei Asia, the move is aimed at curbing the companies’ monopoly in the Japanese market. Authorities believe the new legislation, slated to be sent to the parliament in 2024, would restrict Apple and Google from forcing users to remain in their ecosystem while shutting down rivals.
The proposed bill will focus on four key areas: app stores and payments, search, browsers, and operating systems.
Japan to Pass New Bill in 2024 Supporting Third-Party App Stores and Payment Systems on iOS and Android
Once approved, the legislation will allow the Japanese Fair Trade Commission to impose fines for violations. If the penalty structure is modeled around the country’s existing anti-trust laws. Then the fines would generally amount to around 6% of the revenue earned from problematic activities.
Nikkei suggested that details of the bill will be worked out by lawmakers in the spring.
The government will determine which companies the legislation applies to based on the sales and user numbers for their services. The regulation is expected to mainly affect multinational tech firms, and therefore, no Japanese companies will fall in the bracket.
Google does allow Android users to leverage third-party marketplaces to download apps. However, it still requires these apps to use its native billing system for payments. However, Apple is strict about its business and only allows apps on the iPhone that are listed on the App Store.
Critics argue that these effective monopolistic practices can lead to Android and iPhone users paying more for the same content or services on mobile devices than on their personal computers.
The Japanese government views these measures as multinationals like Apple and Google stamping their authority on the smartphone market. The upcoming legislation will force the tech giants to allow third-party app stores and payment systems on their operating systems as long as those services are secure and protect users’ privacy.
This also means that Japanese app and game developers and fintech companies will be able to operate dedicated app stores as well as payment systems with lower fees on iOS and Android.
As per the Ministry of Internal Affairs and Communications’ figures. The country’s mobile app market is estimated to be valued at $29.2 billion in 2023. This figure is up by roughly 50% since 2018.
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Search Engines Will Be Banned From Prioritizing Their In-House Services In Results
Provisions of the proposed bill would also bar search engine operators from giving preferential treatment to their in-house services.
which means that Google would be banned from promoting its tools such as Google Maps or Google Translate at the top of search results.
Japan is seemingly following the path of the European Union. Which is set to implement the Digital Markets Act in 2024. The regulatory framework would ban “gatekeepers” like Apple and Google from favoring their own services in internet search results. Violators may be forced to pay up to 10% of their global turnover for the previous fiscal year as a penalty.
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