Make GAFA More Transparent via Intl Regulatory Cooperation

Editorial

12:16 JST, December 18, 2020

Governments around the world are increasingly concerned about market monopolization by giant IT firms and are stepping up efforts to pursue their legal responsibility in court and strengthen regulations. To ensure fair competition, it is important for the authorities in Japan, the United States and Europe to deepen their cooperation.

The U.S. Federal Trade Commission has filed an antitrust lawsuit against Facebook Inc. The FTC claims that Facebook’s acquisitions of companies, such as image-sharing app Instagram, aimed to eliminate possible competitive threats, and is calling for it to divest itself of those businesses.

Facebook has nearly 3 billion monthly users. The FTC argues that its monopoly has stifled innovation and service improvements, narrowing consumer choices. It is hoped that the actual situation will be thoroughly clarified through the lawsuit.

Google LLC, which has about a 90% share of the online search market, was sued by the U.S. Justice Department in October. It has been reported that Google banned smartphone manufacturers from preinstalling search engines other than Google’s.

The IT companies known collectively as GAFA, including Google and Facebook, are gaining market dominance with the vast amounts of data they collect globally. It would be a problem if they put their business partners and users at a disadvantage through acquisitions or other means. It is natural for the authorities of each country to tighten regulations relating to these companies.

The European Commission, which took a tough stance on GAFA before the United States did, has unveiled comprehensive draft regulations on the companies. The proposals prohibit them from giving preferential treatment to their own services in displaying search results and oblige them to delete illegal products and information.

The European Commission has imposed penalties totaling more than ¥1 trillion on Google for violating the European Union’s competition law. However, it decided to tighten anticipatory regulations by presenting them with a list of prohibited actions in advance, based on a judgement that retroactive punishments alone are not sufficient.

Japan also plans to launch such regulations by enforcing a new law in the spring of next year to make transactions regarding commission fees for online shopping and the app market more transparent.

The field of information technology is changing so rapidly that antitrust law alone is not sufficient to deal with a growing number of cases. It is important for each country to share information on IT companies, among others, and cooperate in taking effective measures.

On the GAFA side, there have been movements to try to deflect criticism. Apple Inc., which has collected a 30% commission from companies that provide apps, intends to cut the commission to 15% for small businesses.

Google has launched a new service to pay media organizations for the use of their articles and has concluded contracts with media in Germany, Britain, Australia and other countries. The company is considering the same service with some media organizations in Japan as well.

Search engines and social media are essential infrastructure for daily life. As long as the IT giants are making huge profits from these services, they have a responsibility to take every possible step to ensure transparency in their transactions and protect their users.

— The original Japanese article appeared in The Yomiuri Shimbun on Dec. 18, 2020.