Japan Govt Eyes Rules to Promote Competition in App Marketplaces

The Yomiuri Shimbun

16:37 JST, June 2, 2023

The government plans to introduce rules covering app marketplace services operated by IT giants in a bid to boost competition and reduce prices for consumers.

The rules would force Apple Inc. to make it possible for app marketplaces other than its own App Store service to run on iPhones and prohibit Google LLC from prioritizing its own services in search results.

The government is considering enshrining the regulations in a new law and aims to submit a bill during next year’s ordinary Diet session at the earliest.

A council from the government’s Headquarters for Digital Market Competition is hammering out the details of the proposed regulations. It is expected to submit its final report this month at the earliest.

If realized, the rules would be the second major set of regulations targeting IT giants, following 2021’s Law on Improving Transparency and Fairness of Digital Platforms, which makes it mandatory for such firms to disclose information such as their terms and conditions.

Apple and Google hold a roughly even share of the smartphone operating system market in Japan. Consequently, app developers must follow the rules set down by the two IT giants.

Apple has made it impossible for iPhone owners to use app marketplaces other than its own App Store, and app developers and operators have to pay hefty commissions to Apple, triggering strong criticism that such actions stifle competition.

The government’s proposed regulations would allow other businesses to enter the app marketplace sector. The government expects major Japanese telecommunication companies and IT giants such as Microsoft Corp. to enter the fray.

By boosting competition, the government aims to lower the fees app developers pay to marketplace operators, which should lead to lower prices for consumers.

On devices that run Google’s Android operating system, apps developed by Google, such as Google Maps, get prioritized in search results.

The government plans to introduce new rules that would make choosing other services easier.

In a similar move, the European Union has enacted digital markets legislation that imposes strict regulations, such as prohibiting major IT firms from forcing customers to use their own services.

The Japanese government plans to work out the finer details of the new rules, using the EU regulations as a guide.