Strictly monitor IT giants’ monopoly over smartphone operating systems

Two U.S. tech giants dominate the market for operating systems that run the smartphones that are indispensable to our daily lives. The Japanese government should carefully check whether there have been any negative effects resulting from their monopoly of the OS market.

In late June, the government’s Digital Market Competition Council launched a fact-finding survey on the smartphone OS market.

Apple Inc.’s iOS accounts for a little less than 70% of the smartphone OS market in Japan, while Google LLC’s Android occupies a little more than 30%. The council intends to hear from smartphone makers that are the business partners of these tech giants, and other companies involved, about whether there are unfair transactions in which they take advantage of their dominant positions.

If problems are found, the council should consider tightening regulations on these unfair transactions.

Operating systems are the basic software that runs smartphones. They act as a foundation for running a variety of apps, including search services, games and online payments. Likewise, Windows is an operating system for personal computers.

Regarding operating systems for personal computers, Microsoft Corp. has had legal actions filed against it mainly for excluding internet browsing software manufactured by companies in rivalry with Microsoft, taking advantage of the dominant power of Windows. In 2000, a U.S. district court ordered the company to split up its businesses. But the company eventually reached a settlement whose terms included requiring it to take remedial action.

As the leading role in information technology equipment has shifted to smartphones, it is necessary to be wary of similar situations surrounding smartphones.

In Europe and the United States, the oligopoly of Google and Apple has already been called into question.

Google is said to have asked manufacturers of smartphones equipped with Android to install Google’s search service as the standard from the beginning. Apple has been criticized for making business partners preferentially use its own apps for things like music.

In addition, others say the tech giants are corralling customers by complicating procedures for data migration and app switching when the customers change to other operating systems.

There is also strong criticism that Google and Apple have unilaterally taken hefty commission charges from developers who offer apps for the operating systems of the two tech giants.

In Japan, too, there are concerns about business partners and users of their operating systems being at a disadvantage, so it is essential to make a thorough investigation. The government must cooperate with the authorities in the United States and Europe to devise countermeasures.

In February this year, the government put a new law into effect that requires IT giants that engage in online shopping and app store businesses to make their transactions more transparent. Digital advertising on the internet will be added to the new law as early as next spring. The consideration of regulations on operating systems follows this.

Based on the results of the fact-finding survey, the government needs to establish an effective monitoring system with a view to strengthening measures under the Antimonopoly Law and applying the new legislation.

— The original Japanese article appeared in The Yomiuri Shimbun on July 6, 2021.