Demand corrective action to ensure fairness in transactions

Editorial

12:30 JST, November 25, 2022

It is unacceptable for tech giants in a dominant position to impose unfavorable conditions on the companies with which they do business. The government should strongly urge them to correct their problematic behavior.

The Economy, Trade and Industry Ministry has compiled draft documents to request two companies, Apple Inc. of the United States and Amazon Japan G.K., to improve their transactions. The ministry said the documents will be officially decided and released by the end of this year after soliciting public opinion.

In February 2021, a new law went into force to encourage tech giants to make their transactions more transparent. Based on this law, the ministry is required to conduct inspections and compile a document evaluating the efforts of tech giants once a year.

Google LLC, Rakuten Group, Inc. and Yahoo Japan Corp. are also among the companies subject to inspections under the law. This time, Apple and Amazon will be cited by name over problems. This will be the first case in which improvements will be sought under the new law. It is important to take advantage of the law as a first step to ensure that transactions are being conducted appropriately.

According to the ministry, Apple raised the prices of smartphone games and other software in its App Store in October. At that time, Apple provided only a 15-day notice period between notification and implementation for app providers, and many of them were forced to deal with Apple’s decision, resulting in confusion.

Amazon, in some cases, unilaterally suspended transactions with online shopping vendors without providing adequate explanations. Some vendors have complained that their sales proceeds were withheld and received only boilerplate email replies to their inquiries.

The two companies must take the suggestions seriously and make efforts to improve.

However, there is no enforcement power in the demand for correction to be issued. Some believe that there is a limit to simply relying on voluntary responses.

The European Union has enacted the “Digital Markets Act,” which has enforcement power against tech giants, and prohibits them from such matters as giving preferential treatment to their own services on online shopping and search sites and using data obtained from other companies to improve their own services.

Using the EU system as a reference, Japan, too, needs to deepen the debate on whether enforcement power should be introduced in the regulation of tech giants.

In addition to the issues to be cited in the documents, vendors and clients are deeply dissatisfied with such matters as the high commissions charged for app sales as well as the lack of transparency in the effectiveness and pricing of digital advertising.

The Fair Trade Commission plans to investigate the business dealings of news distributors, including Google of the United States and Yahoo. The FTC will investigate, for example, whether the fees paid to news organizations such as newspapers and TV stations are being kept unreasonably low.

The rise of tech giants must not be allowed to undermine the foundation of various news reporting and free speech. The government needs to promote the appropriateness of business transactions by tech giants in a wide range of fields.

(From The Yomiuri Shimbun, Nov. 25, 2022)