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The Japan Fair Trade Commission (JFTC) has begun an investigation into U.S. firm Google LLC, which holds an overwhelming share of the market for smartphone search apps, on suspicion of violating the Antimonopoly Law.
To ensure a fair competitive environment, the actual situation should be thoroughly clarified.
According to the JFTC, Google is suspected of requiring manufacturers of smartphones equipped with its operating system to install Google’s search, browsing and other apps on their devices by default, and instructing them to place the apps in prominent positions on the screen.
Google is also suspected of signing agreements with smartphone makers to share its advertising revenue on the condition that rival companies’ search engine apps are not installed.
If these actions restricted the business of rival companies and smartphone manufacturers, they could violate the Antimonopoly Law, according to the fair trade watchdog. It is quite natural that the JFTC launched an investigation.
Google has an about 80% share of the domestic search service market, and a major source of the company’s revenue is its business of distributing ads related to the content of users’ searches. Since Google’s search services are provided free of charge, it is difficult for consumers to sense the negative impact of such services.
However, if Google prevents rival companies from competing on an equal footing, consumers’ choices will be limited. There are also concerns that innovative technologies and services will be less likely to emerge. If this happens, consumers will ultimately be disadvantaged.
With the emergence of generative artificial intelligence, new search engine apps are being developed, and the adverse effects of Google’s strong presence in the market could be significant.
The European Commission imposed a fine of €4.3 billion (about ¥690 billion) on Google in 2018 over issues raised by the JFTC. Also, the U.S. Justice Department filed a lawsuit against Google in 2020 that is pending. Both the European and U.S. authorities believe that the violations by Google have continued for more than 10 years.
The JFTC must exchange information with the European and U.S. fair trade authorities, which are taking the lead on this issue, and conduct a thorough investigation. If a violation of the Antimonopoly Law is acknowledged, it is hoped that the JFTC will deal with the case strictly, including administrative penalties.
Even when there are suspected violations of the Antimonopoly Law, JFTC investigations are not normally made public, in principle, until administrative penalties such as an order to pay a surcharge have been decided on.
This was the first time for an announcement to be made at the initial stage of an investigation before concrete administrative penalties have been determined. The JFTC said it aims to obtain information from third parties, such as business partners and users, before the full-fledged investigation.
Hopefully, the new method will be used effectively to gather a wide range of information. If the JFTC can uncover any negative business dealings between Google and its business partners, it could heighten effectiveness to deter wrongdoing before it occurs.
