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The Japan Fair Trade Commission has issued its first strict administrative order against Google LLC, which is seen as dominating the search engine market, over the strong-arm business model that the U.S. tech giant has established.
Google must take the decision seriously and work earnestly to rectify the situation.
The JFTC found that Google had violated the Antimonopoly Law because it was unfairly restricting the business of its partners by pressuring them to give it preferential treatment. The watchdog’s issuance of a cease-and-desist order is its first against a U.S. tech giant, according to the regulators.
The JFTC also ordered Google to select lawyers and other experts who will make up a third party and monitor whether the company is properly implementing measures to prevent the practices from recurring over a period of five years. The monitors will report their findings to the watchdog.
According to the JFTC, Google forced smartphone manufacturers to preinstall its own apps, such as the Google Chrome web browser, as a condition for allowing its Google Play app store to be installed on their devices.
In addition, Google demanded that manufacturers not install search engine apps from its competitors, in exchange for which it paid them some of the revenue generated from its own search-linked advertising services.
The Antimonopoly Law prohibits “trading on restrictive terms,” the practice of imposing conditions that unduly restrict the activities of business partners, because it can undermine healthy competition. It is clear that Google’s actions constitute a violation of the law.
If Google did not demand such restrictive trading, manufacturers would have been able to install similar apps provided by Microsoft Corp. and LY Corp. on their smartphones, thus benefiting users. Google’s actions have also caused harm by narrowing the choice of services for consumers.
The JFTC’s recent decision to take the strong step of issuing a cease-and-desist order can be described as a major turning point in the tug-of-war with tech giants over regulation.
A cease-and-desist order is issued in order to make a company found to have violated the law stop illegal activities as soon as possible by demanding it take preventive and other measures. The company will receive fines or other penalties if it fails to comply with the order.
Tech giants have made huge profits by collecting vast amounts of data from their users while providing a wide range of services for free. Although the JFTC has stepped up its investigations against them based on the Antimonopoly Law in recent years, the watchdog has struggled to uncover violations because technological innovations are taking place so fast.
For this reason, the JFTC has often ended up taking an administrative action called “commitment procedures,” under which the companies in question have to promise to make improvements on a voluntary basis. In the current case, it seems that the watchdog’s meticulous investigations have borne fruit, as it accumulated evidence, including business contracts, over a 1½-year period.
The increasing scrutiny of IT giants by regulators has become a global trend. It is important for Japanese authorities to handle this issue in a strict manner while cooperating with their counterparts in other countries.
