Japan’s Ruling LDP Approves Bill to Regulate Tech Giants; Smartphone App Stores to be Required to Open Up

The Yomiuri Shimbun

13:33 JST, April 17, 2024

The Liberal Democratic Party approved a bill to regulate tech giants at a joint meeting of its Economy, Trade and Industry Division and other divisions on Tuesday. Under the envisaged law, the Japan Fair Trade Commission will impose a “surcharge” of 20% of their domestic sales in relevant fields if tech giants such as Apple Inc. and Google LLC. do not comply with their requirements, including opening up smartphone app stores to other companies.

The government aims to have the Cabinet approve the bill as early as this month and to pass the bill during the current Diet session.

Under the current Antimonopoly Law, the basic surcharge level for cartels is 10%, and it is only 6% for acts of “exclusion-type private monopolization,” which corresponds to violation of the regulation to be stipulated in the envisaged law. The surcharge under the envisaged law is much higher than these levels, and it will be raised to a maximum of 30% if violations are repeated.

According to the JFTC, the total sales by app distributors and other companies through Apple’s App Store amounted to approximately ¥1.6 trillion in the Japanese market in 2021. Assuming that Apple took a 30% commission from the sales, Apple’s revenue subject to the surcharge is approximately ¥480 billion. Based on a simple calculation, if Apple violates the envisaged law, the surcharge for one year amounts to approximately ¥100 billion.