Japanese Fair Trade Commission Opens Investigation of Mobile Operating Systems

Report from Nikkei Asia

In Brief – The Japan Fair Trade Commission (JFTC) has opened a new antitrust investigation into Apple and Google related to dominance of mobile operating systems. The investigation will cover systems for smart phones, smartwatches and other wearable devices. The JFTC recently settled a dispute with Apple regarding its mobile payments rules. Apple, which has a 70% market share in Japan, agreed to allow “reader apps”, services that provide content such as e-books, video and music, to communicate with users about alternative payment systems. A similar change was later ordered by Federal Judge Yvonne Gonzalez Rogers in her ruling that otherwise gave Apple a major antitrust win over Epic Games.

Context – The ruling by Federal Judge Gonzalez Rogers that Apple’s App Store was not a monopoly and it could mandate its payments system to collect its fees has been the biggest news in app store policy this year. It sets the bar for US Courts looking at antitrust claims that allege the mobile platform giants are monopolists dominating their own platforms (at least related to fees). While Epic is appealing in US Federal Court and litigating in Europe, the UK and Australia, other regulators and legislatures are taking on the same questions. For example, South Korea has enacted legislation requiring large mobile operating system companies (Google and Apple, but the focus in Korea is Google) to accept alternate payment systems. Similarly, the Dutch competition authority is reported to have concluded that Apple’s rules on in-app payments violates its competition law and ordered a change, basically the opposite of the US Court ruling. And the European Commission competition authority is investigating a similar question. All the conflicts and contradictions are raising the issue of whether the platform giants will need to offer tailored services market-by-market, withdraw from some markets, or, as hinted at by Google in Korea, simply find a new method to charge large developers to access to the platforms.