Report from the Japan Times
In Brief – The Japanese Fair Trade Commission has formally designated three companies as being subject to the new law regulating major information technology companies in the smartphone application market, the American mobile ecosystem giants Google and Apple, and iTunes K.K., an Apple subsidiary in based in Tokyo that manages iTunes for Apple in the market. The law regulates app stores, operating systems, browsers and search engines, and prohibits the two giants from blocking the entry of other companies into their app mobile market or giving preferential treatment to their own services. Google is subject to regulation in all four areas, while Apple will face restrictions in three areas excluding search engines. For iTunes, restrictions will apply to the app store it operates with Apple. Last December, the JFTC determined that the new law would apply to mobile companies with an average monthly user base of 40 million or more. The law goes fully into effect in December.
Context – Japan has pursued more moderate digital regulation than the EU and the UK. There are five digital giants in Japan – Amazon, Apple, Google, Rakuten and Yahoo Japan. Two are Japan-based. None of the original six digital “gatekeeper” companies regulated by the EU’s Digital Markets Act (DMA) is European. And it’s unlikely any UK-based companies will be designated as having “Strategic Market Status” under the Digital Markets Competition and Consumers Act (DMCCA). If Japan’s app store regulation reflects the country joining the European trend of regulating digital markets rather than sticking to traditional antitrust enforcement, it’s noteworthy that they have narrowly chosen a market with just two digital giants, both not Japanese. And they picked a digital market where the regulatory tide is well underway elsewhere. In the EU, the Commission has rejected both Google’s and Apple’s app store rules for not meeting the DMA’s rules on “steering”, meaning giving users easy access to low fee alternatives. In the US, federal judges are covering much the same ground in the federal antitrust cases filed by Epic. And both will soon be regulated under the DMCCA.