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Japan’s parliament has passed a new law aimed at improving competition in smartphone app stores. The legislation will prevent major tech companies like Apple and Google from blocking third-party companies from selling and operating apps on their platforms.
The Act on Promotion of Competition for Specified Smartphone Software was approved by Japan’s upper house on Wednesday (June 12). It will come into effect once it receives the Cabinet’s formal approval, which is expected within the next eighteen months.
The law specifically targets providers of Apple’s iOS and Google’s Android operating systems, along with their respective app stores and payment platforms, by prohibiting them from restricting the sale of apps and services that compete with those offered by the native platforms.
The legislation seeks to stop monopolistic practices by dominant companies, forcing them to compete on pricing with smaller competitors, which is expected to benefit consumers and spur innovation.
The law will also bar these tech giants from favoring their services in internet search results.
Violating the new regulation will bring a penalty of 20 per cent of the domestic revenue of the service found to be in breach. The fine may rise to 30 per cent if the companies continue their anti-competitive practices.
This new penalty is a major increase of the existing fine, more than tripling the previous 6 per cent levy on revenue from services considered to have an anti-competitive advantage under the antimonopoly law.
The legislation mirrors a similar measure introduced by the European Union in March.
In December, Epic Games beat Google in court after a three-year-long legal battle against the firm over how it operates the Play Store.
Why is Japan changing the law for Apple and Google app stores?
In an outline of the act published by the Japan Fair Trade Commission, it states: “Self-correction by market mechanisms such as new entries is difficult and it takes a remarkably long time to demonstrate anticompetitive activities in response to individual cases under the Antimonopoly Act.” This suggests that existing antimonopoly rules may not be enough to deal with the current smartphone ecosystem.
It goes on to add that as a result of the situation, “[It] is necessary to develop a competitive environment for Specified Software for smartphones, while ensuring security, privacy, etc., so that through competition, innovation by various entities will be fostered and then consumers will be able to select the various services that will be created by such innovation and enjoy the benefits of those services.”
Featured image: Canva / Ideogram
