New legislation in Japan reduces monopoly of dominant app stores

22 July, 2024
monopoly legislation japan
On Wednesday, June 12th 2024, Japan enacted groundbreaking legislation aimed at ensuring that tech giants like Google or Apple provide access to third-party smartphone apps and payment systems on their platforms. This law represents a significant move to bolster fair competition, enhance consumer choice, and reduce monopolistic practices by dominant digital platform operators.

Key Provisions of the Legislation

1. Access to Third-Party Apps:

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Mandatory Inclusion:

Dominant app stores are required to allow third-party apps on their platforms without undue restrictions or favoritism towards their own apps.

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Fair Treatment:

The law ensures that third-party apps are given equal visibility and opportunities compared to those offered by the platform operators.

2. Payment Systems:

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Alternative Payment Options:

Tech giants must permit the use of third-party payment systems, allowing app developers and consumers to choose their preferred payment methods.
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Fee Regulations:

The legislation limits the fees that platform operators can charge for transactions made through third-party payment systems.

3. Transparency and Accountability:

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Clear Guidelines:

Platforms must publish transparent guidelines for app inclusion and payment system integration, ensuring fair and consistent application of rules.
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Regular Audits:

The law mandates regular audits and reports to ensure compliance, with significant penalties for non-compliance.

Impact on the Japanese market and industry to domestic and foreign companies and consumers:

1. Enhanced Competition:

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Leveled Playing Field:

Smaller app developers and payment system providers will benefit from a more leveled playing field, increasing innovation and diversity in the digital market.
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Market Entry:

Reduced entry barriers will encourage new players to enter the market, fostering a more competitive environment.

2. Consumer Benefits:

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Increased Choice:

Consumers will have access to a wider range of apps and payment options, improving their overall user experience.
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Lower Costs:

The availability of alternative payment systems may lead to lower transaction fees and costs for consumers.

3. Regulatory Compliance:

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Operational Changes:

Dominant platforms will need to make significant adjustments to their business practices, including updating app store policies and integrating third-party payment systems. These changes may imply initial costs, nevertheless, long-benefits are expected to outweigh these expenses.

4. Global Implications:

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Cross-Border Impact:

International tech companies operating in Japan will need to align their global practices with the new regulations, potentially affecting their operations in other markets.
In conclusion, the new legislation enacted by Japan to ensure access to third-party apps and payment systems on dominant digital platforms marks a significant step towards promoting fair competition and consumer choice. While tech giants will face increased regulatory scrutiny and compliance costs, the long-term benefits for consumers, smaller developers, and the overall market are substantial fostering innovation, more options for consumers, and fair competition.

This law not only strengthens Japan’s digital market but also joins the precedent set by the European Commission’s Digital Markets Act for global digital market regulation.

WOULD YOU LIKE TO KNOW MORE?

Consult with our Consumer Law and Unfair Competition department or our Asia office in Tokyo at asia@olartemoure.com.

Our Experts

Carlos A. Parra
Carlos Parra

Partner | Head of
Asia Office

Santiago Lombana
Santiago Lombana
Antitrust and Consumer
Law Coordinator

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