Japan's App Store antitrust case

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Japan is preparing regulations to curb the dominance of tech giants like Apple and Google in the Japanese market. The proposed legislation, expected to be sent to parliament in 2024, would require these companies to allow outside app stores and payments on their mobile operating systems. The regulations aim to prevent these companies from keeping users within their own ecosystems and excluding rivals. The legislation will focus on four main areas: app stores and payments, search, browsers, and operating systems. The Japan Fair Trade Commission (FTC) has previously warned Apple and Google about potential violations of Japanese antitrust law in their handling of mobile apps. The FTC argued for further regulation to prevent anti-competitive behavior by tech platforms. A report released by the FTC found that Apple and Google hold a duopoly in the mobile market, with Apple's iOS having a market share of 46.6% and Google's Android having a market share of 53.4%. The FTC stated that there is "not enough competitive pressure" in the app store market. In February 2023, the FTC identified that Apple and Google may be in breach of Japan’s antitrust laws due to their app store policies. Apple and Google make up over 99.9% of the mobile operating systems on Japanese devices, which means most app developers are confined by the rules set by these two companies. While users on Google’s Android OS can sideload apps, Apple bans this practice. If developers refuse to follow Apple’s rules, they miss out on 46.6% of the Japanese consumer base. In response to regulatory pressure, Apple announced an update in 2021 that would allow developers of “reader” apps to include an in-app link to their website for users to set up or manage their apps. This update was made in agreement with the JFTC and closed an investigation by the commission. The proposed anti-monopoly law could result in hefty fines of up to 6% of revenue for violations. The law extends beyond app stores, targeting anti-competitive practices in search, browsers, and operating systems. This could potentially allow Japanese game companies to run their own smartphone game stores and give fintechs a chance to challenge Apple and Google’s dominance in mobile payments.
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