After Europe, Japan introduces law to curb Apple and Google’s app store dominance

Japan’s parliament passed a landmark law on Wednesday, officially titled the Act on Promotion of Competition for Specified Smartphone Software. The law is a direct response to concerns about stifled competition and consumer choice, particularly regarding Apple’s iOS and Google’s Android operating systems, which have dominated the smartphone market.

This legislation, echoing some elements of Europe’s recent Digital Markets Act (DMA), aims to prevent tech giants like Apple and Google from monopolizing app sales and operations on their respective platforms, a practice generally known as “gatekeeping.”

The Fair Trade Commission of Japan will be responsible for identifying the companies that fall under this new law and ensuring their compliance by requiring regular compliance reports and continuous monitoring.

Should these companies violate the new regulations, they will face hefty fines — 20 percent of the offending service’s domestic revenue, which can increase to 30 percent if the anti-competitive behavior continues. These fines represent a substantial increase from the existing anti-monopoly penalties in Japan, which are set at 6 percent of revenue gained through unfair practices.

What Japan’s new law means for tech companies

In essence, the law seeks to dismantle barriers that have long favored the dominant players and create a more level playing field for all participants in the app ecosystem. This is expected to encourage price competition, leading to lower costs for consumers and promoting innovation in the market.

The act also addresses concerns about the misuse of user data. It prohibits tech companies from using acquired data, such as usage information and sales numbers, to gain an unfair advantage in competing with third-party services.

Outlined in the new regulations, the law specifies that companies identified under the law as ‘designated providers’ cannot prevent third-party providers from offering their own app stores, using third-party billing systems, or providing items through websites.

Additionally, they cannot unfairly discriminate against app developers or restrict the use of third-party browsers. Much like Europe, Japan wants users to be able to change default settings easily and have a choice among similar services for browsers and search services.

Scheduled to take effect by the end of 2025, this legislation mirrors regulatory efforts seen in other parts of the world. The European Union’s Digital Markets Act, which was fully implemented in March, and recent legal actions by the U.S. Department of Justice against large tech firms illustrate a global push towards stricter control over digital markets.