Japan Targets Apple, Google With Legislation To Curb App Store Monopolies

In a bid to regulate the tech giants Apple Inc. AAPL and Google's parent company, Alphabet Inc. GOOGL GOOG, Japan is formulating legislation aimed at breaking their app store monopolies.

What Happened: A recent report from Nikkei Asia revealed Japan’s plan to enforce laws mandating the tech titans to allow third-party app platforms and payment systems on their mobile operating systems to curb their market dominance.

The proposed legislation, set for parliamentary submission in 2024, aims to restrict platform operators from monopolizing users within their ecosystems and alienating competitors. The law will primarily focus on app stores and payments, search mechanisms, web browsers, and operating systems.

The Japan Fair Trade Commission is set to enforce fines for any violations. Penalties could reach up to 6% of the revenue generated from the infringing activities if the new rules mimic existing antitrust laws.

The Japanese government will establish the criteria for companies subject to the legislation, such as sales and user numbers. It is anticipated that predominantly multinational corporations will be affected, with no Japanese companies likely to be ensnared.

See Also: Tesla Investor Ross Gerber After Getting A New Rivian R1S: ‘I’M Bored Of The Model Y’

Apple currently only allows apps to be downloaded onto iPhones via its own App Store, with in-app payments also passing through Apple’s system. Google, although allowing third-party app distribution platforms, still typically requires apps to utilize its own billing system.

These monopolistic practices can result in users paying more for identical content or services on mobile devices compared to personal computers. The forthcoming legislation aims to mandate these companies to permit third-party app stores and payment systems, provided they are secure and safeguard user privacy.

Why It Matters: The move from Japan follows similar actions from the European Union with its Digital Markets Act and the United States, where Google recently agreed to a $700 million settlement in an antitrust case involving its app store.

In June, the Competition Commission of India considered enforcing Apple to adjust its App Store billing policies, mirroring its action against Google.

Earlier, in November, Apple also began adjusting its strategy to comply with the European Union's Digital Markets Act, which promotes competition by forcing Apple to allow iPhone users to sideload apps from outside the official App Store.

Read Next: ‘Dogecoin Killer’ Shiba Inu’s Burn Rate Skyrockets, DOGE Predicted To Rally This Christmas And More

Image Courtesy: Shutterstock