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Japan is poised to mandate that Apple and Google permit sideloading

In a bid to challenge the overwhelming influence of Apple and Google in Japan, the government is set to introduce legislation in 2024, compelling these tech giants to permit external app stores and alternative payment systems on their mobile operating systems, reports Nikkei Asia.

The proposed regulations, focusing on app stores, payments, search, browsers, and operating systems, aim to address the potential abuse of these companies’ powerful positions. The Japan Fair Trade Commission is anticipated to impose fines, potentially amounting to approximately 6% of revenue generated from identified problematic activities. The legislation seeks to foster competition, creating a level playing field and preventing tech giants from suppressing potential rivals.

Initiated in 2020, antitrust investigations by the Japanese government targeted major tech players, including Google, Apple, Amazon, and Facebook. Japanese developers also expressed dissatisfaction with the App Store’s business model. By 2023, the regulatory body concluded its extensive study, affirming the significant dominance of Apple and Google in the mobile app market.

Apple’s requirement for in-app payments through its system, with a substantial cut of up to 30%, and Google’s practice of usually requiring apps to use its billing system, are perceived as solidifying their dominance. This can lead to users paying more for the same content or services compared to personal computers.

The proposed legislation aligns with global efforts to regulate tech giants, reminiscent of the European Union’s Digital Markets Act set for full implementation in 2024. These measures reflect a growing international sentiment against monopolistic practices, emphasizing fair competition and user choice.

As Japan’s mobile app market is projected to reach $29.2 billion in 2023, a nearly 50% increase from 2018, these regulations signify a strategic move to foster a more competitive and dynamic digital marketplace. The Japanese government aims to strike a balance between encouraging innovation and preventing anti-competitive practices, aligning itself with international efforts to rein in the dominance of tech giants in the digital landscape.

In a related development, the Japanese government recently announced plans to require Apple and Google to be responsible for paying sales tax on apps and in-app content developed by organizations outside the country.

Source: adapted from an article by Maya Robertson, Author of Archives for Mobile Marketing Reads.

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