Gene Burrus is global policy counsel for the Coalition for App Fairness, a Washington-based advocacy group for app developers.
The Japanese Diet looks set this week to join the list of legislatures and regulators around the world moving to protect consumers and innovators from the abusive conduct of Apple and Google in mobile phone app ecosystems.
The upper house is expected to vote on a new law that would create a fairer and more competitive environment for mobile app developers in Japan. The bill was already approved by the lower house last week.
In recent years, developers in Japan have been subject to artificial, arbitrary and anticompetitive constraints imposed by the two companies that control mobile operating systems. The new law would provide the government with tools to quickly and effectively stop abusive behavior, freeing developers to compete with the world’s largest companies and providing a boon for both Japanese businesses and consumers.
Smartphones have become the primary way most people access the internet and are integral to daily life for billions of consumers globally. But the mobile ecosystem market is currently broken due to the disproportionate power of just two companies.
After in-depth study, Japan and other governments have concluded that Apple’s and Google’s mobile app stores are rife with abuses that stifle competition and innovation.
Specifically, the two companies extract monopoly rents from app developers and force small developers to hand over private data that enables the pair to create optimized and integrated rival apps. At the same time, they block developers from introducing convenient features — such as in-app audiobook purchases that Spotify has sought to offer — by forcing transactions to go through their own payment channels.
Japan, like other jurisdictions, has recognized that the only answer is government intervention to stop the abuses and restore competition.
Apple’s and Google’s defenders have attacked Japan’s proposed law because they know that it will force them to give up control of the mobile app economy and chip away at their profit margins. We have already seen this strategy play out in other jurisdictions including the European Union and the U.K. The Diet should not be deterred by such hollow arguments.
Critics argue that Japan’s new bill is unnecessary because the country’s mobile ecosystem is thriving and say that the dominance of Apple and Google is a sign of a healthy market. They suggest that the proposed regulations are misguided because Japan’s technology sector is already strong and innovative. But such arguments ignore the fact that truly competitive markets depend on the existence of competitive options and consumer choice.
The critics also ignore history. We know that the kind of intervention to rein in dominant platforms contemplated by the new law can unleash innovation because it has done so before. Thirty years ago, Microsoft occupied a similar position of control over internet access through its Windows operating system platform.
Eventually, at the urging of companies in Silicon Valley, the U.S., EU and others took action to limit the power and abuses of Microsoft. As a result, innovators, including Apple and Google, were able to freely build innovative businesses serving customers on Windows computers without interference from Microsoft.
There is no doubt that the U.S. had a robust tech industry at that time, but the actions of the U.S. Justice Department opened the door to an explosion of innovation. This intervention constrained the power of the dominant gatekeeper of the time and paved the way for new consumer choices and, ironically, the success of companies like Apple and Google.
Today we find ourselves in a similar situation. Internet access has moved from PCs to mobile devices. Right now, two companies have a chokehold on that access. Despite widespread recognition of their abuses, Apple and Google for too long were unchecked by enforcers. For consumers and developers to have the opportunity to benefit from a thriving mobile economy, laws like the one being considered by the Diet have proved necessary.
That consumers and developers in Japan and around the world have had to endure more than a decade of monopolistic abuses shows why new measures, in addition to existing competition laws, are needed.
The EU and U.K. have already acted. In the U.S., the Open App Markets Act won approval from a Senate committee in a bipartisan 20-2 vote in 2022, and the Justice Department is pursuing a case against Apple regarding anticompetitive conduct.
The need is clear, the benefits are clear and countries around the world are mobilizing to act.
In response, Apple and Google are engaging in scare tactics to avoid regulation and competition. These include “doomsday” claims that users’ privacy and security will be compromised if the companies are forced to loosen control over users’ apps.
The reality, however, is the opposite. Competition is the only reliable means to ensure that important considerations like privacy and security are prioritized.
It is also important to note that Apple and Google are not the U.S. Just as a number of American companies, including Apple and Google, encouraged strong enforcement against fellow U.S. company Microsoft 25 years ago, all independent developers in the U.S. and elsewhere will benefit from the kind of new law that the Diet is considering.
By adopting this legislation, Japan would help set a standard for digital market fairness and encourage other countries to follow suit. This would strengthen its links with countries that value innovation, consumer choice and fair competition.
The Diet’s proposed app store law is a forward-thinking measure that promotes innovation, consumer choice and fair competition in the digital market. By loosening the control of dominant players like Apple and Google, the legislation would create a more open and dynamic ecosystem where innovation can thrive and consumers reap the benefits.
