Diet OK’s bill to promote competition between smartphone apps

TOKYO (Jiji Press) – Parliament on Wednesday passed a bill to promote competition in smartphone apps.

The legislation, apparently aimed at regulating the activities of information technology giants such as Google LLC and Apple Inc., was approved during the plenary meeting of the House of Councilors that day. The House of Representatives approved this last month.

The new law bans blocking new entrants to the app store and other smartphone software markets, in an effort to ensure a level playing field. Violators will face a fine equal to 20% of their turnover from the affected industries in Japan.

The expectation is that the law will give app users more choices and could lead to cheaper and better quality services. It could also better protect app developers, whose revenues are under pressure from high fees imposed by IT giants, industry sources said. The law also covers search engines, operating systems and browsers.

The penalty rate is 30% for repeated violations to increase the effectiveness of the regulations. Japan’s anti-monopoly law imposes a fine equal to 6% of sales for actions to block new market entry.

The law, which comes into effect within 18 months, calls on IT giants to report annually on their compliance. It is designed to bring Japan’s regulations in line with those in other advanced countries.

In March, the European Union began full implementation of its Digital Markets Law, which aims to keep tabs on IT giants. A series of lawsuits have been filed in the United States against IT giants for allegedly violating the country’s antitrust laws.