In a landmark move aimed at promoting competition and giving consumers more choice, Japan has passed a new law that prohibits tech giants Apple and Google from blocking the sale of apps by third-party developers on their platforms. The law, which was approved by Japan’s National Diet in April 2024, mandates that Apple’s App Store and Google’s Play Store allow third-party companies to sell and operate their apps. It also gives developers the freedom to use their preferred payment systems for user charges, rather than forcing them to use the built-in payment options offered by Apple and Google.
Aiming for a competitive digital market
The new law comes as part of Japan’s broader effort to enhance competition in the digital marketplace. As the two companies control the majority of mobile operating systems and app distribution through their platforms, the law aims to dismantle some of the barriers that have allowed them to maintain dominance.
The Japan Fair Trade Commission (JFTC), a key regulator overseeing the legislative changes, highlighted the need for this new regulation to foster a competitive and innovative ecosystem. According to the JFTC, the law will allow app developers to reach users more easily, while ensuring that consumers have access to a more diverse array of services and technologies.
“The bill aims to develop a competitive environment in which innovation by various entities is activated through competition,” the JFTC stated. The law also places importance on maintaining security, particularly with respect to the “Specified Software” needed to operate mobile devices, including operating systems, app stores, browsers, and search engines.
Impact on apple and google’s business models
Both Apple and Google have built their app distribution models around centralized app stores, which not only provide a marketplace for developers but also a means to control the distribution, operation, and payments associated with apps. Under this system, developers typically pay a commission—ranging from 15% to 30%—for transactions made via in-app purchases or subscription services through the App Store and Google Play Store.
The new law, however, disrupts this model by allowing developers to bypass these payment systems and use their own methods for processing user payments. This move is expected to significantly reduce the fees developers pay to Apple and Google, potentially lowering costs for consumers as well. Furthermore, it opens up the possibility for third-party app stores to flourish, reducing the reliance on the two dominant platforms.
Apple and google respond
Following the law’s approval, Apple and Google both expressed concerns about the potential consequences, particularly regarding user privacy and security.
Apple, in a statement, underscored its concerns about the potential erosion of the iPhone’s renowned privacy and security features. “We will continue our engagement with the Japan Fair Trade Commission during the implementation period… concerned about how the law will impact Japanese consumers and the secure and private iPhone experience our users have come to expect,” said an Apple representative.
Google, meanwhile, emphasized its collaborative approach with the Japanese government. “We have proactively engaged with the government to explain our practices in and contributions to this dynamic and highly competitive sector. We will continue to collaborate with the government and industry stakeholders throughout this process,” a Google spokesperson said.
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Implications for global tech regulation
Japan’s new law signals a significant shift in how major tech companies will need to operate in foreign markets, and it may set a precedent for other countries to follow. As the dominance of tech giants like Apple and Google has been increasingly scrutinized around the world, regulators in other nations are watching closely to see how Japan’s law affects the market.
India, for instance, is also considering similar antitrust legislation. In February 2024, a panel proposed the creation of a “Digital Competition Bill” to supplement existing antitrust laws. This legislation would impose strict compliance requirements on major tech companies like Apple, Google, Meta, and Amazon, preventing them from leveraging non-public user data to prioritize their own products and services. It would also limit the restrictions these companies can place on third-party app downloads and installations.
As more governments consider tougher regulations for big tech, Japan’s new law could become a model for curbing the influence of dominant platforms in the digital economy.
A new chapter for app distribution
Japan’s bold move marks a pivotal change in the mobile software industry. By forcing Apple and Google to allow third-party apps and payment systems on their platforms, the law promises to open up the market for greater competition and consumer choice. While the long-term impact on both developers and consumers remains to be seen, the law has already signaled a shift toward a more open and diverse app ecosystem.
For now, both Apple and Google will be watching closely as the law takes effect, navigating this new regulatory landscape and working with Japanese authorities to ensure compliance.
