May 3, 2022
With two U.S. tech giants having an oligopoly on smartphone operating systems, there are growing concerns that the situation is distorting the market. The Japanese government must expedite discussions on strengthening relevant regulations.
The government’s Digital Market Competition Council has released an interim report on problems concerning smartphone operating systems. A survey conducted last summer to ascertain the situation has confirmed a number of cases that could hamper competition, according to the report.
Currently, Apple Inc.’s iOS and Google LLC’s Android account for nearly 100% of the market for smartphone operating systems.
These systems can be described as the foundation on which apps run on smartphones, and app developers need to comply with their specifications. As companies that have their own operating systems tend to gain the upper hand, it is essential to monitor whether fair transactions are being conducted.
As tech companies from the outset can gather more data and increase their influence as their user numbers grow. The two companies have overwhelming power to dominate the market.
According to the report, Apple allows developers of paid apps for iOS to only sell these products via Apple’s App Store, while charging them a high commission of up to 30%.
The report also said the companies may have obtained data from competitors without permission to develop apps.
Google is believed to have set its services to appear most prominently in search results.
The government has raised questions over such cases and come up with a plan to introduce pre-regulations, which will clearly convey in advance to tech giants acts that are prohibited and impose fines if violations occur.
The European Union will implement as early as October the Digital Markets Act that incorporates pre-regulations as the first such case in the world. The Japanese government is likely aware of the global trend in this regard.
In Japan, a new law was enforced in February last year to encourage online shopping operators and other tech companies to make their transactions more transparent, but the law makes such improvement voluntary. Therefore some experts have said the ability to enforce the law is lacking.
Accelerating discussions on making regulations more concrete is a pressing task for the government.
In response to the report, Apple released a statement, saying it respectfully disagreed with a number of conclusions. Google has also disputed many of the claims.
However, it is a fact that firms doing business with both companies are increasingly frustrated and the two should strive to explain more carefully to app developers and users.
Smartphones are now used for a variety of purposes, from looking up information to settling transactions and managing health, becoming an important piece of infrastructure. Tech companies should be aware of the heavy responsibility they bear.