Japan Takes on Big Tech

Tokyo is at it again. Japan has begun drafting guidelines that will be used to introduce more regulation into the US tech giant-dominated domestic digital market. This time, the goal is to weave together the protection of competition and protection of user privacy and devise a set of regulations that would address the purposes of both.

The proposed guidelines are being drafted by Japan’s Fair Trade Commission and will be up for public debate in September. If approved, the guidelines could come into effect as early as October 2019.

Japan’s push for broader regulation is thanks to calls to prevent Google, Amazon, Facebook, and Apple from abusing the user data they have been collecting for years — and exploiting the market advantage this practice awards them. The new guidelines will be applied to firms that provide online shopping, social media, search engines, and video, music, and app distribution.

This will be the first time an antimonopoly law will be applied to business practices between a company and customers to protect consumer privacy.

The drafting comes after Japan’s ruling Liberal Democratic Party called on the government to impose tougher rules on technology giants and force them to improve their respective privacy policies, in addition to clarifying the rules of transactions with smaller vendors.

The driving force behind the guidelines being drafted is a plan to, “for the first time”, use antitrust laws to regulate “business practices between a company and customers,” with the explicit goal of protecting consumers. But another concern seems to be making its way to the table: tech giants must make room for smaller players in the market.

This latest regulation is indeed an attempt to protect consumer data, but also mentions that big tech companies have been charged with “discouraging new companies from entering the market by monopolizing customer data through their platforms to bolster their competitive positions.”

The draft further introduces the idea of “superior bargaining position,” and is set to apply it to situations where a user is required to provide personal data to use one of the dominant online services or platforms targeted by the bill.

If the guidelines go ahead, major companies will be required to notify users, and manage their data “properly” or otherwise be accused of unfair trade practices. The law is not yet explicit about which penalties failure to comply will incur.

This is not the first time Japan has sought to curb the ability of the big tech giants to grasp a monopoly on access to user data. In 2017, the Japan Fair Trade Commission considered designating as an antitrust violation the use of a dominant market position to collect and monopolize users’ personal data.

Japan may be setting the stage for future regulation in other countries. By refusing to shy away from linking controversial emerging issues of competition and privacy, Japan has a history of making the case that technology giants are stifling competition and limiting smaller firms’ access to user data.