Japan is set to require Apple and Google to allow sideloading

In a move to counter the dominance of Apple and Google in the Japanese market, the government is gearing up to introduce legislation in 2024 that would compel the tech giants to allow external app stores and alternative payment systems on their mobile operating systems, according to Nikkei Asia. 

The proposed regulations, set to focus on app stores and payments, search, browsers, and operating systems, aim to curb the abuse of these companies’ powerful positions. The Japan Fair Trade Commission is expected to enforce fines, potentially amounting to around 6% of revenue generated from the activities deemed problematic. The legislation aims to foster competition, ensuring a level playing field and preventing tech giants from stifling potential rivals.

In 2020, the Japanese government initiated antitrust investigations into major tech players such as Google, Apple, Amazon, and Facebook. Concurrently, numerous Japanese developers voiced discontent with the App Store’s business model. By 2023, the Japanese regulatory body concluded its extensive study, affirming that Apple and Google wield significant dominance in the mobile app market.

Apple mandates in-app payments through its system, taking a substantial cut of up to 30%. Google, while allowing third-party app distribution, typically requires apps to use its billing system. These practices, seen as solidifying the companies’ dominance in the mobile market, can result in users paying more for the same content or services compared to personal computers.

Notably, the legislation echoes global efforts to regulate tech giants, akin to the European Union’s Digital Markets Act set for full implementation in 2024. The proposed Japanese measures highlight a growing global sentiment against monopolistic practices, with a focus on fair competition and user choice.

As Japan’s mobile app market is projected to reach $29.2 billion in 2023, a nearly 50% increase from 2018, these regulations signify a strategic move to foster a more competitive and dynamic digital marketplace. The Japanese government aims to strike a balance between encouraging innovation and preventing anti-competitive practices, aligning itself with international efforts to rein in the dominance of tech giants in the digital landscape.

Last month, the Japanese government announced it would require Apple and Google to be responsible for paying sales tax on apps and in-app content developed by organizations outside the country.