April 26, 2024
Japan Association of New Economy (JANE)
Representative Director
Mickey Mikitani
 　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　　

Japan Association of New Economy (JANE. Location: Minato-ku, Tokyo; Representative Director: Mickey Mikitani) is pleased to announce the comments of its representative director following the “Cabinet Decision (April 26, 2024) on the Bill for the Act on Promotion of Competition for Specified Smartphone Software”.

1. JANE has repeatedly made proposals regarding the problems (*1) arising from the oligopolistic structure of Mobile Operating System (Mobile OS) and App Stores and the need to resolve them, and has proposed the development of a legal environment. We believe that this issue should be resolved as soon as possible.
2. This is an issue that is being discussed and acted upon around the world. It should be addressed urgently through international cooperation, as it has become common for services to be provided across borders.
3. It is imperative that this law be enacted as soon as possible based on the basic ideas stated in 1. and 2. above.
4. In addition, the content and interpretation of the entire legal system should be improved to create the competitive environment necessary to resolve the above issues. The specific issues are as follows.

【The content of the new legal system and assumptions for its interpretation and application】

Once the law is enacted, as the details of the legal system are discussed and the system is put into operation, it is important to ensure the following.

(1) Strict implementation and enforcement

①Establish guidelines or other relevant measures to clarify the process and verification system to confirm the existence and applicability of prohibited activities by regulated entities and their compliance.

②Clarify practical interpretations in the explanation of the articles and in the guidelines and ensure that substantive legal interpretations are provided.

③Prevent abuse of access restrictions to the Mobile OS for security and privacy reasons. To this end, guidelines or other relevant measures should be developed that specify limited cases in which access restrictions may be justified.
Ensure and clearly state a strict and reliable mechanism (including a system for collecting necessary information and a system for analyzing such information) so that even if there is a claim of restricting access to the Mobile OS for security or privacy reasons. It allows to confirm whether the claim is legitimately applicable.

④Open access to Mobile OS features, such as Rich Communication Services (RCS), including voice calls.

⑤Ensure strict enforcement against foreign companies, including corrective measures and surcharges.

⑥Ensure the prohibition of circumvention (*2) as a legal system, which was pointed out as necessary in the “Competition Assessment of Mobile Ecosystem Final Report” compiled by the Headquarters for Digital Market Competition (HDMC) on June 16, 2023.

(2) Monitoring and continuous review after the implementation of the law

①Continuously monitor the status of the improvement of competition against the issues raised in the final report of the HDMC, as well as the issues raised by related companies.

②Continuously monitor the latest industry trends worldwide, as well as the implementation and enforcement of laws and relevant measures in foreign countries.

*1 Examples of problems stemming from the oligopolistic structure of the mobile OS and app stores.

(1) High payment system fees are squeezing the profits of app providers and hindering the growth of Japanese businesses, including the startup industry.

It could have a negative impact on the prices of consumer goods and services. It is also a factor in the outflow of Japan’s national wealth.

(Note 1) The size of the mobile content market in Japan in 2022 is approximately 2.8 trillion yen. Assuming a settlement fee rate of 30%, this is likely to be a factor in the Japan’s balance of payments deficit of just over 800 billion yen.

(Note 2) According to preliminary figures for 2023, Japan’s digital deficit is about 5.5 trillion yen. The digital deficit is the amount of Japan’s total digital-related balance of services deficit, which consists of the following three components.

①Usage fees for computer services, cloud services and online conferencing systems.

②Royalties for copyrights and various licensing fees for video and music distribution.

③Professional and management consulting services and Internet advertising sales fees.

(2) Access to certain features of the Mobile OS, such as RCS, including voice calls, is not considered open.

*2 Examples of circumvention

Make switching to the alternative App Store or alternative payment method meaningless for app developers.

e.g., By allowing the platformer to charge new fees for downloads through the alternative app store or payment method, or by causing excessive losses to the developers.