What steps should be taken to deal with information technology giants, which have accelerated their marketplace oligopoly by collecting enormous amounts of personal data? Regulations that are in line with the times must be created.
A government council tasked with tackling issues on digital market competition has launched full-fledged discussions toward the introduction of such regulations. It intends to compile concrete plans within this year.
The main targets of the regulations will be the U.S. companies collectively dubbed GAFA, including Google LLC and Facebook Inc. Japanese companies such as Rakuten Inc. and Yahoo Japan Corp. will also be subject to the regulations.
Urgent efforts should be made to create rules that will help make business transactions transparent, protect consumers and secure a healthy competitive environment.
The Fair Trade Commission (FTC), the Personal Information Protection Commission, the Economy, Trade and Industry Ministry and the Internal Affairs and Communications Ministry will take charge of drawing up the regulations. They are urged to work together by eliminating their bureaucratic divisions.
Problems have been pointed out. For example, online shopping malls are convenient, but the IT companies that operate the malls have forced online shop operators to accept unilateral changes to contract terms. Many users of the malls have also been concerned about how their personal information has been handled.
In response to diversified online services, it is significant to push for revising guidelines for the Antimonopoly Law and establishing a new law.
As part of such measures, the FTC also intends to review the guidelines for screening deals for corporate mergers and acquisitions. As the deals could affect the domestic market, the antitrust watchdog has decided to require companies to notify it in advance if an acquisition exceeds ¥40 billion.
Grasp real picture
There has been much criticism that major IT companies have nipped competition in the bud by acquiring emerging firms that could become their rivals in the future, one after another. Where to draw the line between this practice and general mergers and acquisitions would be the key.
A notable point is that the government has shown its intention to launch a fact-finding probe into fast-growing digital advertising.
Companies such as Google have offered services to place advertisements on companies’ websites and individuals’ blogs that are closely related to the content of those sites and the search results of general users.
In March, the European Commission, the executive arm of the European Union, cracked down on such practices. It imposed a fine of €1.49 billion (about ¥180 billion) on Google based on EU antitrust rules.
The commission determined that Google had restricted competition such as by forcing service users not to place advertisements from its rival companies on their websites. This perspective could be a reference point for Japan.
In the United States, the judicial authorities of 50 states and territories launched a joint investigation into Google’s digital advertising business in September on suspicion of antitrust law violations. This indicates the U.S. judicial authorities have a similar awareness to the EU on this issue.
Google’s annual advertising revenue is about ¥10 trillion. If there is an unfair scheme behind Google’s huge profits, it cannot be overlooked. Japan also needs to grasp the real picture as much as possible.