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Platform providers should pay attention to the moves of Japanese regulations

In Japan, a platform business has been considered just a vehicle for service providers and users, and assumed no responsibility. However, in response to recent trends in regulations on platform businesses (e.g. against Google) in Europe, Japan has commenced studies toward tightening of regulations since July 2018, and published the draft interim report on November 5 2018 to invite public opinion until December 4 and commence to discuss detailed regulations after the turn of the year.

Here are several issues addressed in the report which will be discussed next year.

  • Market manipulability based on algorithmic profiling and opaqueness of the technologies. The necessity of disclosure of code or algorithm will be discussed.
  • Opacity of the actual circumstances of trading with users (business operators and consumers). The government conducted a questionnaire to business operators doing businesses on platforms.The result shows that the business operators enjoy business opportunities on the platforms, while they feel frustrated with trading with platform providers. However, the details are not disclosed, due to confidentiality obligations. Therefore, the government is planning to grasp the actual circumstances of trading*1 by any means necessary including compulsory investigation under the Anti-Monopoly Act.
  • Review of existing business laws. The report addresses the possibility of unequal competitive conditions between existing businesses and new businesses (unexpected businesses) and between domestic businesses and foreign businesses.   
  • Review of acquisition. There are some acquisitions that could lead to platform businesses preventing the emergence of potential competitors, and sometimes acquires a company that doesn’t have any potential competitive relationship at the time of the acquisition. It is suggested that the review of acquisition should take account of collected data, patents and other intellectual property, human resources, know-how.
  • Necessity of rules for data portability and open API will be discussed.

Platform providers should pay attention to the discussions next year. New regulations may give business opportunities to other business operators. However, the important thing is to create a system or environments to promote value-added businesses, rather than just to allow other business operators to provide similar services.

Note*1: The government has started fact-finding survey on January 23 2019.

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