Photo/Illutration Smartphone apps displayed on a smartphone (Asahi Shimbun file photo)

A bill to regulate tech giants that have been dominating the smartphone app market was passed and enacted at an Upper House plenary session on June 12.

The legislation is targeting Apple Inc. and Google LLC and will encourage competition in the digital markets in Japan.

The new law designates companies that are influential in four areas: smartphone operating systems, app stores, web browsers and search engines.

The new law will prohibit companies from giving preferential treatment for the operator’s own payment system and from preventing third-party companies from launching new application stores. 

Operators who fail to comply with the law will be imposed surcharges of three times more than for similar violations of antitrust laws.

The designated companies will have to report on how they are complying with the new regulation to the Fair Trade Commission on an annual basis.

With economic activities based on smartphones increasing, the legislation to prompt free competition gained wide support from both ruling and opposition parties.

At the same time, questions regarding how to secure safety in new entries in app stores came in rapid succession during the session.

The new legislation sets out exceptional rules in cases to protect security, privacy and youth users.

Details will be nailed down by compiling Cabinet orders and guidelines.

The designated operators will be specified in December 2024 and the new law will be in effect by December 2025.