Japan to Increase Fines for App Store Monopolies to 20% of Sales

In a bid to curb monopolistic practices in the tech industry, Japan is planning to raise the penalty for such practices to 20% or more of applicable sales nationwide. This is more than triple the current percentage under the country's antitrust law, according to sources at Nikkei.

The proposed legislation specifically targets app distribution monopolies, taking aim at companies like Apple and other smartphone operating system providers. Under the new law, mobile platform operators such as Apple and Google would be required to allow third-party app stores and payment systems. Any violations of this requirement would result in fines imposed by the government.

Currently, the Japan Fair Trade Commission fines companies 6% of their sales in related services under the existing antimonopoly law. However, the new law aims to significantly increase this penalty to 20%. For instance, a company that excludes competitors from its app store would be fined 20% of the total revenue generated from distributing apps, often in the form of charges. Repeat violations could even lead to a penalty as high as 30% of sales.

The need for stricter penalties arises from the fact that providers of smartphone operating systems generate substantial revenues. The current penalty has been criticized as ineffective in deterring violations, hence the push for a more substantial fine.

The Japan Fair Trade Commission is expected to present a detailed proposal to lawmaker groups, including the ruling Liberal Democratic Party's economy and industry unit. The commission aims to submit the legislation to parliament as early as this month.

This move by Japan follows a global trend of strengthening regulations in the tech industry. The European Union's Digital Markets Act, for example, imposes fines of 10% of global sales on violators, with the penalty increasing to 20% for repeated violations.

Source: ASIA NIKKEI