Japan plans to regulate online advertising as early as next April under the law requiring information technology giants to be more transparent following recommendations contained in a final government report on digital marketing released Tuesday.
The move could be the world's first legislation to regulate digital advertisements if measures aimed at securing transparency and fairness in the industry are added to the law that took effect in February.
The report compiled by the Digital Market Competition Council urged IT giants to create a scheme to accept third-party assessment of the effectiveness of online advertising and disclose information on wrongdoings such as illegal charges levied on advertisers.
The legislation to protect advertisers will come as Japan steps up efforts to toughen regulations on industry giants such as Apple Inc. and Amazon.com Inc. amid concerns that such companies are taking advantage of their market dominance to mistreat merchants who offer wares on their platforms.
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The tech titans are known to exercise strong influence through their search and social networking services and see digital advertising as a major source of revenue.
In some cases, advertisers face abrupt changes to terms and conditions and are charged increased fees based on illicitly inflated clicks on online advertisements.
As there are also privacy concerns regarding the practice of collecting data from consumers to deliver personalized advertisements, the panel's final report also urged IT firms to disclose what kind of personal information they obtain and the conditions under which they use it when they display such ads.
Although the government will set conditions to determine which companies are subject to the regulation, U.S.-based Google LLC and Facebook Inc. are among those that are likely to be included, government officials said.
The government "will secure fairness and enhance transparency for sound development of the digital advertising market," said Chief Cabinet Secretary Katsunobu Kato at the council's meeting Tuesday.
The legislation on transparency and fairness concerning specific digital platforms now regulates e-commerce website operators with distribution amounts totaling more than 300 billion yen ($2.8 billion) within Japan and apps suppliers whose domestic merchandise value stands at 200 billion yen or more.
Amazon's Japan unit, Google and Apple and its affiliated iTunes as well as Rakuten Group Inc. and Yahoo Japan Corp. are now subject to the regulation.
Under the law, those companies are obliged to notify their clients of contract changes in advance as well as submit reports on their business practices every year to the Economy, Trade and Industry Ministry.l
