By Hiroki Okuno,
Music and video streaming, free shipping for online shopping and funerals are among the services of companies named in 2021 as subject to antitrust investigations by Japanese authorities.
From global tech giant Apple Inc. to local online services, these firms provide digital platforms that are arguably credited with life-changing innovations but also posed concerns for their monopolistic influence in the market.
Amid regulatory efforts worldwide to deal with providers of such basic platforms as internet search engine, online shopping, operating systems and social networking services, the Japan Fair Trade Commission's scrutiny of Apple came to light last September.
In a press release titled "Japan Fair Trade Commission closes App Store investigation," Apple said it will allow developers of "reader" apps on the Apple Store to include an in-app link to their website where users can set up or manage an account.
The Japanese antimonopoly watchdog had been negotiating with Apple for nearly five years, an official told a press conference at the time.
Until the change goes into effect in early 2022, all apps were required to use Apple's in-app payment system for a commission of 15 to 30 percent.
The charge amounting to a significant share of developers' income brought about huge revenues to the iPhone maker but was questioned by governments in various countries as well as developers.
Now apps providing digital magazines, newspapers, books, audio, music and video around the world would be able to include a link to an external website where users can make purchases, and hence bypass Apple's payment system.
It is believed to be the first time Apple has accepted an issue raised by a government authority, a "compromise" widely taken as surprising even though the change does not apply to gaming apps.
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In December, the JFTC said Japan's leading e-commerce platform Rakuten Group Inc. is suspected of antitrust law violation over its free shipping program designed to rival Amazon.com Inc.
Rakuten tried in March 2020 to require free shipping of all shops on its Rakuten Ichiba online mall, prompting the JFTC to step in and resulting in launching the program on a non-compulsory basis.
But Rakuten's sales staff was still unduly pressuring shop owners to adopt the program, abusing the shopping platform's dominant bargaining position, the commission said 21 months later, causing Rakuten to improve the situation.
Such scrutiny covers not only large companies but smaller firms can also wield anti-competitive power in digital markets, the JFTC showed when it named Uniquest Inc., which runs a funeral intermediary website, also in December.
The Osaka-based IT firm has a questionable contract system that prohibits funeral operators that use its website "Chiisana Ososhiki," meaning compact funeral, from doing business with rival websites, the commission said.
The move "came as a surprise," said a Uniquest official, suggesting that the company had not considered its business a digital platform -- something perceived to do with tech giants such as GAFA as Google LLC, Apple, Facebook Inc. and Amazon.com were collectively referred to.
Uniquest, which has also received the commission's on-site inspection, subsequently abolished the contract system.
These recent cases against digital platforms have borne fruits in terms of improving their business practices but also point to challenges faced by the JFTC, officials and experts say.
Antitrust investigations are usually aimed at imposing an administrative disciplinary action such as a cease-and-desist order to prevent recurrence and an order to pay surcharges.
If a swift action is called for, the authority may make the target company promise a future preventive step or reparation to affected firms instead.
But the probes on digital platforms last year were closed without any such prescribed action because the companies proposed to take voluntary measures to resolve the suspected violations.
On the backdrop of such lackluster consequences is time taken to confirm violations or calculate surcharges in elusive digital markets.
The five years spent for Apple's case and two years for Rakuten's were apparently insufficient for the JFTC to issue an administrative order, and a commission official admitted the results were "not satisfying."
JFTC Chairman Kazuyuki Furuya said in a press conference in October taking an administrative measure against digital platforms is "very difficult, that's true."
"It must be acceptable that we take various steps when they lead to concrete improvements in their business models," Furuya added.
A senior JFTC official said, "It is difficult to earn a reputation when there are no visible results that are easy to understand," as the JFTC issued no cease-and-desist order in 2021 due partly to the COVID-19 pandemic.
"As for digital platforms, there is an aspect that we've chosen to bring about real improvements over making our name with administrative actions," the official said on condition of anonymity.
Lawyer Kentaro Hirayama, who is versed in antimonopoly laws, said the Japanese authority's unhesitating stance to tackle digital platforms is welcome and encouraged, but challenges such as the subdued end to the recent probes need to be addressed quickly.
"Since the cases resulted in no clear recognition of illegal acts, it is difficult to refer to them in future lawsuits and other cases," he said, adding that many details remain not clarified.
"Authorities in other countries are issuing formal orders while trying to take swift actions such as through an injunction" in a nod to the rapidly changing market environment, he said, adding, "The JFTC's response seems not necessarily riding the global tide and peculiar."
The Japanese watchdog may have problems with its workforce for investigation or collaboration with experts, and needs to nail them down and solve them, Hirayama said.
