Guidelines unveiled by Japan for tech giants regarding smartphone applications

The Japan Fair Trade Commission (JFTC) has set new regulations for tech giants Google LLC and Apple Inc., marking a significant shift in Japan's smartphone app market. These regulations, under the Mobile Software Competition Act, will take effect on December 18, 2025.

The new guidelines aim to promote fair competition and enhance consumer choice. Here's a breakdown of the key changes:

Third-Party App Stores: Both Apple and Google must allow users to access and download apps from third-party app stores on their platforms. This opens the market to competition and offers consumers more choices.
Alternative Payment Systems: Developers can now offer their own payment options, freeing them from relying on Apple or Google's in-house payment methods and commission fees.
Ban on Anti-Competitive Practices: Apple and Google cannot favour their own apps or services using data obtained through their operating systems to gain unfair advantages. They must also establish internal firewalls to prevent conflicts of interest.
Choosing Default Apps: Users will be able to select their preferred apps (e.g., browsers, search engines) freely, promoting user autonomy.
Open Access to Operating System Functions: Developers must have access to the same OS functions that Apple and Google use for their apps, levelling the playing field.
Browser Engine Flexibility: The guidelines prohibit practices that hinder the adoption of third-party browser engines, directly challenging Apple's WebKit-only browser engine requirement on iOS.
Monitoring and Compliance: Apple and Google are required to submit annual compliance reports to the JFTC, ensuring continued adherence to these rules.

These regulations represent a major shift, breaking the monopoly-like dominance Apple and Google have held, especially in app store operations and payment systems. Consumers can expect more choices and potentially lower prices due to increased competition from third-party app stores and payment options. Developers can avoid high commissions and have more freedom in app development and monetization.

Apple and Google must overhaul platform policies and technical restrictions that currently limit competition, including fundamental changes such as allowing multiple browser engines on iOS. The law may influence other jurisdictions considering similar digital market regulations.

However, Apple has expressed concerns over sharing confidential technology and user information with third parties, indicating potential tensions in compliance.

In summary, Japan's new guidelines legally compel Apple and Google to open their ecosystems substantially, increasing competition and consumer choice, and reducing the gatekeeper power these companies have exercised in Japan's app market. The guidelines also urge tech companies to allow customers to choose from multiple search engines when buying new devices and prohibit tech companies from hampering the use of other companies' payment systems in apps. The full implementation of these new laws is set for December 2025.

The aerospace industry, finance sector, and various business domains will witness significant changes with the rise in consumer choices and competition in the smartphone app market, courtesy of the new regulations.
The technology industry is expected to undergo a transformation as developers gain the freedom to use alternative payment systems and multi-browser engine options within the apps, leading to potential innovation.
The regulations in the Japanese app market's technology and business realms could serve as a model for other industries globally, depending on how Apple addresses constraints related to sharing confidential technology and user information with third parties.