Japan’s Fair Trade Commission has ordered the Alphabet holding company to stop what the agency deemed to be abuse of its dominant market position against local smartphone makers. The company has been banned from forcing its software products on partners.
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In issuing the order, the regulator reiterated its earlier claim that the US tech giant was abusing its position as the provider of the Google Play ecosystem, the only viable alternative to the Apple iPhone app store, by improperly forcing local smartphone makers to prioritise its apps and services that run on the devices.
The commission issued the order shortly before Ryosei Akazawa, head of Japan’s Ministry of Economic Revitalization, visits the United States this week to seek a deferment of tariffs on Japanese goods imported into the United States. The Office of the US Trade Representative has previously complained that Japan’s Digital Platform Act, which aims to increase transparency among major technology providers, has a disproportionate impact on American companies and hurts their competitiveness in Japan by requiring them to spend more to comply. The United States supplies relatively small volumes of goods to Japan, but significant volumes of services, including licensing fees for the Android app ecosystem and advertising revenue. Last year, the United States supplied $45 billion in services to Japan.
Google, according to the commission, profited from Japanese manufacturers’ desire to maintain market share in a country where Apple is the leading smartphone brand. The search giant demanded that Japanese smartphone makers, including Sony and Sharp, bundle the Chrome browser with their software and place an icon to launch it on the home screen of each device. The Japanese companies were forced to comply because the Google Play ecosystem is necessary for smartphones that can compete with Apple products. The American tech giant also offered manufacturers a share of advertising revenue if they agreed not to bundle software that enabled them to work with competitors’ search engines. Google has a similar agreement with Apple, to which it pays billions of dollars annually.
Japan is the first country to follow the lead of global regulators in issuing such an order to a leading American tech company. The EU has repeatedly sued Apple and Google for what it says are illegal actions to establish and maintain dominant positions in the mobile software market; a U.S. court has found that Google has illegally monopolized the web search market, and the company is now facing a potential breakup.