Photo/Illutration A sign at Apple Inc.’s headquarters in California (Asahi Shimbun file photo)

The government plans to introduce rules covering smartphone operating systems (OS) and apps, a market now dominated by U.S. information technology giants Apple Inc. and Google LLC., to bolster competition and reduce prices for consumers.

Its Headquarters for Digital Market Competition released a report June 16 with the results of an assessment of the current state of the smartphone market and what should be done to encourage competition.

The government intends to submit legislation as early as the ordinary Diet session next January to implement the proposals.

One proposal would require companies to allow users of their smartphone OS to purchase apps at outlets other than their own.

Currently, users of Apple’s iOS mobile phones can only purchase apps from Apple’s App Store. As a result, user fees for the apps remain high.

The proposal called on OS companies to allow users to purchase apps elsewhere as long as those services are found to have sufficient measures installed to protect the security and privacy of users.

The dominating presence of Apple and Google means other companies have almost no chance of developing and selling their OS for use in mobile phones.

One proposal would ban an OS company from forcing app developers to only use the payment settlement service it provides. App developers must often pay a commission of as much as 30 percent for use of the payment settlement service, another factor impacting the profits of the app developer.

Another proposal would place restrictions on preferential treatment of software services provided by the OS company. That would target the common practice at Google of listing its Google Map high on the list of results when a search is made of a place name.

In 2021, the government passed a law to protect consumers who use digital platforms for online shopping and required companies of a certain size to disclose the transaction conditions of their online shopping services.

The latest proposal marks the second step aimed at IT giants to encourage competition.

In February, the Fair Trade Commission issued a report that said there was insufficient competition in the smartphone OS and app markets and urged the government to consider legislation to deal with the problem. The FTC noted that Apple and Google combined had more than a 90-percent share of the OS market.

(This article was written by Junki Watanabe and Yuriko Suzuki.)

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