Japan must toughen regulation if e-commerce law falls short

City centre, Tokyo (Japan). Photo: Cory Schadt/Unsplash

Japanese policymakers must keep open the option of toughening regulations on technology giants if an e-commerce law introduced this month does not work as expected, said a lawmaker overseeing the ruling party’s deliberations on competition policy.

Japan on Feb. 1 joined a global trend towards increased scrutiny of possible antitrust activity by big tech names with legislation requiring disclosure of information such as terms of contracts with business partners, how search rankings operate and reasons for suspending or refusing vendors.

The law, which offers leeway in how much information companies must submit, comes as authorities in Europe, Australia and elsewhere confront the clout of global e-commerce and social media firms, concerned of their significant market dominance.

“If this joint regulatory approach isn’t sufficient, we have to make rules going a step further,” Tatsuya Ito, a ruling Liberal Democratic Party (LDP) lawmaker, told Reuters in an interview on Wednesday.

Ito, who oversees competition policy in the LDP’s powerful policy research council, described the law as “light-touch”, saying policymakers must assess how it is working before taking any further steps or expanding its scope.

Japan’s e-commerce market was worth 19 trillion yen ($180 billion) in 2019. Its app store market reached $20.2 billion in 2020, showed data from App Annie.

Amazon Inc and Rakuten Inc were the largest e-commerce operators in 2018, while the app store market was split between Apple Inc and Alphabet Inc’s Google, showed a 2019 report from the Japan Fair Trade Commission (JFTC).

Under the new law, operators of shopping sites and app stores with annual Japan revenue of at least 300 billion yen and 200 billion yen respectively must submit annual reports to the Ministry of Economy, Trade and Industry.

The ministry can then issue improvement orders if operators do not follow its recommendations, or refer operators to the JFTC if it suspects antitrust activity.

Antitrust expert Yosuke Okada, a professor at Hitotsubashi University, said the law is more of a cooperation type of regulation aimed at gathering information on firms’ operations.

“It isn’t a framework in which businesses are regulated in great detail,” he said.

Moreover, any imposition of fines would likely require large-scale reform of anti-monopoly law, Ito said.

“It’s important to see how much results can be got while moving ahead with making rules and responding to digital platformers,” he added.

Separately on Wednesday, the antitrust watchdog outlined actions in digital advertising that may constitute abuse of any dominant bargaining position. Such actions include inappropriate use of personal data and unilateral change to contract terms.

($1 = 105.7800 yen)

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.