Tighten regulations so IT giants cannot abuse their market dominance

The Yomiuri ShimbunPrecisely grasping the actual state of market dominance by IT giants and striving to make online business transactions fairer: To do this, effective measures should be taken.

A governmental panel of experts has compiled an interim report that calls for tightening regulations on digital giants — known as digital platform operators — including Google and Amazon.

The panel is set to release its final report within this year, and the government will launch the crafting of concrete proposals for regulating them.

The interim report pointed out that the business operations of these digital platform operators are opaque. The report went on to sound an alarm over the danger of unfair trade practices conducted by these digital giants against consumers or other business operators.

The report called on the government to study the idea of obliging these digital giants to disclose such important information as the terms of contract made with their trading partners.

Against the backdrop of the overwhelming amount of data they aggregate, these IT giants are increasing their market dominance. It is appropriate for the interim report to call for the government to shift into tightening regulations.

Big data collected by companies can become a source of bringing about convenient services. On the other hand, users have yet to be made aware of how these vast records of their searches and online shopping are being used.

The interim report has warned that depending on how personal data is handled, “There is a risk of impairing [consumers’] personal interests.”

Establishing intl rules vital

According to a survey conducted by the Economy, Trade and Industry Ministry, 86 percent of companies that transact business with digital platform operators responded that they suffered disadvantages due to digital giants making unilateral changes in their agreements, for instance.

To eliminate adverse effects of all kinds, it is essential to enhance transparency and fairness. In light of the interim report, the government is expected to establish a team of specialists to monitor IT companies.

Cooperation with the Fair Trade Commission, authorized to conduct compulsory investigations, will be key for the team. Moreover, there is a possibility that it may become necessary for the Antimonopoly Law to be amended or a new law to be enacted.

European countries have been moving ahead in placing regulations on IT giants.

The European Union put into effect this May the General Data Protection Regulation (GDPR), a set of rules making it obligatory for companies to scrupulously handle personal data.

The European Commission has presented to each member country a draft regulation calling for digital platform operators to make their contracts more transparent. Such a move probably indicates their strong sense of crisis over IT giants from the United States. Japan should utilize these efforts taken by European countries as references.

In connection with mega business enterprises that operate globally, there has been a strong criticism about their avoiding payment of huge sums of taxes by placing their main business bases in countries with low corporate tax rates.

Moves to reinforce tax collection have begun to be seen. Britain, for instance, has showed its policy of introducing, starting in April 2020, tax on the sales of digital giants.

Also among the Group of 20 member nations and regions, relevant discussion is advancing. Japan, for its part, needs to take the lead in crafting internationally compatible taxation rules.

(From The Yomiuri Shimbun, Nov. 7, 2018)Speech


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