Google is facing increased antitrust scrutiny in Japan, with the Japan Fair Trade Commission (JFTC) issuing a cease and desist order against the tech giant for allegedly violating the country's Antimonopoly Act. The JFTC's investigation, which began in October 2023, has focused on Google's Mobile Application Distribution Agreements (MADAs) with Android handset manufacturers. These agreements require manufacturers to pre-install Google's Chrome browser, search bar, links to specific Google apps, and the Google Play Store on their devices.
The JFTC argues that these MADAs and related revenue-sharing deals unfairly restrict competition and make it difficult for new market entrants to gain a foothold. According to the JFTC, Google has leveraged its dominant position in the market, with over 80% of Android device users relying on Google Play, to enforce these restrictive trading conditions. Specifically, the JFTC found that Google offered additional advertising revenue to manufacturers who complied with these pre-installation requirements, effectively incentivizing them to prioritize Google's services over those of competitors. Reportedly, Google had such agreements with six manufacturers, covering approximately 80% of smartphones produced in Japan.
The cease and desist order instructs Google to cease these practices, allowing manufacturers to install rival offerings and allowing users a choice of default search service. The JFTC is also implementing a five-year monitoring period, requiring a third party to oversee Google's compliance with the order. This marks the first time the JFTC has included such a surveillance measure, underscoring its commitment to ensuring Google adheres to the new regulations. This is the first time that the Commission has acted against a big American tech company.
Google has expressed disappointment with the JFTC's findings, stating that its agreements with Japanese partners are pro-competitive and have boosted their ability to invest in product innovations, thus providing consumers with more choice. The company has stated it will review the order to determine its next steps.
This action in Japan aligns with a broader global trend of increased regulatory scrutiny of major tech companies, particularly regarding antitrust concerns. In the United States, the Justice Department filed a similar lawsuit against Google in 2020, and in August 2024, a U.S. district court ruled that Google had violated antitrust laws. The European Commission has also taken action, imposing a substantial penalty on Google in 2018 for violating EU competition law in a similar case. In 2022, the General Court upheld the decision. Similarly, South Korea fined Google millions in 2022 for allegedly blocking smartphone makers from using modified versions of Android, and India also fined Google for anti-competitive practices involving pre-installed apps.
In Japan, the JFTC is seeking to strengthen regulations further with the Law on Promotion of Competition for Specified Smartphone Software, which is scheduled to come into full force in December. This law will regulate search engines and app stores, prohibiting preferential display of a company's own services over competitors in search results and requiring companies to allow users to easily change pre-installed apps.
