Competition / Antitrust Law

Japan's Evolving Platform Regulation Landscape: An Overview for Global Businesses

Japanese Attorney at Law - Bengoshi L.L.

• 11 min read
Slide overview: Japan’s multi-pillar platform regulation—competition, transparency, consumer, data and tax duties 2025-26
TL;DR: Japan is piecing together an issue-specific framework for digital-platform oversight: tougher competition rules for mobile gatekeepers, transparency laws for online malls, “soft-law” consumer-protection duties, and new security-tax measures. Global businesses must map which statute applies to which service and prepare for stricter disclosure, algorithm and data-handling obligations.

Table of Contents

  1. Introduction
  2. The Rise of Platform Power and Regulatory Drivers in Japan
  3. Core Pillars of Japan's Platform Regulation
  4. Cross-Cutting Issues: Data, Tax, and Security
  5. Navigating the Landscape: Key Takeaways for Businesses
  6. Conclusion

Introduction

Digital platforms – encompassing everything from e-commerce marketplaces and app stores to social media networks and search engines – have become integral to the global economy and daily life. Japan, as one of the world's largest and most technologically advanced markets, is no exception. Recognizing the profound impact of these platforms, Japanese policymakers and regulators have been actively developing a complex legal framework to address the unique challenges and opportunities they present.

In recent years, Japan has enacted a series of laws specifically targeting digital platforms, moving beyond the application of existing general laws to create bespoke regulatory regimes. This wave of legislation tackles a wide range of issues, including fair competition, consumer protection, liability for user-generated content, data handling practices, taxation, and even national security concerns. The result is a multi-layered and rapidly evolving regulatory landscape that international businesses operating in or engaging with the Japanese market must navigate carefully.

This article provides a comprehensive overview of the key pillars of platform regulation in Japan as of mid-2025. It examines the primary laws governing platform conduct, outlines their objectives and core requirements, and discusses the implications for businesses, particularly large technology companies and those utilizing digital platforms to reach Japanese consumers.

1. The Rise of Platform Power and Regulatory Drivers in Japan

The proliferation of digital platforms has brought immense benefits, including increased consumer choice, new business opportunities, and novel forms of communication. However, the concentration of market power in the hands of a few large platform operators ("Big Tech") and the nature of platform-mediated interactions have also given rise to significant policy concerns in Japan, mirroring global trends. Key drivers behind the recent regulatory push include:

  • Competition Concerns: Issues such as market dominance by major players (especially in areas like mobile operating systems, app stores, and search), potential self-preferencing by platform operators favoring their own services, abuse of bargaining power against smaller business users (app developers, marketplace sellers), and barriers to entry for potential competitors.
  • Consumer Protection: Risks faced by consumers using platforms, including exposure to scams, counterfeit or unsafe products sold by third parties, misleading advertising, unclear contractual terms, and difficulties in resolving disputes with sellers or the platform itself.
  • Content-Related Harms: The rapid spread of harmful content via social media and other user-generated content platforms, encompassing defamation, online harassment, invasion of privacy, and the increasingly critical issue of disinformation and misinformation (including financially damaging scam advertisements).
  • Fairness for Business Users: Concerns raised by businesses reliant on platforms (e.g., merchants on e-commerce sites, app developers) regarding opaque algorithms, unclear or arbitrarily applied terms of service, sudden account suspensions or delistings, and restrictions on accessing their own customers or data.
  • Data Privacy and Security: Issues surrounding the large-scale collection and use of user data by platforms, transparency regarding data practices (including "external transmission" of data to third parties via tracking technologies), cross-border data flows, and the security of platform infrastructure against breaches or unauthorized access.
  • National Security: Growing awareness of how platforms can be vectors for foreign influence operations, espionage (through data access), or disruption of critical information infrastructure.

2. Core Pillars of Japan's Platform Regulation

Japan's response has been multi-faceted, involving amendments to existing laws and the creation of several new "Platform Laws." These can be broadly categorized based on their primary focus:

2.1. Promoting Fair Competition & Transparency for Business Users

Recognizing the dependence of many businesses on large platforms, several laws aim to ensure a fairer playing field.

  • Act on Improving Transparency and Fairness of Specified Digital Platforms (Torihiki Toumeika Hou) (Effective 2021):
    • Scope: Applies to very large online "digital platform providers" designated by the government based on transaction value and user numbers. Initial designations covered major online malls (like Amazon Marketplace, Rakuten Ichiba, Yahoo! Shopping) and app stores (Apple App Store, Google Play).
    • Core Obligations: Designated platforms must:
      • Disclose their terms and conditions (including criteria for search rankings, reasons for account suspension, data usage policies) clearly to their business users.
      • Establish procedures for handling inquiries and complaints from business users fairly and promptly.
      • Take measures to promote mutual understanding with business users (e.g., providing prior notice of significant term changes).
      • Submit annual reports to the Ministry of Economy, Trade and Industry (METI) detailing their compliance efforts, which are subject to public review and assessment ("monitoring review").
    • Goal: Primarily aimed at protecting the interests of business users (merchants, developers) interacting with dominant platforms, enhancing procedural fairness and transparency in their relationship.
    • Limitations: Notably, the law primarily imposes procedural and transparency obligations rather than directly prohibiting specific anti-competitive conduct (like self-preferencing). Enforcement relies mainly on recommendations and orders related to reporting and procedural compliance, with relatively low monetary penalties for non-compliance (maximum ¥1 million), leading some commentators to view it as having limited "bite" against entrenched behavior.
  • Act on Promoting Competition for Specified Smartphone Software (Sumaho Software Kyousou Sokushin Hou) (Enacted June 2024, likely effective late 2025 or 2026):
    • Scope: This is a more targeted and stringent law focusing on competition within core mobile ecosystems. It applies to designated providers ("Specified Software Business Providers") of essential smartphone software: (1) Mobile Operating Systems (OS), (2) App Stores, (3) Web Browsers, and (4) Search Engines, exceeding certain domestic user thresholds. The initial designations are widely expected to cover Apple and Google.
    • Core Obligations/Prohibitions: Inspired by the EU's Digital Markets Act (DMA), this law imposes specific obligations and prohibitions on designated providers in their respective fields:
      • Prohibitions: Include bans on unreasonable self-preferencing (e.g., in search results or app store rankings), restricting users from using competing software or services (e.g., limiting alternative app stores or browsers, subject to security exceptions), tying different services together, using non-public data obtained from business users to compete against them, and imposing unfair conditions.
      • Obligations: Mandate allowing alternative payment systems within apps (anti-steering), permitting uninstallation of pre-installed apps, providing access and interoperability for certain functions (e.g., OS features used by the provider's own apps), and ensuring fair access to search ranking data for competitors.
    • Exceptions: The law allows for exceptions based on justifications like cybersecurity, privacy protection, or youth protection, but places a high burden on the designated provider to demonstrate the necessity and proportionality of restrictive measures. The precise scope of these exceptions will be critical and detailed in forthcoming guidelines.
    • Goal: To proactively address perceived anti-competitive practices by dominant mobile ecosystem gatekeepers and foster competition for the benefit of app developers, competing service providers, and ultimately consumers.
    • Enforcement: Features significantly stronger enforcement powers for the Japan Fair Trade Commission (JFTC) compared to the Transparency Act, including cease-and-desist orders and substantial administrative monetary penalties (kachoukin) of up to 20% of the affected domestic turnover (potentially rising to 30% for repeat violations).
  • Antimonopoly Act (AMA) Enforcement: It's crucial to remember that Japan's general competition law, the Antimonopoly Act, continues to apply to platforms. The JFTC actively investigates potential AMA violations by digital platforms, including abuse of superior bargaining position, exclusionary conduct, and anti-competitive M&A. The JFTC has increasingly utilized "commitment procedures" (kakuyaku tetsuzuki) – where a company voluntarily proposes remedies to resolve competition concerns without a formal finding of violation – in platform-related cases (e.g., involving online travel agencies or search advertising).

2.2. Addressing Content Liability and Online Harms

Managing the flow of information and mitigating harm caused by user-generated content is another major regulatory focus.

  • Act on Countermeasures for Rights Infringement... by Information Distribution Platforms (Jouhou Ryuutsū Platform Taisho Hou) (Effective late 2024 / early 2025 - Revised Provider Liability Limitation Act):
    • Background: The original Provider Liability Limitation Act (プロバイダ責任制限法) primarily offered internet service providers (ISPs) and platform operators a "safe harbor" from liability for user-generated content under certain conditions and established procedures for victims to request disclosure of anonymous posters' identities.
    • The 2024 Reform: Recognizing limitations in addressing the speed and scale of online harms like defamation and harassment, the law was significantly amended (and renamed). The key change is the imposition of new procedural obligations on designated "Large Specified Telecommunications Service Providers" (essentially large social media platforms, forums, video sharing sites, etc., designated based on user/post volume).
    • Core Obligations for Designated Platforms:
      • Establish and publicize clear procedures and contact points for receiving takedown requests from victims claiming rights infringement.
      • Respond to takedown requests within a specified period (generally expected to be around one week via ordinance), notifying the requester of the decision (takedown or refusal) and the reason. Exceptions for complex cases requiring investigation or sender consultation exist, but still require timely initial notification.
      • Develop and publish clear content moderation policies ("transmission prevention measures implementation standards"), detailing the types of information subject to removal or other actions (like account suspension).
      • Notify the original sender when their content is removed or restricted based on these policies, providing the reason.
      • Publish regular transparency reports on content moderation activities.
    • Goal: To expedite the process for victims seeking removal of infringing content and increase the transparency and accountability of large platforms' content moderation practices, while still generally leaving the substantive decision of whether content is illegal to the platform or courts, not direct government mandate.
  • Disinformation Regulation (Under Consideration):
    • The Problem: Japan, like other countries, faces growing challenges from the spread of harmful disinformation (intentionally false) and misinformation (unintentionally false), impacting public health, disaster response (as seen after the Noto Earthquake in early 2024), financial markets (e.g., fake investment ads using celebrities' images), and democratic processes.
    • Current Status (as of May 2025): There is no specific comprehensive law regulating disinformation content itself, largely due to strong free speech protections under Article 21 of the Constitution. However, governmental bodies like the Ministry of Internal Affairs and Communications (MIC) have convened expert panels to study the issue.
    • Likely Direction: Regulatory efforts are expected to focus not on direct state censorship of content, but rather on enhancing platform responsibilities and processes. This might include:
      • Requiring platforms to strengthen measures against specific categories like AI-generated deepfakes or demonstrably harmful false information (e.g., related to health emergencies).
      • Mandating greater transparency regarding algorithms that amplify content.
      • Promoting media literacy initiatives.
      • Strengthening requirements for screening advertisements, particularly financial ones, to prevent scams.
      • Encouraging multi-stakeholder cooperation (platforms, media, fact-checkers, government).
    • This remains an active policy area, driven by recent high-profile incidents.

2.3. Enhancing Consumer Protection

Direct consumer protection on platforms is addressed by another specific law.

  • Act on the Protection of Consumers Using Digital Platforms (DPF Shouhisha Hogo Hou) (Effective 2022):
    • Scope: Primarily targets large online marketplaces and other platforms where consumers transact directly with third-party business users.
    • Core Obligations: Imposes mostly "best efforts" obligations (doryoku gimu) on platform operators to:
      • Facilitate smooth communication between consumers and sellers.
      • Investigate consumer complaints regarding sellers' potentially misleading representations about goods or services.
      • Request identification information from sellers to aid consumer redress.
    • Consumer Rights: Grants consumers the right to request the platform operator disclose seller identification information under certain conditions (e.g., difficulty contacting the seller directly).
    • Government Role: Allows the relevant Minister to request (but not order) the platform to suspend a seller engaging in significantly harmful practices. Non-compliance doesn't carry direct penalties for the platform, though the request can be publicized.
    • Character: Often described as a "soft law" approach, relying more on encouraging platform cooperation and providing consumers with information than on imposing hard sanctions on platforms for seller misconduct.

3. Cross-Cutting Issues: Data, Tax, and Security

Beyond the core "Platform Laws," other regulations significantly impact platform operations.

  • Data Governance and Privacy: Platforms' handling of vast amounts of user data is subject to Japan's general Act on the Protection of Personal Information (APPI). Additionally, the Telecommunications Business Act includes specific "external transmission regulations" (gaibu soushin kiritsu) requiring certain online service providers (including many platforms) to notify users or provide opt-out mechanisms regarding the transmission of user information to third parties via cookies, ad identifiers, or other tracking technologies.
  • Platform Taxation: As detailed in the Jurist PDF, the 2024 Tax Reform introduced a new "Platform Taxation System" for consumption tax. Designated large platform operators facilitating digital service transactions (like app sales or streaming) by foreign businesses to Japanese consumers are now deemed the supplier for consumption tax purposes and are liable for collecting and remitting the tax (Revised Consumption Tax Act Art. 15-2). This aims to level the playing field and improve tax collection from cross-border digital sales where enforcement against numerous small foreign suppliers was difficult.
  • National Security Dimensions: The intersection of platforms and national security is a growing concern. Issues include:
    • Foreign Influence: Use of platforms for disinformation campaigns or political interference by foreign states.
    • Data Access: Risks associated with foreign governments potentially accessing sensitive user data held by platform operators (highlighted by the administrative guidance issued to LINE Yahoo in 2024 following a data breach involving its Korean-based委託先, itakusaki or contractor).
    • Critical Infrastructure: Dependence on platforms for communication and information dissemination raises questions about their role as quasi-critical infrastructure.
    • Japan's broader Economic Security Promotion Act and related initiatives (like the new security clearance system also enacted in 2024) may increasingly interact with platform operations, particularly regarding data handling, supply chain security for essential services, and foreign investment scrutiny.

4. Navigating the Landscape: Key Takeaways for Businesses

The evolving regulatory environment in Japan presents several key considerations for platform operators and businesses using platforms:

  • Complexity and Potential Overlap: Different laws target different aspects of platform operations (competition, consumer protection, content) and apply based on varying criteria (size, type of service). A single large platform might be subject to several of these regimes simultaneously.
  • Designation Thresholds Matter: The most significant obligations under the Transparency Act, the Smartphone Software Competition Promotion Act, and the Jouhou Platform Act are triggered only when a platform provider is designated by the relevant authority based on scale (user numbers, transaction value). Understanding these thresholds and the designation process is crucial.
  • Emphasis on Process and Transparency: A common thread across multiple laws is the requirement for platforms to establish fair, transparent, and clearly communicated processes – whether for business user terms, content moderation decisions, or data handling practices. Proactive development of robust internal governance and compliance systems is essential.
  • Global Influences, Local Specifics: While Japan draws inspiration from international developments (especially the EU's DMA), its regulatory approach often remains distinct. It may be more targeted (e.g., focusing on smartphones) or sometimes employ softer measures (e.g., DPF Consumer Protection Act) than comprehensive frameworks elsewhere. Direct analogies should be made cautiously.
  • Dynamic Environment: This field is far from static. Businesses should expect ongoing policy discussions, potential legislative amendments (especially regarding disinformation or further competition measures), refinement of regulations through ordinances and guidelines, and evolving enforcement priorities from the JFTC, MIC, METI, CFA, and PPC.

Conclusion

Japan has moved decisively in recent years to establish a dedicated regulatory framework for the digital platform economy. Rather than a single overarching law, it has adopted a sector-specific and issue-specific approach, resulting in a complex tapestry of legislation covering competition in mobile ecosystems, transparency for business users, consumer protection on marketplaces, content moderation responsibilities, platform tax obligations, and emerging security concerns.

The overall direction reflects a global trend towards greater scrutiny and accountability for large digital platforms. While some Japanese regulations are inspired by international models like the EU's DMA, the Japanese approach often incorporates unique features, such as a strong emphasis on procedural fairness obligations (Transparency Act), a mix of mandatory and voluntary schemes (DBS law), and sometimes a preference for "soft law" or effort-based requirements (DPF Consumer Act).

For global businesses, navigating this landscape requires a nuanced understanding of which laws apply to their specific operations or interactions in Japan, proactive development of compliance programs focused on transparency and procedural fairness, and continuous monitoring of regulatory developments and enforcement actions. The era of light-touch regulation for digital platforms in Japan is clearly evolving towards a more structured and demanding environment.