Japan starts public consultation on draft rules for smartphone software competition law

On 15 May 2025, the Japan Fair Trade Commission (JFTC) released draft implementation rules and guidelines in respect of the new Act on the Promotion of Competition for Specified Smartphone Software (the Smartphone Act), which is set to take effect in December this year. As reported in a previous edition of our Competition and Regulatory Newsletter, Apple and Google have been designated as ‘Specified Software Operators’ or ‘SSOs’, which are required to comply with certain obligations and prohibitions under the Smartphone Act.

The draft rules provide explanations of key concepts and guidance on the scope of the obligations and prohibitions set out in the Smartphone Act, including specific examples of what may constitute prohibited conduct for each of the relevant categories of software, and recommended practices for compliance with the Smartphone Act. For example, regarding the prohibition of unjust discrimination or otherwise unfair treatment (applicable to operating systems and app stores), the draft rules explain that applying certain criteria (e.g. ensuring cybersecurity, maintaining public order and morals etc.) in the review of individual software is generally permissible, unless the implementation of such review is discriminatory without reasonable grounds.

As noted in our previous edition, the Smartphone Act permits “justifiable measures” that are necessary to achieve the objectives of security, privacy and youth protection etc., provided that there are no “less competition-restricting” measures. The draft rules unveil two additional objectives which may qualify as “justifiable measures”, namely: (a) the prevention of gambling and other criminal activities; and (b) the prevention of significant delays or abnormal operations of smartphones. These justifiable objectives must be carefully balanced against the imperative of promoting competition. By way of a hypothetical scenario, if an SSO uniformly displays an “unsafe” warning message to smartphone users who attempt to install alternative app stores, without having conducted a prior review of such app store, this will not be accepted as a “justifiable measure” and may therefore constitute an infringement under the Smartphone Act.

In addition, the draft rules include a draft policy on commitment procedures, which sets out the framework through which operators may voluntarily propose corrective plans in exchange for the JFTC suspending its enforcement action. In particular, the policy specifies that structural measures may, in some cases, be required to restore competitive order. It is expected that the commitment procedures will help address competitive issues at an early stage and facilitate the implementation of corrective measures.

The draft rules are open for public consultation until 13 June. While further changes are expected, the draft rules shed light on the JFTC’s proposed approach to the enforcement of the Smartphone Act and serve as a useful indication of the future direction of Big Tech regulation in Japan more generally.