Japan to toughen regulations on major e-commerce operators

November 13, 2019

Tokyo--A Japanese government panel reaffirmed on Tuesday its plans to impose tougher regulations on online shopping businesses run by information technology giants.

At the day's meeting of the future investment panel, chaired by Prime Minister Shinzo Abe, participants specifically agreed to examine the idea of obliging major online shopping mall operators, including Amazon.com Inc., Rakuten Inc. <4755> and Z Holdings Corp. <4689>, formerly known as Yahoo Japan Corp., to disclose how they decide search result rankings and to report their operational status regularly.

The panel is planning to work out details of the tougher regulations to be stipulated in legislation the government aims to introduce next year, informed sources said.

At the meeting, Abe told relevant ministers to make efforts to set up rules that respect the IT firms' autonomy as far as innovation efforts in the industry are not hampered.

It has long been suspected that products of companies that pay advertising fees to electronic commerce operators or smartphone app distributors rank high in search results.

In a bid to ensure market fairness, the government hopes to require under law shopping site operators to describe how search rankings are determined.

But to what extent the ranking mechanism is disclosed will be discussed carefully, because there may be goods and services providers who use the information to make their product rank high, people familiar with the situation said.

The envisaged legislation is also expected to contain clauses obliging major shopping mall operators to not only disclose information but abide by rules to protect rights of their client firms, which are generally overridden by the operators on the back of a huge number of users.

Last month, Japan's Fair Trade Commission reported that some big e-commerce site operators forced their clients to accept terms they revised unilaterally or raised commission fees.

Ahead of the future investment panel meeting, another government panel held a hearing with the four U.S. IT titans of Google LLC, Amazon.com, Facebook Inc. and Apple Inc. and sought their cooperation for the government initiative to make e-commerce transparent.

The government is set to launch soon a full-fledged investigation into the digital ad market, which is under the strong influence of the four companies. Jiji Press