Japan orders Google to stop forcing phone makers to pre-install its apps

Anouncement comes just ahead of Economic Revitalization Minister Ryosei Akazawa's planned visit to the US this week to press for a reprieve from President Donald Trump's tariffs on Japanese products

By Takashi Mochizuki

  Japan’s Fair Trade Commission ordered Alphabet Inc.’s Google to stop alleged abuse of its market power over local smartphone manufacturers, just ahead of high-stakes trade negotiations with the US this week. 

The Tuesday order reiterates the FTC’s earlier finding that the US tech giant took advantage of its position as the provider of the Google Play app ecosystem — the only viable alternative to the iPhone’s App store. Google is improperly forcing local phone makers to prioritize its apps and services on their devices, the regulator said.

 

The announcement comes just ahead of Economic Revitalization Minister Ryosei Akazawa’s planned visit to the US this week to press for a reprieve from President Donald Trump’s tariffs on Japanese products. The watchdog’s move also follows a complaint by the Office of the US Trade Representative that Japan’s Digital Platform Act — geared to boost transparency from large technology providers — disproportionately affects American companies and undermines their competitiveness in Japan by increasing compliance costs.

 

While the US runs a goods deficit with Japan, it has a surplus in services, which includes licensing fees for Android’s app ecosystem as well as advertising revenue. Last year, the US sold more than $45 billion in seasonally adjusted services to Japan.

 

Google allegedly capitalized on the struggles of Japanese smartphone makers to retain market share in a country where Apple Inc. is by far the leading smartphone brand. Google demanded Japanese phone makers — which include Sony Group Corp. and Sharp Corp. — bundle the Chrome browser and promote it on each handset’s home screen, according to the FTC. The manufacturers complied, because the Google Play app ecosystem is indispensable to deliver phones that can stand toe to toe with Apple’s handsets.

 

Mountain View, California-based Google also offered to share ad revenue with device makers if they agree not to preload search engines from its rivals, the FTC said. Google places a high priority on ensuring it’s the first search service users see when they get a new phone, paying Apple billions each year to secure that spot on iPhones.

 

Japan’s cease-and-desist order marks the country’s first such command to any leading US tech firm and follows examples set by regulators around the world. The EU has rebuked both Google and Apple for using what it alleges are illegal tactics to dominate mobile software markets, while the US Justice Department is considering asking a federal judge to force Google to sell off parts of its business after a federal judge ruled the company illegally monopolized the search market.

 

Google in December said that it was disappointed in the Japanese watchdog’s conclusions, and that it’s proposed solutions to the regulator.