Japan’s Act on Digital Platforms
Aiming to improve the transparency and fairness of digital platforms, the Act on Improving Transparency and Fairness of Digital Platforms (TFDPA) was established on May 27, 2020, promulgated on June 3, 2020, and enforced on February 1, 2021.
The Act stipulates necessary measures for digital platforms, including requirements of digital platform providers to disclose terms and conditions and other information, secure fairness in operating digital platforms, submit a yearly report on the current situation of business operation, and conduct self-assessments. The Act also requires the METI Minister to review the business operation of the platform based on the yearly report and other information with involvement of business users, consumers and academics, and to publish the results of the assessment.
In addition, the Act requires the government to encourage digital platform providers and their customers to facilitate mutual understanding on the basis of such digital platform providers making voluntary and proactive efforts with minimally necessary commitments by the government.
The Act stipulates that the government should secure the minimally-necessary commitments from, and enforce regulations on, digital platform providers, on the basis that such providers must take voluntary and proactive efforts toward improving the transparency and fairness of their digital platforms (this adopts a “co-regulation” approach that stipulates the general framework under laws and leaves details to businesses’ voluntary efforts).
The Act designates digital platform providers whose transparency and fairness must be significantly improved in particular compared to other digital platforms as “specified digital platform providers” and it makes such providers subject to specific regulations. Currently, the following digital platform providers have been listed.
Role of Digital Platform Providers
The Act requires specified platform providers to disclose terms and conditions of trading and other information, develop procedures and systems in a voluntary manner and submit a report every fiscal year on the overview of measures and businesses that they have conducted, to which self-assessment results are attached.
Information Disclosure
Specified digital platform providers are required to disclose terms & conditions to users and send a prior notification of changes in such conditions to them. Disclosure requirements include, but are not limited to, the following:
- Prior notice of detailed changes in terms & conditions and the reasons
- Details of requests by the digital platform providers for customers to use additional paid services and the reasons
- Scope of data use
- Reasons for rejecting or stopping customers from placing their products on platforms
- Basic matters that determine search ranking
Voluntary Development of Procedures & Systems
Specified digital platform providers are required to take necessary measures in accordance with the guidelines under the Act and develop fair procedures and systems. The guidelines include, but are not limited to, the following:
- Development of procedures and systems to secure fairness of the platform
- Development of systems for addressing complaints and settling disputes
- Development of systems for closely communicating with stakeholders (choosing administrators in Japan)
- Building of frameworks for understanding conditions that customers are facing
Role of Administrative Authorities
The Act requires administrative authorities (METI Minister) to review the current situation of platform operation in accordance with the submitted yearly report and publicize the assessment results together with the overview of the report. In such reviews, administrative authorities are expected to hold interviews with academic experts, customers and consumers of the target digital platform provider and other stakeholders in order to hear their opinions and encourage stakeholders to share challenges and facilitate mutual understanding.
Role of the Japan Fair Trade Commission
The Act authorizes the METI Minister to request that the Japan Fair Trade Commission take appropriate measures under the Antimonopoly Act if it is found that a digital platform provider may be suspected of being involved in any cases which are violations of the Antimonopoly Act.
Source: METI
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