Japan turns up heat on Apple, Google with threat of hefty fines

Antitrust proposals could stretch to 30% of annual revenues for law-breaking app store monopolies

Apple, Google, and other Big Tech players could be fined 20 or even 30 percent of their sales in Japan if they break newly proposed regulations on abusive app store monopolies.

This level of punishment is just at the draft stage, according to Nikkei, and if the proposed changes pass, today's current six percent fine for app store monopoly abuse will rise to 20 percent or more.

The legislation, which is being drafted by Japan's Fair Trade Commission (FTC), is seemingly targeted at Apple and Google, which have come under fire globally for resisting calls to allow third-party app stores into their smartphone ecosystems.

While a six percent fine on Japanese sales may be manageable for tech titans like Apple and Google, 20 percent could do some serious damage, especially as these fines are based on revenue, not profit. Additionally, repeat offenders will be fined up to 30 percent, or five times the original six percent.

For reference, Apple generally takes a 30 percent cut from sales on its app store, equal to the repeat offender fine that Japan's FTC might impose. For developers that turn over less than $1 million a year, this Apple store fee drops to 15 percent.

Google is more flexible and only takes a 15 percent cut from three percent of devs on the Google Play store, though it increases the cut to 30 percent when devs see revenue in excess of $1 million. Should Japan follow through with these increased fines for monopoly violations, it could seriously impact Apple and Google's bottom lines.

In the US, the two giants are in a similar struggle over antitrust suits. Google already settled one case that involved every single US state, plus Washington DC and two territories, to the tune of $700 million. For its part, Apple is now being sued by 15 states and the Department of Justice, and the case was only filed last month.

Across the pond, Apple and Google have already capitulated to the European Union's Digital Markets Act (DMA), which promises to dismantle the app monopolies both companies are accused of having. Google already met the DMA's open app ecosystem requirements when they went into effect, but Apple made big changes that included app distribution over the internet (which only costs devs half a euro per install after one million installs).

While it's unclear if a 20-30 percent fine for monopoly abuse will get Apple and Google to change their ways, it could at least bring Japan more of that sweet app store cash and help pay for a future antitrust suit if that's ever on the table. ®

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