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Japan gov't panel interviews Apple, Google execs on info privacy, business practices

A government panel to consider new rules for major internet platforms meets in Tokyo's Chiyoda Ward on Nov. 28, 2018. (Mainichi/Kenji Wada)

TOKYO -- A government panel interviewed representatives from internet platform giants Google LLC and Apple Inc. on their business practices, how they handle users' information, and other issues at a hearing here on Nov. 28, as Japan considers drawing up new IT industry regulations.

The company representatives explained to the committee that they had systems in place to guarantee transparent and fair personal information use, and that any new rules introduced by the government should be "smart and efficient." They also called on the administration to avoid stifling technological innovation through overregulation and be mindful of the different features of individual internet businesses.

The hearing was the first in Japan for companies in what is often referred to here as the GAFA group of IT platform giants: Google, Apple, Facebook Inc., and Inc. The panel, composed of experts as well as representatives from the Japan Fair Trade Commission and the trade and communications ministries, held the hearing behind closed doors at Apple's and Google's request.

The firms sent senior executives in charge of antitrust law, personal information protection and other fields from both their headquarters in the United States and their Japanese subsidiaries to attend the hearing. Amazon and Facebook skipped the meeting, though the latter submitted written responses to the panel's questions.

According to the committee secretariat, the panel pointed out to the executives that, amid their firms' domination of the internet services market, there are fears that they could engage in increasingly unfair business practices, or provide biased information as if it were fair. The company representatives are said to have argued that they are responding appropriately to these risks based on internal rules. Furthermore, while they apparently did not oppose increased regulation outright, they emphasized that new rules could hamper innovation and ultimately create net disadvantages depending on their content or how they are implemented.

According to panel members and others involved in the hearing, Apple presented materials showing that some 90 percent of the firm's income came from iPhone and other mobile device sales. The company stressed that its business model was thus not based on making money off users' personal information, drawing a clear contrast with Google's and Facebook's leveraging of user data to drive advertising. The presentation appeared to be an argument against grouping Apple with the other three GAFA firms.

The Cupertino, California-based company furthermore voiced support for the European Union's General Data Protection Regulation imposing strict limits on how and when firms can use personal information.

Google representatives, meanwhile, reportedly highlighted that the company was supporting the growth of Japanese tech startups, small and mid-sized firms.

One senior Ministry of Economy, Trade and Industry official revealed that "all the companies stated they wanted rules to be differentiated by business area." The company representatives apparently made the request to reflect the major differences among services in how transactions or personal information is handled, such as social media versus online shopping.

The government will work out basic principles in drafting new rules on the internet sector based in part on the panel's findings by the end of 2018, and move to draw up concrete regulatory proposals in the new year.

Meanwhile, it was also noted by a number of committee members that, unlike the big Japanese or U.S. internet firms, Chinese platform giants provide the personal data they collect to the Chinese government, which uses it to strengthen state power. A panelist was quoted as saying that "the big platforms in China are basically doing business as a part of the Chinese state, and that is very important to consider." It was proposed that the committee thus consider Chinese internet firms separately from Japanese and U.S. companies and create regulations accordingly.

The Chinese government is known to use AI, facial recognition and other cutting-edge technology to track the activities of its citizens and surveil society as a whole. Beijing is also thought to be exporting the technology to developing countries that use it to boost their security apparatus. There are also fears that Chinese internet giants will leverage their enormous home market to establish world "data hegemony."

However, Chinese firms have thus far not been invited to appear at the hearing, and it remains unknown if the panel members' comments will translate into concrete policy.

(Japanese original by Kenji Shimizu, Akane Imamura, and Kenji Wada, Business News Department)

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