The Japanese government has embarked on implementing full-scale regulations on information technology (IT) giants.
As part of these efforts, the government has set up a council on digital market competition within the Cabinet Secretariat. The panel will strive to reduce red tape and work out rules on personal information protection and competition.
U.S.-based Google, Apple, Facebook and Amazon.com (GAFA) are the best known IT giants. While providing useful and convenient services such as search engines and social networking services, these companies have been gathering massive amounts of users' personal information.
These IT giants have gained profits by analyzing individuals' browsing history and sending advertisements that suit their interests. Users are increasingly concerned that their personal information is being used for other business activities without their knowledge while they enjoy the convenience of the services provided by these firms.
It has been pointed out that Amazon.com and other major online shopping companies are unilaterally forcing businesses that sell their goods and services on these giants' sites -- their online tenants, so to speak -- to change the terms of their contracts.
The government panel is poised to draw up by the year's end a bill to amend the Act on the Protection of Personal Information and one to require IT giants to ensure transparency of their transactions.
The core of these legislative measures is a clause under which IT giants' use of personal data without the individuals' permission would constitute abuse of their dominant bargaining position and be subject to a crackdown by the Japan Fair Trade Commission, the government's anti-monopoly watchdog. If the legislation is to come into force, it could severely restrict the distribution of ads by GAFA.
Under the legal changes, Japanese e-commerce giants such as Rakuten Inc. would be obligated to disclose the terms of their contracts with businesses that set up online shops on Rakuten's market to prevent smaller businesses from suffering disadvantages.
As part of measures to boost the protection of personal information, the new legislation would guarantee users' right to demand that IT giants stop using their personal information.
However, the criteria for protecting personal information being considered by government bodies lack clarity. The Japan Fair Trade Commission assumes that browsing history and location information would be subject to protection. However, the Personal Information Protection Commission of the Cabinet Office, which oversees the Act on the Protection of Personal Information, is reluctant to expand the scope of personal information subject to legal protection because the panel is concerned that such regulations could adversely affect technological innovation.
The European Union enforced strict personal information protection rules last year. The state of California is scheduled to introduce regulations as strict as those enforced by the EU at the beginning of 2020.
EU rules on personal information protection had initially been feared to hinder business activities. However, the regulations allow companies to utilize data without concern because the criterion for personal information subject to protection has been clarified.
Japan should also set explicit criteria in legislation for the scope of personal information that must be protected. Otherwise, effective use of data cannot be ensured.