Japan Takes Aim At Big Tech eCommerce Transparency

Earlier this week, Japan’s cabinet proposed a bill that seeks to, as reported by the country’s national daily, The Mainichi, “improve contract transparency” for deals struck by Big Tech firms — specifically, platform operators — and their smaller vendors.

The legislation mandates that Amazon, Google, Apple and others issue annual reports to the government (the Ministry of Economy, Trade and Industry) that detail how terms and conditions, rates and fees, are struck.

In terms of timeline, as reported by the site, passage is slated for the current parliamentary session and would take effect in March of next year.

The bill seems part and parcel of a strategy that seeks to bring at least some forum for smaller firms to voice complaints, and perhaps even give regulators some power to shape the ways in which eCommerce giants interact with local players.

Amid the other components of the bill: Big Tech companies have to notify vendors of changes in agreements in advance and must detail how search results are displayed.

Japan’s efforts come with a bit of prologue. In India, in recent weeks, the Confederation of All India Traders has been among groups pushing for a comprehensive eCommerce policy. Critics in India have alleged that companies, such as Amazon and Walmart’s Flipkart, have employed unfair discounting efforts, and in some cases, have promoted exclusive brand launches on their platforms.

In Japan, the legislation may have some special urgency against a backdrop of macro-economic pressure.

As reported by CNBC, the nation’s economy, per the latest data, shows a contraction at the fastest pace seen in more than half a decade. As measured on an annualized basis, GDP contracted by more than 6 percent. That’s due in part to a sales tax boost that now has been hurting consumer spending. Add the coronavirus into the mix, and demand is likely to be hurt even further, worsening private consumption, which was off by 2.9 percent, and the first drop seen in five quarters.

“The government had hoped Japan’s economy would continue a moderate recovery. But we must be vigilant against the impact of the coronavirus on domestic and overseas economies,” Economy Minister Yasutoshi Nishimura said in a statement.

The government, as reported by CNBC, has maintained that it will take “all necessary steps” to combat those pressures.

Spurring Electronic Payments

The sales tax was raised from 8 percent to 10 percent at the end of last year — and it applies to goods from electronics to cars. It’s interesting to note that the tax hike has a silver lining, of sorts, for eCommerce. Consumers can get a 5 percent rebate for electronic payments made with smaller retailers, and that rebate more than compensates for the 2 percent rate hike.

Adding the latest moves by the government to scrutinize larger tech players seems a bid to shore up the fortunes of smaller merchants in Japan, beyond the initial hurdles that include the coronavirus. Japan’s eCommerce market, ranking behind only China, the United States and the United Kingdom, as estimated by btrax.com, is dominated by firms like Amazon and Rakuten.

Perhaps not surprisingly, Big Tech might be poised to push back. As reported in JapanTimes.com, a panel convened representatives from Google, Amazon, Facebook and Apple. Those tech giants voiced reservations about the annual disclosures, but the government has decided to press on.

Fast forward a year, and the landscape might look a lot different from eCommerce in Japan.