Japan Forces Big Tech's Hand on App Store Competition

Apple Inc. (AAPL) and Alphabet Inc. (GOOG) (GOOGL) are overhauling how their app ecosystems work in Japan, and it's not because they wanted to. The country's Mobile Software Competition Act went live Thursday, and it's doing exactly what the name suggests: forcing competition into a market that Apple and Google have pretty much controlled on their own terms for years.

The law introduces something that's been a sore point for developers worldwide. They can now distribute iOS apps through alternative app marketplaces in Japan, bypassing the App Store entirely, as long as those marketplaces meet Apple's approval and stick to certain standards. Developers can also handle payments for digital goods and services outside Apple's in-app purchase system, which has historically taken a cut of every transaction.

This sounds great for developers who've been chafing under Apple's commission structure, but there's a catch. Actually, several catches. Apps installed outside the App Store won't get the same level of App Review protection that Apple normally provides. That opens the door to malware, fraud, and the kind of security nightmares that make IT departments nervous. Apple knows this, and they've been working with Japanese regulators to put guardrails in place.

Every iOS app distributed in Japan, regardless of where it comes from, will need to pass through what Apple calls Notarization. Think of it as a basic security screening. It's not as thorough as full App Review, but it's something. Apple is particularly concerned about protecting younger users who might not recognize sketchy apps when they see them.

Google Takes a Lighter Touch

Meanwhile, Google is taking a somewhat different approach. The company will roll out choice screens in Japan, asking users to pick their preferred search engine and browser on Android and Chrome. It's a nudge toward openness without completely dismantling the existing system. Google is also keeping its User Choice Billing program running, which lets non-gaming app developers offer alternative payment options within their apps.

Part of a Bigger Pattern

Japan's new law isn't happening in a vacuum. Apple has been dealing with regulators around the world who are increasingly skeptical of how much control the company exercises over its platforms. Back in November, Apple confirmed that its Apple Ads and Apple Maps services met the Digital Markets Act thresholds set by the European Commission. That could trigger strict pro-competition obligations across Europe.

And then there's India, where Apple is fighting back against a new antitrust penalty law that could theoretically hit the company with fines up to $38 billion. Apple has called that potential penalty "grossly disproportionate" and "unjust," which is corporate speak for "absolutely not happening if we have anything to say about it."

The through line here is clear: regulators in major markets are no longer content to let Apple and Google set the rules for how apps get distributed and how developers get paid. Japan is just the latest country to decide that competition might be better for everyone, even if it comes with some security trade-offs.