A government panel on competition in the digital marketplace has proposed regulations on large technology companies that would require stricter controls on personal information as businesses expand their use of personal data. However, as the use of data will play a key role in the development of digital societies, the panel wants to ensure the regulations also respect corporate autonomy and do not hinder technological innovation.
Data collection
One of the ways giant tech companies profit is by collecting and analyzing huge amounts of user data from free services such as maps, online searches and social networks, then using this to sell advertising.
Users often do not realize their data is being collected, and it is becoming more difficult for people to understand how their information is being used.
There is also a risk of data leaks. In 2018, it was discovered that personal data from up to about 87 million people had leaked from Facebook Inc.
'Dominant position'
In response, the draft revision of the personal information protection law broadens individual rights by allowing users to request companies stop using their data. The aim is to apply the prohibition on "abusing a dominant bargaining position," which in antitrust law mainly functions between companies, to consumers.
Collecting and using "cookies," which record what websites users have viewed, could be regarded as an abuse of this dominant position if they can be used to identify individuals and are acquired and used without notifying users.
The job site Rikunabi, run by Recruit Career Co., got into trouble for selling data to companies on the probability that job seekers would decline informal job offers. Initially, the site's use of cookies to identify individuals was what was seen as problematic.
However, EY Advisory & Consulting Co.'s Izumi Umezawa said the regulations needed to go farther. "This revision [of the law] would be a step forward, but without things like the 'right to be forgotten,' it's lacking," he said, referring to protections that allow people to demand some online content, such as slander, be removed.
Path to better use
Meanwhile, other measures were also under consideration in order to encourage companies to better use data.
The regulations also present a new concept -- "alias data." The idea is that if data can be processed so the individual cannot be identified, such as by substituting part of it, companies or other groups could use it internally to make predictions about attributes and preferences, even without the individual's consent. Conventionally, if data is not processed so there is no way to identify the individual, it cannot be used.
Industry objects
A draft of the provisionally named Digital Platform Transaction Transparency Law stipulates that large tech companies must regularly submit reports to the government on areas such as the status of transactions.
In the market for online sales and smartphone apps, the reality is that companies cannot do business without the service infrastructure provided by the giant tech firms. Even if they are unhappy, it is difficult for these businesses to object to things like unilateral fee increases.
The draft law obligates large tech companies to submit reports, making it easier to understand the state of such transactions.
Globally, such requirements are rare and some doubts have been raised.
Hiroshi Mikitani, chairman and president of Rakuten Inc., which operates the online shopping platform Rakuten Ichiba, strongly criticized the government's stance, saying, "In the midst of an internet revolution, they're putting regulations on everything and requiring reports to the state."
An official related to the government explained that, "We want to create a framework that encourages the big tech firms to think about things they can do voluntarily, rather than having the government giving orders when there's a problem with a client."
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