Unilateral changes in the terms and conditions of business transactions or restrictions on trade with competitors by major tech companies could constitute a violation of the Antimonopoly Law, the Japan Fair Trade Commission (JFTC) said Wednesday in its final report on the state of trade regarding online advertising.
The government plans to use the report as the basis for drawing up a policy by as early as March to regulate giant tech firms concerning digital advertising. Discussions are forthcoming to add this sector to areas covered under the law on the improvement of transparency and fairness in transactions on specified digital platforms, which was enacted in February to regulate major tech companies.
The JFTC also said major tech companies collecting personal information and using it for advertising without adequate explanations to consumers could mean the firms are unfairly capitalizing on their dominant positions.
The report summarizes antitrust issues based on questionnaires and interviews with companies that place digital ads, advertising agencies, the media and consumers. The JFTC said Google of the United States, with its high market share in digital advertising, is in a "monopolistic position," while Facebook of the United States and Yahoo Japan Corp., which are both strongly situated in their sectors, are in "leading positions."
If these three companies restrict advertising agencies from doing business with other major tech firms, the possibility of their violating the Antimonopoly Law, the report says. Unilateral changes to contracts or the termination of transactions with advertisers among others, or demands to use their services could also lead to problems under the law.
The JFTC also expressed concern about the collection and use of user information from search sites and social media. That information forms the basis for how digital advertisements are displayed. If the scope of information to be collected or the purpose for which it is used is unclear, or if the data is used without informing consumers of the purpose, such actions could constitute abuse of a major tech firm's dominant position, the report states.
Since page views correlate to a webpage's value, meaning a greater number of clicks leads to higher digital advertising prices, this might encourage the creation of false information to generate traffic to sites, the report also notes. This could lead to the diminishing value of media outlets that provide quality news and information, setting up a situation where "consumers are unable to receive accurate and useful information," the report warns.
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