Digital Platform Consultation Deskfor app developers* commissioned by METI

September 2022

Background of DPCD Act on Improving Transparency and Fairness ofDigital Platforms (called as “TFDPA”)
 established in May 2020, enforced in February 2021
 Digital platform providers subject to regulation:(designated in April 1，2021 by METI)
https://www.meti.go.jp/english/press/2021/0401_001.html

 App stores• Apple Inc. and iTunes KK• Google LLC（App Store）（Google Play Store）

As one of the efforts to ensure effective implementation ofthe TFDPA, METI has established consultation desks forbusiness users of digital platforms

1Role of DPCD（１）Digital Platform Consultation Deskfor app developers• Open Mon.-Fri. 9am to 12pm, 13pm to 17pm
• https://www.app-developers.meti.go.jp/• E-mail info@app-developers.meti.go.jp• TEL: 0120-535-366• Operated by Mobile Content Forum (MCF)* commissioned by METI

 Advise on challenges in online shopping mall＊ instruction of terms & conditions of platforms＊ advice on how to respond based on past cases＊ support to communicate with platform providers

 Provide information on lawyers and financial assistance toconsultation with lawyers
 Conduct seminars for app developers
 Interview with app developers to understand transaction environment Identify common issues, and consider how to solve them2

Role of DPCD（２）Digital Platform Consultation Deskfor app developers• Open Mon.-Fri. 9am to 12pm, 13pm to 17pm
• https://www.app-developers.meti.go.jp/• E-mail info@app-developers.meti.go.jp• TEL: 0120-535-366• Operated by Mobile Content Forum (MCF)* commissioned by METI

Provideinformation

 Confirm violations of the TFDPA (transparency act) Assess possibility of violations of Antimonopoly Act→ Request the JFTC to execute measures Consider in evaluation of transparency & fairness ofregulated platforms ＝ “Monitoring Review”
 Use for policy making

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FY2021 Summary of DPCD’s Operations
for app developers

 There was a total of 1,407 consultations and inquiries in FY2021.
(Note: The count is based on the types of information, and includes
both positive and negative subject matter) Of these, there were 53 requests for consultations and inquiries fromusers, and 1,354 cases in which the DPCD collected information
through interviews and other means.
 By type of information provided, among the requests and cases
collected by the DPCD, there were;• 257 (18%) for matters related to changes in terms and conditions,• 250 (18%) for matters related to partial refusal of transactions(e.g., listing bans), and• 234 (17%) for matters related to rankings (e.g., search rankings).
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Feedback from App Store Developers* Based on feedback to the Consultation Desk since April 2021. Feedback has been organized byrelatively frequent comments and comments that would impact a large number of developers.

1. Commissions and billing●●The rate for in-app settlement commissions has been reduced.
I do not fully agree with the settlement rules and standards nor the placement of commission rates set by app storeoperators.
•••

I feel that standard commissions are high. They should adequately disclose the costs, etc. to operate the app store and thereasons for commission rates.
Competition isn't fair because the commissions create a significant difference in our costs versus those for apps from the appstore operator and their affiliate companies.
Users are forced to use the in-app payment method, which feels unreasonable. External links within the app that lead to otherpayment methods are prohibited. The result of these rules is that restraints are placed on developing services and that impactsusability.

2. Refunds●●We can now see a user's transaction history, which prevents double refunds to app users.
App store operators decide the rules for refunds and how to accept refunds, which creates a burden on developers.
•••

When an app user requests a refund within 90 days and the app store operator decides to grant a refund, the developer mustaccept that decision. I feel that this rule is unreasonable considering that there are refund requests from users with ill intent.
Accepting a refund after the unconditional refund period is restricted to certain cases by violations of warranty, laws, etc.
Developers do not have the opportunity to contest an app store operator's decision to grant a refund.
Developers must provide proof if they question a user's refund request. However, app store operators do not disclose theinformation necessary to analyze a problem (specific details on the refund request, the reason for the refund, etc.), so contestinga decision is difficult in practice.

5Feedback from App Store Developers* Based on feedback to the Consultation Desk since April 2021. Feedback has been organized byrelatively frequent comments and comments that would impact a large number of developers.

3. App reviews●●●

App rejection notification emails now include the reason for the rejection. The reason for an app being rejected isoften resolved through phone consultation with an agent. Operators now provide detailed explanations when apps
are stuck in the review stage.
Reviews have been improved from a consistency stance. The pace of app reviews has increased.
I can't predict how an app review will go and it impacts my decisions for investment.
••●•App reviews feel unreasonable and biased.
••●The review guidelines they provide are confusing and I can't determine what is allowed before the review. Apps require time andinvestment to develop, so they should provide standards and rejection examples.
My app was rejected after the main review even though the app store operator gave me feedback before the review. I take issue
that there is no system for review and consultation before the final review. It should be easier to predict the outcome of reviews.
Games are suddenly unilaterally banned for policy violations even though they were offered legally in Japan.
Another company's app with certain features was accepted but our company's app was rejected. It feels like developers are nottreated equally. We would like guarantees on consistency and fairness in reviews.
Excessive prohibitions on collecting user information prevent me from collecting the information I need for my app due to thenature of the service it provides. Preliminary reviews to determine these rules are insufficient.

Deleting an app that is already available on the app store impacts the users of that app, so I would like to be
notified ahead of time and given the opportunity to correct the app.

4. Suspending accounts●My account was suspended without advance notification because the app store operator indicated that the app
violated guidelines, which then simultaneously deletes my other apps on the app store. I suffered significant losses
as a result. Even if my app violated guidelines, all I needed to do was to correct the app and I don't understand
why my account had to be suspended immediately.

6Feedback from App Store Developers* Based on feedback to the Consultation Desk since April 2021. Feedback has been organized byrelatively frequent comments and comments that would impact a large number of developers.
5. Complaint processing and consolations●●

Support is now offered in Japanese and it feels like communication is improving.
Issues do not get resolved because developers cannot communicate adequately with app store operators when anissue or other problem arises.

• My questions were answered with scripted phrases and the issue was not resolved.
• I've had no problems communicating over the internet, but I'm transferred around to several different desks when I try to reach out
via phone. I often use phone calls for emergencies, but my conversations often ultimately result in me being told to use a web form.

6. App display placement etc.
●●

The best practices for search results and ranking displays are publicly available and easy to understand.
The mechanisms behind displaying apps feels unclear and unfair and that's an issue.

• The standards for being displayed on the recommended page are unclear. It feels like the methods for determining search results
are not expressed clearly.
• It feels like app store operators favor their own apps in search results, etc. The logic and algorithms are not publicly available,
though, so I cannot verify whether app store operators actually favor their own apps.

7. Data use by app store operators●It feels like some app stores use their position to obtain information on all apps - including our company's apps and connect that with services offered by developers, then reflect that in their own services. When we examinedthe contents of a service, it was similar to what our company was going to develop.

* Developers also said, "Rules and notifications are easier to understand than before" and "They now offer information
sessions and Q&A sessions for developers to create mutual communication."
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Key Points of the Act on Improving Transparency and Fairness of Digital Platforms(establishment: May 27, 2020; promulgation: June 3, 2020, enforcement: February 1, 2021)

Basic philosophy
The Act stipulates that the government should secure the minimally-necessary commitments from and enforce regulations
on digital platform providers, on the basis that such providers must take voluntary and proactive efforts toward
improving the transparency and fairness of their digital platforms (this adopts a “co-regulation” approach that
stipulates the general framework under laws and leaves details to businesses’ voluntary efforts).

Targets subject to the regulations


The Act designates digital platform providers whose transparency and fairness must be significantly improved in particularcompared to other digital platforms as “specified digital platform providers” and it makes such providers subject to specificregulations.

Roles that specified digital platform providers should play

The Act requires specified platform providers to disclose terms and conditions of trading and other information, develop
procedures and systems in a voluntary manner and submit a report every fiscal year on the overview of measures andbusinesses that they have conducted, to which self-assessment results are attached.
Note: The Act requires such providers to send a prior notification of changes in terms and conditions, etc. to users and to voluntarily developsystems for settling complaints and disputes.

Roles that administrative authorities should play

The Act requires administrative authorities (METI Minister) to review the current situation of platform operation inaccordance with the submitted yearly report and publicize the assessment results together with an overview of the report. In
such reviews, administrative authorities are expected to hold interviews with academic experts, customers and consumersof the target specified digital platform provider, and other stakeholders in order to hear their opinions and encourage
stakeholders to share challenges and enhance mutual understanding.
The Act authorized the METI Minister to request that the Japan Fair Trade Commission take appropriate measures underthe Antimonopoly Act if it is found that a digital platform provider may be suspected of being involved in any cases ofviolations of the Antimonopoly Act.

Note: The regulations under the Act should be applied to all digital platform providers regardless of domestic or overseas origin of the business. METI may develop
procedures for service by publication by referring to case examples in which the Antimonopoly Act has been applied to overseas businesses.

“Monitoring Review” process
Roles of the administrative
authorities

Roles that specified digital platform providers should play
Disclosure of information, e.g.,terms and conditions

Voluntary development ofprocedures and systems

Specified digital platform providers
are required to disclose terms andconditions to users and send a priornotification of changes in suchconditions to them. This requirement
aims to improve the transparency oftrading.

Specified digital platform providers
are required to take necessary
measures in accordance with theguidelines under the Act anddevelop fair procedures andsystems.

[Examples of items to be disclosed]
 Prior notice of detailed changes interms and conditions and reasons
therefor Details of requests by the digitalplatform providers for customers
to use additional paid services andreasons therefor Scope of data use
 Reasons for rejecting or stopping
customers from placing theirproducts on platforms
 Basic matters that determine
search ranking[Examples of details of the guidelines] Development of procedures andsystems to secure fairness of theplatform Development of systems foraddressing complaints and settling
disputes Development of systems for
closely communicating withstakeholders (choosingadministrators in Japan)
 Building of frameworks forunderstanding conditions that
customers are facing[Administrative measures and penalties][Administrative measure] Issuance of recommendations and Issuance of recommendations andpublications to improve improper
publications to providers topractices
improve their practices in cases Execution of cease and desist
where such actions are necessaryorders only when no correction isto ensure that platform providers
seen in such practices
appropriately and effectively carry Imposition of penalties onout certain measuresviolators of the orders

Report on the current
situation of platform
operation
Details of the report(1) Outline of business(2) Current situation ofaddressing complaints(3) Current situation of
information disclosure(4) Current situation ofvoluntary development ofprocedures and systems(5) Results of self-assessment
Note: Penalties may be imposed
if a provider fails to submit areport or complete
descriptions of required items.

Voluntary actions toimprove transparency
and fairness intrading based on theresults of the reviews

Implementation of reviews(assessment)
The administrative authority in charge isrequired to implement reviews of the current
situation of specified digital platform providers’operation with input from academic experts,
customers and consumers of the providers,and other stakeholders and to publicize theresults of the reviews.

(1) Acceptance of a report

Administrativeauthority(METI Minister)(2) Assessment of
the current
situation of
platform operation

Input from the customers
and consumers academic
experts and otherstakeholders of theproviders(3) Publication of the resultsof the reviews and anoverview of the report

Request the JFTC toexecute measures

The METI Minister is authorized to request
the JFTC to take appropriate measures underthe Antimonopoly Act if it is found that digitalplatform provider may be involved in any
cases which are suspected of being violationsof the Antimonopoly Act.

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