In a bid to break Apple and Google’s dominance of the smartphone app ecosystem, the Japanese government is looking to change rules on app markets and payments to stimulate competition.

A bill submitted by the administration of Prime Minister Fumio Kishida would compel the dominant platforms to allow third parties to launch their own app markets and to offer more payment options, while banning the technology giants from giving preferential treatment to their own products.

Japan’s move comes as antitrust authorities in other countries and regions escalate moves to curb tech giants’ market supremacy.

The bill is currently being deliberated in parliament and will likely clear both chambers during the ongoing session, which ends next month.

Here are some key things to know about the bill:

What does the bill hope to achieve?

The bill is intended to facilitate competition in smartphone software services by weakening the control of Apple and Google.

The main targets are the app stores they provide, as consumers effectively have only two choices for smartphone operating systems: Apple's iOS or Google’s Android.

“The discussion (to create new regulations) began because competition is hardly visible in the smartphone OS market, because of an effective duopoly by the two firms,” said Daisuke Korenaga, a professor at Tohoku University who is well-versed in the digital economy and antitrust law.

“Apple and Google control competitive behavior and user’s choice in their own ecosystems, so if (the new regulations) can create open doors in the walls surrounding their ecosystem, it would attract new competitors, facilitate innovation and possibly lower prices for app users. Direct benefits would be big for users in this field,” said Korenaga, who was a member of a government working group that discussed the issue.

The government believes that the tech giants’ app store duopoly has limited competition, while app developers have to pay high fees — which they might pass on to users.

Apple does not allow other companies to run app stores on iOS, so users can only download apps from Apple’s store. With Android smartphones, Google does allow other firms to provide app stores, but Google’s own store, called Google Play, is the dominant choice among users and app developers.

Apple and Google both set fees for app providers at 15% or 30% of sales.

The Mobile Content Forum, a Tokyo-based body for smartphone app developers including video game firms, said that although powerful tech companies cultivated the mobile ecosystem, the duopoly has created issues for developers and consumers.

If business models weren’t restrained by the unilateral rules of tech platforms, “app providers would be able to improve profitability and consumers would benefit from a greater variety of content and services with more reasonable prices,” the Mobile Content Forum said in a statement.

The bill also bans powerful companies from giving preferential treatment to their own products.

Last October, the Fair Trade Commission launched a probe into Google over allegations the firm asked Android smartphone-makers to put its apps, such as Google Search and Google Chrome, in prominent places by default.

The bill specifies that violators would have to pay penalty fees worth 20% of their domestic sales, which is far bigger than the 6% set for violators of the antitrust law in similar cases.

If the bill clears parliament during the ongoing session, it will come into effect by the end of 2025.

Why can’t the authorities regulate tech giants using the antitrust law?

It is possible to do this, but antitrust investigations often take a long time — possibly years — while such probes also require a lot of work.

Regulators need to prove that tech giants’ dominance has negatively impacted competition, but it is difficult to find definitive proof, Korenaga said, while firms can take the matter to court, thereby potentially dragging out the process.

In addition, the speed of change in the tech sector is so fast that it is hard to use antitrust legal action to regulate the industry in a timely manner.

As such, the government has come up with these new rules that companies would have to follow from the outset.

Will the changes really lead to more app store competition?

That remains to be seen. Because Apple and Google’s app stores are so dominant and users are already familiar with them, it will likely be tough for other firms to create alternative stores that can actually compete with them.

But Korenaga said there is a chance that other tech giants, such as Microsoft and Meta, would roll out their own app stores. He added that Apple and Google might also launch stores on each other’s platforms.

Microsoft is looking to introduce a web-based mobile game store in July, as Apple and Google have been under regulatory pressure, especially in Europe, to accept alternative app stores.

The European Union has already passed a competition law called the Digital Markets Act, which came into force earlier this year and mainly targets U.S. tech giants.

The bloc has designated Google’s parent company Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft as so-called gatekeepers along with their 22 platform services, including Google and Apple’s app stores and smartphone operating systems, the Windows operating system, Facebook and TikTok.

In light of the move, Fortnite-maker Epic Games plans to provide its own app stores on iOS and Android later this year.

What about security? Would allowing third-party app stores lead to the spread of malicious apps?

While the bill aims to challenge Apple and Google’s duopoly, it still allows designated companies to reject other app stores if there are serious concerns about security and data privacy.

The Japanese government will draft guidelines for app store providers to make sure security is robust and data privacy is protected. But how an oversight system will be established and whether it will be operated in an effective manner will be key.