As ex ante regulation sweeps across digital markets, Japan has decided not to stand athwart the global tide. With the Mobile Software Competition Act (MSCA) taking effect in December 2025, Tokyo aligned itself with the European Union’s effort to redesign platform competition by rule rather than by case. Among competition scholars, the prevailing mood is resignation—even among skeptics. This, it seems, is simply where policy is headed.
To be sure, the MSCA is narrower than the EU’s Digital Markets Act (DMA), and its enforcer, the Japan Fair Trade Commission (JFTC), favors consultation and guidance over the European Commission’s more confrontational style.
Yet the MSCA rests on the same flawed premises as the DMA. It treats size and concentration as proxies for competitive harm. It also presumes that practices such as self-preferencing or differentiated in-app payment terms are inherently suspect and therefore unlawful unless narrowly justified. And perhaps most importantly, it fails to grapple with how artificial intelligence (AI) is likely to remake the market completely.
Choosing Regulation Over Competition
The government’s Competition Assessment of the Mobile Ecosystem Final Report—the intellectual foundation of the MSCA—casts the mobile ecosystem as a rigid oligopoly. It claims that network effects and user “lock-in” have neutralized competitive pressure, leaving ex ante regulation as the only viable substitute for antitrust enforcement, which it dismisses as too slow to protect innovation.
That diagnosis misreads the market, as Japanese policymakers mistake a mature and differentiated ecosystem for a stagnant one. As Toshiaki Takigawa of Kansai University has argued, competition between Apple’s tightly integrated, security-centric model and Google’s open Android platform is real and ongoing. It is a rivalry of design and governance that expands consumer choice rather than constraining it.
These facts expose the MSCA as unnecessary at best and counterproductive at worst. Framed as “consumer protection,” the act actually risks trading security, convenience, and platform integrity for the benefit of rent-seeking rivals. Like its European counterpart, it replaces evidence with presumption, imposing categorical bans untethered to demonstrated harm. Vague prohibitions—such as the ban on “unjust” uses of acquired data—only heighten the risk of overreach and innovation-chilling uncertainty.
Mandates for “openness” and interoperability may sound attractive in the abstract, but they threaten the very product differentiation and integrated security that Japanese consumers value. Forcing Apple, for example, to re-engineer iOS to accommodate deeper layers of third-party software would weaken the end-to-end integration that underpins its security model.
Although the MSCA gestures toward security exceptions, its core mandates tell a different story. By forcing access to core operating-system functions and requiring support for alternative app stores, the act opens new pathways for piracy and malware. These obligations may promise greater “competition” for developers, but they do so by eroding the incentives to invest in secure, integrated platforms and, in the process, dulling incentives to innovate.
A Law Built for Yesterday
The government’s static account also overlooks a powerful source of competitive disruption: generative AI. As Takigawa observes, AI-driven interfaces and services already threaten to reshape the smartphone ecosystem more profoundly than any regulatory mandate. At the same time, the JFTC’s recent enforcement actions against Google under the existing Antimonopoly Act show that current law can and does address anticompetitive conduct when it actually occurs.
Digital markets rarely change because regulators micromanage incumbents. They change when outsiders introduce new paradigms. The winners of these technological races expect to earn returns on their innovations. By constraining platforms’ ability to monetize successful designs, the MSCA dulls those incentives and, in doing so, discourages the next wave of disruption. For smaller developers, “openness” may deliver not liberation but fragmentation: more divergent app builds, overlapping compliance regimes, higher costs, and uncertain gains for consumers.
The proper test of any regulatory intervention is consumer welfare—understood broadly to include price, quality, innovation, security, and choice. Categorical prohibitions assume improvement across these dimensions, but the evidence remains thin. In Europe, the DMA’s early effects have often taken the form of delayed or degraded services, feature fragmentation, and postponed releases as firms divert resources from product development to regulatory compliance.
Competition problems may, of course, arise. But Japan already possesses a flexible, evidence-based framework to address them. The Antimonopoly Act equips the JFTC to target exclusionary conduct when it produces demonstrable harm, and the agency’s tradition of careful justification analysis is a strength, not a liability. Rather than defaulting to blunt prohibitions, Japan could have updated its effects-based approach—intervening where harm is shown while preserving forbearance where markets continue to discipline themselves.
Repeal Should Remain on the Table
The MSCA is now law, but debate should not stop at enactment. Policymakers and scholars must subject the act to sustained scrutiny. If its rigid rules slow the AI-driven transformation of mobile markets or fail to deliver measurable gains in consumer welfare, Japan should not hesitate to reconsider—and, if necessary, repeal—it.
The MSCA reflects the smartphone market of 2023, not the AI-enabled ecosystem emerging in 2030. Japan once set global standards in consumer technology. The Walkman and the Game Boy succeeded because firms like Sony and Nintendo mastered tightly integrated hardware and software ecosystems. Today, however, Japan no longer leads the digital platform economy.
If the MSCA entrenches that gap rather than closing it, preserving it would be a mistake. Market competition, not regulatory design, remains the most reliable engine of innovation and consumer welfare. Japan should be prepared to let it work.
