Following the example of the European Union, Japanese courts may require big tech companies to open up algorithms – yqqlm

In the morning news on July 5th, Beijing time, Japanese legal experts reportedly said that an antitrust case related to a local restaurant website could change the way large Internet platforms such as Google, Facebook and Amazon operate in the country, and the court will force the These companies disclose the inner workings of their secret algorithms.

Last month, a Tokyo court ruled in favor of Hanryumura, a Korean barbecue chain, in an antitrust case brought against Kakaku.com, the operator of Tabelog, Japan’s largest restaurant review platform.

Hanryumura successfully demonstrated that Kakaku.com changed the way user ratings were calculated, hurting its restaurant sales efforts. While Kakaku.com was ordered to pay Hanryumura 38.4 million yen ($284,000) in damages for “abuse of an advantageous negotiating position,” the internet company has appealed the decision.

Japanese legal experts say,The result could have far-reaching consequences, as the court ordered Kakaku.com to disclose some of its algorithms.

While the restaurant group is restricted from revealing publicly what information was shown to it, the court’s request sets a rare precedent. Big tech groups have insisted for a long time that their algorithms should be considered trade secrets under all circumstances.

However, courts and regulators around the world have begun to challenge this stance, and many businesses have complained that even small changes in algorithms can have serious negative impacts on search and recommendation services.

Kentaro Hirayama, a lawyer who specializes in antitrust issues and who has worked at Japan’s Fair Trade Commission, the country’s antitrust regulator, said: “In competition law elsewhere in the world, there has not been a single court that requires digital platforms to disclose The case for its algorithm.”

He also added: “There is now a risk that any platform could spend years in court and end up being forced to explain its algorithms to plaintiffs.”

Facebook’s Japanese operations said they would not comment on lawsuits involving other companies, while Google and Amazon declined to comment.

Hanryumura sued Kakaku.com for the first time in 2020, claiming that changes Tabelog made to its algorithm about how user scores were calculated significantly lowered the rating of its outlets.

“This is a groundbreaking antitrust case about the manipulation of algorithms by large technology platforms in the age of artificial intelligence,” Hanryumura’s lawyer Katsumasa Minagawa said after winning the case.

While the platform has provided some information on how its algorithm-based services work, big tech companies are generally opposed to disclosing algorithms.

However, this position is under increasing pressure. Already in 2020, the European Union’s “platform-to-business” regulation, which requires platforms to provide businesses with more information about how their ranking algorithms work, has come into effect.

A year later, Japan introduced the Law on Improving the Transparency and Fairness of Digital Platforms, which requires internet platforms to disclose at a fundamental level how their algorithms work. Five companies (Amazon Japan, Rakuten, Yahoo Japan, Apple and Google) were targeted by the law.

Daisuke Korenaga, a professor of competition law at Tokyo Metropolitan University, said: “The law aims to punish violators by means of antitrust laws.”

He also added: “But until now, there has been no precedent in Japan where digital platform players have been sanctioned for using algorithms. The Tabelog case provides a reference for penalties in cases of violations.”

Koya Uemura, a partner at law firm Hibiya Sogo, said the Tabelog case “will undoubtedly lead to more cases questioning the fairness of algorithms under antitrust law.”

“I think the big tech companies will see this case as relevant to them,” he said. “They will definitely assess the risks they may face.”