Cloud Computing as Key Digital Infrastructure to Achieve Japan’s Sustainable Development Goals (SDGs) Challenge: A Potential “Revival” of Competition Analysis

Tatsuya Tsunoda
(The University of Tokyo & Attorney-at-law at Nishimura Asahi, Japan)

Abstract: Cloud computing services have evolved as key digital infrastructure for a digital economy; furthermore, they could potentially lead to the “revival” of an analytical competition law framework to balance anti-competitive effects and justification. Recently, various competition authorities have been scrutinizing cloud computing service providers (“CSPs”) suspected of abusing their superior bargaining position by taking “advantage” of “vendor lock-in”. On the other hand, CSPs provide agility, diversity, flexibility, scalability, and cost-efficiency that enable start-ups to develop innovative cloud-based software and solutions and strengthen their competitive advantage. Also, the Japan Fair Trade Commission (“JFTC”) has published the draft “Guidelines Concerning the Activities of Enterprises, etc. Toward the Realization of a Green Society under the Antimonopoly Act” (Draft Green Guidelines”) and explained that the benefits of SDGs, including the reduction of greenhouse gas emissions, can be considered justification for anti-competitive conduct. Thus, the competition policy’s interaction with environmental policy, education/healthcare policy, and governmental digital transformation has become an emerging issue. In this regard, two theoretical issues must be addressed in order not to turn the competition law into a self-satisfying regulation. First, the definition of “relevant markets” must be revisited. Historically and theoretically, conduct was generally assessed by each market, regardless of whether the conduct generates consumer benefits in one market that may overcome the anti-competitive effect in another market. However, in 2021, a new regulatory framework aimed at digital platforms that regulate interactions between multi-sided markets came into effect in Japan (the Act on Improving Transparency and Fairness of Digital Platforms (“TFDPA”)), which hints at building an analytical framework that will encompass effects in neighboring fields. Second, there needs to clarification about whether the environmentally friendly effects that cloud computing services trigger in other jurisdictions should be taken into account in Japan; accordingly, it is necessary to examine the geographical scope of the justification of anti-competitive conduct in terms of a common global agenda like SDGs.

Key words: cloud, competition, sustainability, digital, software

JEL code: F1