February 24, 2017 | Article

Protecting the digital economy in Japan

By Michael Beckerman, President & CEO of Internet Association

Japan is often described as the world’s most tech-obsessed nation. It has a global reputation for innovation, and for years Japanese tech giants – Sony, Hitachi and Panasonic, to name but a few – were dominant industry leaders that pioneered products loved by the world over.

While Japan was slow to take advantage of the burgeoning internet economy, tech-friendly reforms over the past decade designed to encourage innovation and entrepreneurship are beginning to bear fruit and Japan is now home to a vibrant and thriving start-up ecosystem.

Japan’s growth strategy to realize the Fourth Industrial Revolution, which aims to boost investment in innovation and technology, recognizes the urgency of introducing new mechanisms for regulation that support the internet economy. The government’s plan to promote the sharing economy is also a welcome step that will allow local and international startups to grow and thrive.

The sharing economy is an example of internet-enabled innovation that increases quality and choice while decreasing costs. It has the potential to allow ordinary people to access the global market, which will play an important role in accelerating Japan’s initiative to promote the Dynamic Engagement of All Citizens.

Unfortunately, the Japanese government’s proposal to regulate home sharing platform operators is a retrograde step that will stifle innovation and economic growth in a country that is still lagging behind global technology leaders.

The current proposals, by imposing strict obligations on registered platform operators, could effectively bar platform operators who aim to run home sharing platforms in Japan and other countries. This would hinder innovation and significantly limit competition and consumer choice.

It’s a surprising step for the government considering the its previously public support for the sharing economy and the voluntary restraint of platform operators.

As currently written, these proposals could have grave effects on anyone in the community who relies on the benefits of internet-enabled home sharing platforms, like Airbnb and HomeAway, while reducing market access for local entrepreneurs looking to benefit from the sharing economy.

Home sharing has revolutionized the way people experience towns, cities, and local communities, creating enormous economic opportunities for local residents, businesses, and the broader tourism economy, which now accounts for 10 percent of GDP in most developed countries.

Governments around the world have introduced clear home-sharing rules that allow diverse individuals to share their homes and boost their income. We urge the Japanese Government to to strike the right regulatory balance, embrace technology, and allow innovation to thrive.

The Internet Association’s mission is to foster innovation, promote economic growth, and empower people through the free and open Internet. The Internet creates unprecedented benefits for society, and as the voice of the world’s leading Internet companies, we ensure stakeholders understand these benefits. The Internet Association represents the interests of more than 40 of the leading Internet companies.

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