Digital Platform Regulation

This chapter examines the issue of the so-called “one country, two systems” regarding the application and enforcement of laws in Internet services, using TBL and APPI as examples. When a service is provided to Japanese consumers, the so-called “one country, two systems” issue arises when (1) the laws applicable to services provided from Japan differ from those applicable to services provided from overseas, and (2) Japanese law is not applied in an enforceable manner. From the perspective of law enforcement, there is the problem that Japanese law cannot be enforced in practice against foreign operators, and although the TBL is generally based on the principle of territoriality, the Japanese government has taken an official position on this issue and confirmed that jurisdiction under the TBL depends on whether the location where the facility is established, managed, and operated is in Japan. If a large amount of data of domestic users is leaked, the impact on Japanese citizens could be enormous. In this case, it would be necessary to consider whether to modify the traditional principle of territoriality and adopt the so-called effect principle, in which the Japanese TBL would apply even if an act is completed in another country provided that it has a substantial impact on Japanese nationals or markets. With regard to the one-country, two-country system issue, problems may also arise in some cases when the applicable rules do not distinguish between those for domestic and foreign entities. In addition to this, rules should also be considered with respect to regulations on data transfer and distribution. It is essential that the rules for data transfer and disclosure be designed from the perspective of facilitating data transactions and distribution, not from the perspective of hindering innovation or preventing new entrants.