Apple pushes back against Japanese government’s mobile carrier discount changes

Despite a 10.4% decline in the fourth quarter, Apple continues to dominate the smartphone market in Japan. According to the Canalys research group  its market share exceeded 50% for the first time in 2018. That’s up from 48% in 2017 and 48.2% in 2016.

However, changes to the discounts mobile carriers can offer on devices starting in October could put an end to that, and the tech giant “has strongly pushed back against the government’s move,” according to the Japan Times.

Earlier this month, Japan’s Fair Trade Commission is investigating Apple’s dealings with local parts makers, some of which signed contracts with the tech giant that could violate antimonopoly laws. However, it added that it wasn’t punishing Apple as the company has agreed to revise its contracts with the carriers.

The Japanese government has decided to cap handset discounts at ¥20,000 (about US$190), effectively ending the practice of heavily discounting devices to prevent excessive benefits going to certain users, notes the Japan Times. These regulations will also force operators to drastically cut cancellation fees for users who quit in the middle of a two-year contract.

If the new rules are introduced as proposed, “it will take away choice from Japanese customers and result in diminished competition and higher-priced (handsets) in the market,” Apple said in a document disclosed last week that contains public comments from 67 companies, organizations and individuals.

Despite the discount cap, the new policy will allow up to a 50% discount on devices 24 months after their final procurement day. If production of such smartphones is discontinued after that point, stores can sell them with an up to 80% discount. A 50% discount can be applied to phones that remain unsold for 12 months and are no longer being produced.

The Japan Times says this “would be problematic for Apple because its products do not typically meet those conditions.”