57
posted ago by redman012 ago by redman012 +57 / -0

This isn't specifically about blacklisting things, but it is about a really scummy business practice Visa Japan did to essentially bully their way to a monopoly. Infodump ahead: TL;DR illegal denial of service to third parties and monopoly cultivation

When you pay for something with a credit card, you don't just provide your number and a recipient. You also provide a slew of data about where you're paying from, what your past purchases were, your billing address, whether you used the relatively insecure CVV input or the more secure tap/chip, etc. This all goes to something called a "credit information system". While you're watching the spinning wheel or the POS machine say AUTHORIZING, what's going on in the background is a bunch of heuristics (and increasingly deep learning) combing through all this data, comparing it to the data they have about you, and making a rough guess about whether it's actually you or someone committing fraud with a stolen card or identity. Assuming that all comes back clean, the CIS sends what's called an ISO8583 certificate back to the payment processor, which makes the actual transaction in a fraction of a second. Because these certificates have to interoperate (for example, if a Visa user wants to pay a MasterCard user) you can (if you bend over hard for the government) theoretically operate your own CIS but not your own payment processor. As a general rule, every payment processor also operates their own large CIS. It's very boring.

Under Japanese antimonopoly law, particularly after the war, any business that operates many components that work together may not arbitrarily withhold business relationships from a business that only wants to use one of those components. This is part of why JR and private subways like to operate on the same track, or why the entire Japanese console industry was rival companies using each others chips. This is generally considered a good thing in Japan because it discourages horizontal integration (one company owns all of some commodity everyone uses) and encourages vertical integration (every company makes more things needed by various industries). As you can imagine, a CIS absolutely falls under this law. If you operate a payment processor in Japan, as is the case in some other countries, you are required to let other processors use your CIS at a fair rate, and you are also required to process transactions signed with someone else's ISO8583, as long as that someone else has a license from the government.

After Abe was shot, under PM Fumio Kishida, BlackRock and private equity more generally basically tried to flip this system on its head; they bullied their way onto Japanese corporate boards, loaded them with debt, and forced the sale of independent divisions into their own companies, which BlackRock then bought and consolidated. So, for example, whereas the semiconductor industry in Japan used to be dominated by over 30 companies, all of which also made things other than semiconductors (this kept prices low and encouraged those companies to dick around with new uses for semiconductors) it is now dominated by the newly-created KIOXIA, which is owned by BlackRock and will only fab chips that Larry Fink wants made. (Mostly NVIDIA SoC's and DRAM for AI datacenter that consumers can't buy for their GPU's). Or why Seven Eleven was recently forced to sell its supermarket, restaurant, mall and hospitality divisions to Bain Capital to keep their convenience stores safe from BlackRock, like Sonic losing all his rings. And so it goes with other industries. Hell, even Sony Financial's getting spun off by BlackRock in October so Sony can be a company whose entire Capex is just making more Spiderverse and K-Pop Demon Hunters and ruining anime.

The payment processor industry was no exception to this trend, but rather than simply buy out and destroy independent Japanese CIS'es, which would trigger a financial monopoly investigation, Visa Japan simply banned other CIS'es. This may sound way more unacceptable, but that was part of the plan; Visa Japan immediately apologized and told every Japanese card provider and bank that they were welcome to use other CIS'es... for a fee. And of course the fee was fucking exorbitant. This is, to use a legal term, illegal. Under Japanese law, it's considered monopolistic extortion. The Japanese FTC made noise about launching an independent investigation, but then the head of the Japanese FTC found himself forced out of office by one Rahm Emmanuel, who actively hired/fired a lot of Japanese ministers. As a result of this illegal extortion, Visa surged to more than a 50% market share in Japan and every IC tap-point in Japan now has an ugly Visa terminal sticking out of it like a tumor. (Visa explicitly didn't interoperate physical standards and even went as far as forcing Japanese card readers and turnstiles to slap "POWERED BY VISA" signage all over themselves. Dicks.)

Anyhow, to wrap this up, there's a new head of the FTC and he's started kicking doors in over this in response to a crisis of confidence among business voters who ran away from the LDP to Nippon Isshin. Consequences could include fines (lmao) or a potential forced divestment of Visa Japan. The message from Japan is now clear: if BlackRock wants to destroy the Japanese payment processing industry, they need to do it the old-fashioned way: by buying it.

Follow me for more Cool Japan Facts™ 😎

https://www.reddit.com/r/KotakuInAction/s/uQPPF0vIOa