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BEERG Newsletter - Algorithms: Japanese court orders details be revealed

As the European Union considers a raft of legislation that would mandate employers to share algorithm details with employees’ representatives where such algorithms are used to make human resource decisions, a Japanese court has handed down a ruling which shows the way the legal wind may be blowing. Hanryumura, a restaurant chain, argued successfully that Kakaku.com altered how user scores were tallied in a way that hurt sales

Legal experts in Japan have said that the case related to a restaurant website could change how platforms such as Google, Facebook and Amazon run in the country, forcing them to reveal the workings of their algorithms.

Last month a Tokyo court ruled in favour of Hanryumura, a restaurant chain, in an antitrust case brought against Kakaku.com, operator of Tabelog, Japan’s largest restaurant review platform. Hanryumura successfully argued that Kakaku.com had altered the way user scores were tallied in ways that hurt sales.

Kakaku.com has been ordered to pay Hanryumura ¥38.4mn ($284,000) in damages for “abuse of superior bargaining position”. The internet group has appealed. Experts said the outcome could have far-reaching implications, as the court requested that Kakaku.com disclose part of its algorithms.

Technology companies have long argued that their algorithms should be considered trade secrets in all circumstances, giving them competitive advantage, and that sharing information about algorithms could hurt the business. This view is increasingly being challenged by unions and works councils in Europe, and their concerns are being picked up by legislators. 

Proposed laws on AI governance, gender pay transparency, and platform workers, all require that companies inform and consult employees, or their representatives, about the use of algorithms in decision making. The extent of such consultations, and the information to be provided, will prove controversial and will be contested.

We will be discussing this issue at our next BEERG Network meeting in Brussels on Wednesday/Thursday, September 28/29 – See brochure for outline programme

Published on: July 6, 2022

Authors: Tom Hayes

Topics: China, Japan & Asia-Pacific, Evolving Workplace

Tom Hayes

Director of European Union and Global Labor Affairs, HR Policy Association

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Contact Tom Hayes LinkedIn

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