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Japan Meets the Sharing Economy: Contending Frames

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Abstract

The 'sharing economy' epitomized by Airbnb and Uber has challenged business, labor, and regulatory institutions throughout the world. The arrival of Airbnb and Uber in Japan provided an opportunity for Prime Minister Abe's administration to demonstrate its commitment to deregulation. Both platform companies garnered support from powerful governmental and industry actors who framed the sharing economy as a solution to various economic and social problems. However, they met resistance from actors elsewhere in government, the private sector, and civil society, who constructed competing frames. Unlike studies that compare national responses to the sharing economy, we contrast the different experiences and fates of Airbnb and Uber within a single country. Doing so highlights actors, framing processes, and within-country heterogeneity. The study reveals the limits of overly institutionalized understandings of Japanese political economy. It also contributes to current debates concerning Prime Minister Abe's efforts at implementing deregulation during the 2010s.
© The Author(s) 2020. Published by Oxford University Press in conjunction with the University of Tokyo. All rights reserved.
Japan Meets the Sharing Economy: Contending
Frames
ThomasG.ALTURA, YukiHASHIMOTO, SanfordM.JACOBY, KaoruKANAI, and KazuroSAGUCHI*
The ‘sharing economy’ epitomized by Airbnb and Uber has challenged business, labor, and regulatory institutions
throughout the world. The arrival of Airbnb and Uber in Japan provided an opportunity for Prime Minister Abe’s
administration to demonstrate its commitment to deregulation. Both platform companies garnered support
from powerful governmental and industry actors who framed the sharing economy as a solution to various
economic and social problems. However, they met resistance from actors elsewhere in government, the private
sector, and civil society, who constructed competing frames. Unlike studies that compare national responses
to the sharing economy, we contrast the different experiences and fates of Airbnb and Uber within a single
country. Doing so highlights actors, framing processes, and within-country heterogeneity. The study reveals the
limits of overly institutionalized understandings of Japanese political economy. It also contributes to current
debates concerning Prime Minister Abe’s efforts at implementing deregulation during the 2010s.
Keywords: Japan; institutional change; deregulation; framing; Uber; Airbnb; sharing economy; taxis; gig workers; regulatory politics;
Shinzo Abe; political economy
1. Introduction
The rapid emergence of the platform economy—also called the ‘sharing economy’—has challenged
industries and polities around the globe. Platforms structure economic behavior through algorithmic
intermediation between the provider and the customer. Tensions arise between platforms and formal
institutions when existing regulation conflicts with the platform’s code. Amid such tensions, typically
governments become constrained by rapidly-growing platforms, rather than the other way around
(Kenney and Zysman 2016; Srnicek 2017). However, we know little about the processes by which
these tensions produce institutional outcomes.
We examine two platform companies, Airbnb and Uber, in an under-explored context: Japan.
Riding on a wave of enthusiasm over the sharing economy, both companies entered Japan with
strong backing from Prime Minister Abe and his administration. In many respects, the cards were
stacked in the platforms’ favor. Abe had adopted the sharing economy as a component of his ‘third
Thomas G. ALTURA is Assistant Professor of Management in the Lucas College and Graduate School of Business at San José
State University. He can be reached at thomas.altura@sjsu.edu. Yuki HASHIMOTO is a fellow at The Research Institute
of Economy, Trade and Industry (RIETI). She can be reached at hashimoto-yuki@rieti.go.jp. Sanford M. JACOBY is
Distinguished Research Professor of History, Management, and Public Affairs at UCLA. He can be reached at sanford@
ad.ucla.edu. Kaoru KANAI is a professor in the Graduate School of Humanities and Social Sciences at Saitama University.
She can be reached at kanai@mail.saitama-u.ac.jp. Kazuro SAGUCHI is an emeritus professor in the Graduate School of
Economics at The University of Tokyo. He can be reached at saguchi@e.u-tokyo.ac.jp.
* This work was supported by the Japan Society for the Promotion of Science (JSPS) (KAKENHI grant numbers JP
17K18556, 19K01714), the UCLA Anderson School, and San José State University. The authors would like to thank the
three anonymous reviewers as well as the Board of Social Science Japan Journal for providing constructive and insightful
feedback.
Social Science Japan Journal doi: 10.1093/ssjj/jyaa041
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arrow’ of structural reform. Uber had framed itself as a solution to Japan’s transportation problems
in the countryside, while Japan’s technology conglomerates were becoming players in the global
ride-hailing industry. Airbnb, meanwhile, enjoyed enthusiastic support from Japan’s powerful real
estate industry, while policy experts saw Airbnb as a solution to the country’s stock of vacanthomes.
Airbnb grew rapidly at the outset and was even sanctioned by national legislation. Yet, to the
surprise of the law’s designers, Airbnb’s momentum later was curtailed. Uber suffered a worse fate;
its rideshare model was ultimately rejected, while its technology was coopted by several Japanese
companies.1
In this study, we ask why Airbnb and Uber met these unexpected outcomes, despite the fact that
both enjoyed strong support from powerful actors. More broadly, we use these cases to analyze the
processes by which deregulation did or did not succeed in Japan during the 2010s. Our analysis is
based upon evidence collected over four years of field research.
Our first contribution is to recent work examining institutional responses to the sharing economy.
Most notably, Thelen (2018) compared national responses to Uber in Sweden, Germany, and the
US, showing how the same platform can elicit varied responses in different national contexts. She
argues that due to particular institutional configurations, the ‘Uber problem’ manifests in nation-
specific ‘flashpoints’ around which actors coalesce.
We build from this work, but take a different approach, by analyzing two platforms within a single
country. Doing so reveals how actors, through a highly iterative process, struggle to create frames
that can advance their agendas. Actors adjust over time, reacting to their opponents in a search for
new and persuasive frames (Edelman 1985; Entman 1993; Chong and Druckman 2007; Matthes
2012). Outcomes are as much determined through these framing processes as by ex-ante institu-
tional arrangements. The study thus shows the analytical purchase that can be gained through an
in-depth, within-country comparison of framing contests.
Second, this study contributes to the ongoing debate over the liberalization program of Abe
Shinzo, the longest serving prime minister in Japan’s history. Abe returned to power in late 2012
on his Abenomics platform, which included the promise of major ‘structural reform’. While Abe
increased his power by expanding the Cabinet Office, the results of his liberalization attempts have
been mixed (Noble 2015; Honma and George Mulgan 2018). As with other sectors such as agricul-
ture, Abe sought to introduce the sharing economy through what he and his allies labeled ‘drilling’
into Japan’s bedrock regulations (ganban kisei). However, the pro-sharing-economy forces were met
with resistance from a multitude of actors: government ministries, diet members, local governments,
industry associations, labor unions, and affected citizens. The case of the sharing economy thus
brings into further question the extent of Abe’s success in advancing deregulation during the2010s.
Finally, the processes we analyze reveal the limits of power-based factors in explaining regulatory
outcomes. At the start of the process, one would have predicted that the sharing economy’s pro-
ponents had the upper hand. However, the taxi industry—economically marginal and badly defeated
under former Prime Minister Koizumi’s deregulation program in the early 2000s—largely succeeded
in pushing back Uber’s ridesharing model. The hotel and ryokan industry—historically fractured
and without a coherent opposition strategy—undermined what at first looked to be a clear win for
Airbnb. We show how institutional outcomes were the result of framing contests between actors.
1. Due to concerns that ridesharing is a misnomer, the Associated Press prefers the term ‘ride-hailing’. However, we use
‘rideshare’ (raidoshea) given the term’s widespread usage, including by proponents and critics alike in Japan. There is also
a dispute over whether the term ‘sharing economy’ is a misnomer (Schor etal. 2015). The term has been widely adopted
in Japan (shearingu ekonomī).
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Outcomes were not the result of structural inertia or consensus-based decision making, which has
sometimes been the depiction of policymaking in Japan, as in studies emerging from the comparative
capitalism tradition (e.g. Anchordoguy 2005; Vogel 2006; Witt 2006).
The article proceeds as follows. We introduce our theoretical approach through a discussion of
prior work on Japanese political economy and the platform economy. Then we provide the political
and historical context for the sharing economy’s entry into Japan. This is followed by an in-depth
analysis of the coalitions and activities surrounding the sharing economy, including a comparison of
Airbnb and Uber. We conclude by discussing the study’s implications for research on the sharing
economy, institutional change, and deregulation in Japan.
2. Theory
The late Ronald Dore (2000) characterized the political economy of ‘the Japanese model’ circa 1990
as a set of long-term commitments within and between firms, with ministerial bureaucrats setting
the terms for competition and cooperation. But by 2000, he observed strains that others inter-
preted as the disintegration of the Japanese model. Deregulation, extensive during the 1990s, had
undermined Japan’s stakeholder-type corporate governance (Schaede 2008). Electoral reform put a
wedge between the long-reigning Liberal Democratic Party (LDP) and once-protected industries.
Administrative reform transferred power from the ministries and the Diet to the prime minister and
his Cabinet Office (Rosenbluth and Thies 2010; Shinoda 2013; George Mulgan 2017). Unions lost
the sway they once had in corporate and government policymaking, one result of which was a deteri-
oration of working conditions (Imai 2016; Watanabe 2018).
Others, however, saw evidence of institutional persistence in corporations, markets, and politics
(e.g. Anchordoguy 2005; Krauss and Pekkanen 2011). Witt (2006), drawing on the varieties of cap-
italism literature, offered several reasons to think there was and would be continuity of extant institu-
tions: a strong emphasis on societal coordination, adherence to prescribed norms enforced through
dense industry networks, and the model’s institutional legitimacy.
In the middle were those who identified significant changes in Japan’s political economy, albeit
not enough to constitute a fundamental break with the broad outlines of the traditional model (Sako
2006; Vogel 2006). Vogel (1996) showed how efforts to transform Japan from a coordinated to a
liberal market economy resulted in a shift from ministerial discretion to formal rules. Dore (2000)
thought that, while Japan was drifting towards an Anglo-Saxon system, persistent national commit-
ments might trump the interests of those who would benefit from a more libertariansystem.
One explanation for these differing interpretations is Granovetter’s (2017) finding that national
models are internally fractious and subject to disputation. His perspective is consistent with those of
other scholars who emphasize actors and agency as keys to sustaining or modifying institutions—the
rules and regularities of a nation’s political economy (Hodgson 2006). Herrigel (2010), for example,
highlights the ability of actors to pragmatically re-construct their institutional environment. Thus
the functionalist typology of liberal market and coordinated market economies (Hall and Soskice
2001)—and its variants—risks overlooking internal dynamics that do not conform to a particular
ideal type. Indeed, actors can work within, around, and against established rules in their attempts to
promote institutional change (Pierson 1996; Thelen 1999; Crouch and Keune 2005; Mahoney and
Thelen 2010).
Resistance outside of institutionalized patterns is an example of what the typological approach has a
tendency to overlook. In the case of Japan, Shibata (2016) argues that ‘there has been an insufficient
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focus on the politics and agency of those…most negatively affected by [neoliberal] trends’. For ex-
ample, she finds that contemporary labor activism has evolved from a focus on institutionalized ac-
tivities (such as shuntō and May Day events) to ‘emergent’ activities involving non-regular workers,
community unions, and citizens’ groups. Lam (2005) and Jentzsch (2017) maintain that research
on institutional change in Japan has tended to emphasize peak levels and overlook local politics.
Investigating the institutional dynamics of agricultural reform, Jentzsch points to ‘intense contest-
ation’ at the local level. George Mulgan’s research on agricultural deregulation (e.g. George Mulgan
2016) highlights not only how actor coalitions resist top-down structural reform, but also how they
can ‘unravel’ as a result of shifting policy preferences and actor defections.
To be sure, one must consider starting conditions. Actors operate in historical contexts that endow
them with ex-ante power from established coalitions. The famed ‘iron triangle’ in Japan—ties be-
tween the zoku (Diet policy groups), ministerial bureaucrats, and industry associations—provides
actors with supporting organizational structures that protect their interests. However, opposing
actors can alter existing institutional arrangements by constructing new coalitions that undermine
old power bases (Sakakibara 2003; Maclachlan 2011; George Mulgan 2016; Maclachlan and Shimizu
2016; George Mulgan 2017). For example, Maclachlan (2011) examines Koizumi’s privatization of
Japan’s postal system, showing how he took advantage of prior electoral and administrative reforms
to challenge a powerful coalition that had resisted substantivechange.
In this study, we highlight a key mechanism through which actors seek to alter institutional ar-
rangements: framing. Framing refers to the process by which actors ‘promote a particular problem
definition, causal interpretation, moral evaluation, and/or treatment recommendation’ (Entman
1993: 52). More broadly, framing concerns the creative formulation of persuasive ideas (Chong and
Druckman 2007; Matthes 2012; Klüver etal. 2015).
The concept of framing is helpful for our purposes because it helps to reconcile the long-standing
theoretical tension between agency and institutions (Jackson 2010; Schmidt 2011; Blyth etal. 2016).
For example, an interest group may begin with substantial resources. However, it may or may not
be effective in constructing a persuasive frame that affects policy decisions or their implementation.
Conversely, actors with fewer resources can resist institutional change by creating counter-frames that
offer alternative interpretations of emerging issues. Indeed, even when opportunities open for actors
to alter institutions, they may be thwarted by the ideas of their opponents that render certain possi-
bilities improbable (Capoccia 2016).
The effectiveness of a frame in motivating or obstructing action depends upon a variety of fac-
tors (Chong and Druckman 2007; Matthes 2012). First, effective frames are targeted to particular
audience groups and cohere with that group’s prior assumptions and interests (Klüver etal. 2015).
For example, a frame may appeal to a group of elites in business or government, but not to another
group, such as local citizenry (Slothuus and de Vreese 2010). Similarly, persuasive frames will have
resonance in a particular cultural context through the use of analogies that are decipherable to the
recipient, whether cognitively or emotionally (Scheufele and Iyengar 2017).
Second, a frame will be more impactful the more widely it is disseminated and to the extent it is
espoused by authoritative actors. Important here is the construction and use of favorable venues,
such as think tanks and policy committees, which allow for a frame’s amplification (Campbell 1998;
Mehta 2011). In this way, the starting conditions discussed earlier—such as existing coalitions and
alliances—can assist in disseminating frames. Recognized leaders and highly visible norm entrepre-
neurs (Sunstein 1996) can lend further credibility to a frame and increase its impact (Matthes 2012).
Finally, we pay particular attention to temporality in the framing process (Chong and Druckman
2007). We show, for example, how a delay in imposing a frame on an emerging issue allows for
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competing actors to impose their own problem definition and solution. Additionally, we consider
how actors adapt their frames in response to their opponents’ moves. While the frame’s consistency
may matter, so does the ability of actors to adjust their frames in ways that neutralize their opponent’s
frames, such as through cooptation.
Our attention to framing shows that formalized rules are often ambiguous, internally disjointed,
or conflicting. Through framing, actors seek to defend or breach the status quo by creating ideational
fissures within and between ex-ante institutional arrangements; within those zones of indeterminacy
actors advocate new rules in their stead. Further, coalitions adjust their framing strategies in an it-
erative process. In short, the case of the sharing economy in Japan shows how agency and framing
processes matter.
3. The PlatformEconomy
While different types of platforms abound—and categorization schemes vary—Airbnb and Uber
are examples of what Kenney and Zysman (2016) call ‘service-providing platforms’ or what Srnicek
(2017) terms ‘lean platforms’. These platforms match suppliers and seekers of labor or assets through
algorithmic mediation instead of through direct ownership of assets or direct employment of workers.
Recent studies have explored differing national responses to the sharing economy (e.g., DeMasi
2016; Pernicka 2019). As Davis (2016: 139)suggested early on with respect to platforms, ‘…tech-
nology is not destiny: The same technology will be implemented in different ways depending on
surrounding institutions’. Indeed, Thelen’s (2018) three-country study shows that, in contrast to de-
regulation in the US, Germany reacted to Uber with defiance and Sweden with partial accommoda-
tion. She finds little conformity to prior theoretical models based on national varieties of capitalism.
Through an analysis of local discourse and media coverage, she explains Uber’s varied reception by
pointing to nation-specific ‘flashpoints’—such as competition, labor, or tax issues—touched off by
Uber’sentry.
In Japan, we find that there were multiple, emergent flashpoints and shifts over time because the
‘game’ was repeated and not one-off. Our process-based analysis of events and outcomes (Beach and
Pedersen 2019) shows how actors responded in new ways—tit for tat—to their opponents’ attempts
to undermine or defend existing institutions. Further, the outcomes were equally complex and con-
tested. Airbnb won accommodative, national legislation. Yet the legislation was later undermined
through bottom-up resistance from the lodging industry and local citizens. Uber’s rideshare model
was primed for success and then shut out as labor unions largely preserved jobs with social benefits.
However, the domestic taxi industry later would coopt the frames of pro-Uber forces and push a
rationalization of its own industry. They rejected parts of the sharing economy while simultaneously
emerging as leaders in the development and promotion of platform technologies.
4. Ideas inFlux
To understand the situation facing Airbnb and Uber when they came to Japan, one has to go back to
the 1980s. Neoliberal ideas had drifted to Japan at the same time that the US was applying pressure
to liberalize markets at home and abroad. Factions in the long-dominant LDP came to favor privat-
ization and deregulation, and the administrative reforms that would promote them. The sentiment
strengthened during the following decade’s economic malaise. Standing in the way were many of
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Japan’s ministries, which were semi-autonomous from elected officials (Stockwin 2005; Uchiyama
2010; George Mulgan 2017).
The ministries were viewed as architects and defenders of the regulatory status quo.2 Successive
prime ministers took measures to limit their long-standing power and authority. For example, the
‘Law on Administrative Procedure’ of 1993 mandated greater transparency in ministerial decision
making, including the informal and oft-used ‘administrative guidance’ (gyōsei shidō) associated with
the postwar system (Oda 2009). And in 1997, plans were announced for a major administrative
overhaul, including ministerial mergers and the creation of a ‘powerful support organ for the prime
minister, the Cabinet Office’ (Shinoda 2013: 67). With the revision, the prime minister and his office
would have power to initiatepolicy.
Among those putting the panoply of institutional changes to use was Prime Minister Koizumi
Junichiro. Beginning in 2001, he ratcheted up market reforms with guidance from, among others,
Takenaka Heizo, an economist and key architect of Koizumi’s liberalization program. Koizumi
pushed hard to further shift Japan’s postwar trajectory from a developmental state regulated by
the ministries (Johnson 1982) toward a more market-oriented system, most notably by privatizing
the postal service (Krauss and Pekkanen 2011; Maclachlan 2011). After Koizumi, Abe Shinzo
had a brief stint as PM, followed a few years later by a rare three-year period (2009–2012) of
Democratic Party of Japan (DPJ) control. Abe then returned to office and held the position for
nearly eightyears.
4.1. Abe’s Deregulatory Framing: ‘Drilling Through Bedrock’
Upon Abe’s return, he intensified the endeavors of previous LDP leaders to enhance the prime
minister’s authority at the expense of the Diet and the ministries. He increased the size and scope of
his Cabinet Office. He pushed a new economic revival plan—dubbed Abenomics—which had three
‘arrows’: monetary easing, ‘nimble’ fiscal spending, and structural reform, a euphemism for regula-
tory changes in a neoliberal mode. The first arrow was quickly put in place, but the other two would
prove difficult to implement (Noble 2015:165).
Abe and his associates repeatedly used a metaphor that Abenomics was like a drill breaking through
bedrock regulations (ganban kisei). Abe sought to further supplant the ministries with a parallel gov-
ernment based in his Cabinet Office, an action that brought an unprecedented expansion in the
Office’s personnel and power. This included the formation of additional prime-minister-controlled
committees that operated independently from the ministries.
One of the most powerful Cabinet committees was the Industrial Competitiveness Council—
launched and chaired by Abe—which was tasked with designing Abe’s drill. The members of this
committee included Takenaka, as well as Mikitani Hiroshi, a Harvard MBA and the CEO of Japan’s
largest internet conglomerate, Rakuten. Mikitani was well known to the public as a critic of ‘Japan
Inc’.
Mikitani played the lead role in the establishment of a new business association, Japan Association
of New Economy (JANE), intended as an alternative to the stodgier peak business organization,
Keidanren. In 2013, JANE held a summit on entrepreneurship, inviting the CEOs of Uber, Airbnb,
2. A crucial exception is the Ministry of Economy, Trade, and Industry (METI), which has selectively supported liberal-
market reforms.
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and Twitter, along with executives from other e-commerce companies.3 Prime Minister Abe paid a
visit on the eve of the event and praised the participants: ‘How you young entrepreneurs act will be-
come an important factor in the Japanese economy’s revival’.4
Around this time, the Industrial Competitiveness Council proposed a National Strategic Special
Zone system, which would become key to birthing the sharing economy in Japan. Within special
zones (tokku), targeted regulations would be weakened or suspended. While Koizumi had imple-
mented a similar system, Abe’s vision was more ambitious. To bolster the tokku, the Prime Minister
himself chaired a new Tokku Advisory Council (TAC) that certifies projects within the zones. Further,
Abe elevated the TAC to the top of the Cabinet Office apparatus (George Mulgan 2017). He also
created a Tokku Working Group (TWG) to listen to various deregulation proposals and negotiate
with ministries. As with his other Cabinet committees, Abe appointed to the TAC businesspeople
and pro-deregulation experts from academia. Left out were representatives from the ministries and
from organized labor.
4.2. The Cabinet Embraces the Sharing Economy: ‘Tourism and Regional Revitalization’
The Cabinet announced the first round of tokku legislation in 2013, which included a minpaku
(private lodging or home-share) exemption. Within a tokku, minpaku that offered stays of less than
30days would not be subject to the Hotels and Inns Act of 1948. Local governments would still
need to obtain approval from the Tokku Council to take advantage of the minpaku exemption. The
exemption came on the heels of news that Tokyo would host the 2020 Olympics, dubbed Abe’s
‘fourth arrow’. It created concern over the adequacy of guest accommodations. The Olympics also
provided a frame that pro-sharing-economy actors would continually rely upon in the years ahead,
one tied to advancing the nation’s tourist industries. At this point, the minpaku rule-change was in-
cremental and neither the lodging industry nor others protested.5
Airbnb had been setting up operations in Japan and began in 2013 to list a small number of
properties. Airbnb’s initial growth, however, was not due to approved tokku projects but came
from unsanctioned properties listed throughout Japan. Among those who administered lodging in-
dustry regulations were the Ministr y of Health, Labor, and Welfare (MHLW), the Ministry of Land,
Infrastructure, and Transportation (MLIT), the Japan Tourism Agency (JTA), and the Fire and
Disaster Management Agency, this on top of myriad local rules. With support from the Cabinet—
and little reaction from the lodging industry’s business associations—Airbnb took off. From 2014
to 2015 growth accelerated from less than 5,000 to 21,000 units, according to Airbnb. This repre-
sented close to 1 million guests.6
Uber had its official Tokyo launch in March 2014, accompanied by a celebration at the US Embassy
in Tokyo. While the inaugural service was limited to rides with professional limousine drivers,7 Uber
searched for ways to introduce its flagship service that connects passengers to nonprofessional drivers.
The company tried to identify loopholes in those parts of the Road Transportation Law (RTL)—ad-
ministered by MLIT—that deal with the private-car restrictions prohibiting unlicensed taxis. The
3. WSJ Blog, 16 April2013.
4. Jiji Press, 15 April2013.
5. Labor union Aofficial, interview, April2019.
6. Mainichi, 31 August 2015; MHLW/JTA minpaku discussion group minutes, 14 December2015.
7. Jiji Press, 3 March2014.
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search began in February 2015 with the launch of an experimental university-business-government
collaboration in Fukuoka. According to a top executive at Uber Japan, Fukuoka’s ‘forward-thinking’
mayor ‘was actually fairly welcoming’ and was ‘pushing innovation’.8 While Uber maintained that
this was simply a research experiment and not subject to MLIT’s jurisdiction, the challenge to MLIT
demonstrated Uber Japan’s inexperience. MLIT immediately forbade the Fukuoka scheme and in-
structed Uber to shut down the service.9
Despite this initial setback, Uber identified another possible entry route. The company began
framing itself as a socially responsible enterprise seeking to address a critical problem: inadequate
transportation in Japan’s depopulated areas. On this basis, it wanted an exemption from the RTL via
the Abe administration’s tokku.10 Doing so would shift decision-making authority away from local
stakeholders and, more importantly, from MLIT, which historically has been seen as one of the most
rigid of ministries (Upham 1996).
It would prove important that two Japanese conglomerates had taken sizable stakes in foreign
rideshare companies. Both firms were headed by prominent entrepreneurs, who also were mavericks
in Japan’s business and political worlds. Son Masayoshi of Softbank became the largest shareholder
of Ola (India) and Grab (Southeast Asia) and also invested in what was to become Didi Chuxing
(China). Mikitani of Rakuten had a stake in Uber’s competitor, Lyft, joined its board, and said he
would assist Lyft if it attempted to enter Japan.11 Rakuten was also looking to start an Airbnb-style
vacation-rental service.12
Mikitani—on his own and through JANE—was a vocal advocate for the sharing economy in the
halls of government. In 2015 JANE submitted to the government a package of policy proposals,
‘Japan Ahead’, which concentrated on the sharing economy, including minpaku and rideshare.13
Mikitani made presentations to an LDP committee14 and to the Cabinet’s Industrial Competitiveness
Council, of which he was formerly a member.15 JANE also was granted a hearing at the Tokku
Working Group. The Regulatory Reform Council (RRC)—another Cabinet group including vet-
eran neoliberals from the Koizumi years—presented a long list of items targeted for deregulation,
including minpaku and ‘paid transportation for welfare’. It was adopted through an official cabinet
decision.16
Prime Minister Abe, who until then had failed to satisfy critics waiting for him to launch his third
arrow, went all in on the sharing economy. At the end of a Tokku Advisory Council meeting, he
stated in front of themedia:
...The National Strategic Special Zone system is a breakthrough in regulatory reform. We will change the
system so that people’s ingenuity can be utilized, and local regions can be rejuvenated. We need to make the
experience of foreign visitors to Japan more convenient and comfortable. For this reason, we will increase
8. Uber Japan executive, interview, November2016.
9. University tech-transfer executive, interview, December 2016; Reuters, 4 March 2015; Nikkan Jidōsha Shinbun, 19
June2015.
10. Kyotango official and NPO executive, interview, July 2016; Kobe Shinbun, 13 December2015.
11. International New York Times, 25 June 2015; Financial Times, 12 March2015.
12. Reuters News, 11 September2014.
13. JANE interview, October 2017; Jūtaku Shinpō, 13 October2015.
14. JANE’s website, accessed February 2018. https://jane.or.jp/topic/detail?topic_id=360
15. Tokku Working Group minutes, 27 July2015.
16. Regulatory Reform Implementation Plan, 30 June2015.
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the number of dwellings that can be stayed in for a short period of time, even if they are not ryokan. We
will expand use of private cars as a means of transportation for tourists in depopulated areas and the like...17
Media outlets responded by adopting the Cabinet’s framing with headlines such as ‘The sharing
economy: Japan’s countryside may have its savior’.18 The statement, it was said, had ‘effectively
opened the door to the emergence of ride-sharing services in Japan’.19 Abe also instructed the
Regulatory Reform Council to act on deregulation of minpaku.20 Ota, one of Tokyo’s wards, was
the first applicant to utilize the tokku accommodations exemption, and Osaka soon followed.
5. Airbnb
The Abe administration had imposed a problem definition: outdated ‘bedrock regulations’ admin-
istered by an inefficient and self-interested bureaucracy had produced Japan’s economic malaise. To
‘drill’ through the bedrock, he expanded and strengthened his Cabinet Office and the tokku system.
In doing so, he undermined the authority of the ministries and the Diet. The sharing economy was
framed as a solution to regional decline and as a boon to the nation’s tourismgoals.
Airbnb would find partners not only in the Cabinet and technology sector but also in the Japanese
real estate and property management industries, which were benefiting from rising demand for
Airbnb’s minpaku. The real estate industry could be helpful to Airbnb because of its close ties to
some Diet members. It was a powerful counterweight to the hotel and ryokan industry, its adversary,
which also wielded clout in theDiet.
The lodging industry was fractionalized by customer segments and employment practices. Those
parts most staunchly opposed to Airbnb—traditional inns (ryokan) and mid-level business hotels—
were nonunion. Hence organized labor was relatively quiet on the issue. Although unions were
anathema to most parts of the LDP, they still had some supporters in the Diet, several ministries, and
from thepublic.
For pro-Airbnb actors, Abe’s Cabinet-controlled committees provided a politically powerful
venue. The Cabinet successfully pushed through the Diet a new law permitting minpaku nation-
wide. Disorganized, overpowered, and seemingly defeated, the hotel and ryokan industry regrouped
and adapted by decoupling the new minpaku law from its implementation. The anti-Airbnb forces
fomented bottom-up resistance by framing the new minpaku law as an affront to local safety. Critical
to this process, as we will see, was opposition from residents and from local hotels and ryokan. Local
governments, and in turn the ministries, came under pressure to regulate Airbnb’sgrowth.
5.1. MHLW/JTA and the Regulatory Reform Committee: ‘Safety and Fairness’ Versus ‘Technology and
Efciency’
Japan’s ministries had a history of engaging complex policy issues through a consultative process
with stakeholders (Schwartz 1998). It involved the formation of committees and discussion groups
composed of industry, academic, labor, and public-interest representatives. In the case of Airbnb, a
17. Tokku Advisory Council minutes, 20 October2015.
18. Nikkei Report, 14 November2015.
19. Nikkei Asian Review, 1 November2015.
20. The Fudousan Keizai Weekly, 13 October 2015; Fuji Sankei Business, 6 November2015.
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discussion group (kentōkai) was jointly launched by MHLW and JTA to explore the minpaku issue.
However, in this case the ministries were not the first movers. Consultation came in response to the
Cabinet and Regulatory Reform Council’s pro-minpaku declarations.21
The JTA/MHLW discussion group included a representative from the ryokan and hotel industry
who resolutely opposed Airbnb. In the committee and elsewhere, Airbnb’s adversaries framed the
issue by emphasizing safety concerns, including the risk of infectious disease and the potential for
terrorism. They also expressed grave concerns about the lack of ‘equal footing’ between Airbnb and
heavily regulated hotels. Those in favor of Airbnb portrayed extant regulations as out-of-date. They
framed Airbnb as a technological solution to economic problems. One such group was the real estate
industry, which was looking to convert entire buildings to minpaku. Airbnb advocates also said that
minpaku were in line with tourism goals, including the Olympics, and a solution to the growing
stock of vacant homes associated with depopulation.22
Invited to the discussion group were representatives from JANE and Airbnb. The Airbnb repre-
sentative claimed that its hosts in Japan were ‘regular people’ and argued that full-scale regulation
at the same level as hotels would not make sense. Around the world and now in Japan, Airbnb pro-
moted the image of itself as a home sharing business, though its listings increasingly were owned by
companies with multiple units. AJANE representative pointed to the prime minister’s support for
minpaku deregulation and argued that minpaku should be a separate legal category from that of ho-
tels and ryokan. Aguest from a lodging industry association shot back that JANE and Airbnb were
‘whitewashing’ the situation. He said that Airbnb’s business was illegal and, again, that there was
a risk of crime and terrorism. He also rejected the claim of an insufficient supply of hotel rooms.23
For ideas to take hold as policy, they require favorable venues (Mehta 2011). As the MHLW/
JTA discussion group strove to set a clear agenda, on its own the Cabinet’s Regulatory Reform
Committee concurrently pushed minpaku deregulation.24 The MHLW/JTA discussion group was a
less influential setting for Airbnb’s critics than the RRC was for its supporters. At the RRC, the nar-
rative of Airbnb and platform capitalism—that algorithmic mediation facilitates efficient utilization
of private assets without the need for government regulation—reflected the members’ libertarian
tilt. The push strengthened when the RRC submitted to the prime minister an implementation plan
for various deregulatory projects, including minpaku.25 Abe indicated his strong approval,26 and an
MHLW official from the discussion group, implicitly conceding the group’s own weakness, stated
that the MHLW/JTA minpaku group should respect the Cabinet’s ‘supreme decision’.27
5.2. zoku giin: ‘Safety and Fairness’ Versus ‘Tourism and Vacant Houses’
In the Diet, the lodging and real estate industries each had the backing of different zoku giin. The
zoku are ‘policy tribes’ of Diet members who, by specializing in particular policy domains, pro-
vide expertise to their parties. Within the major parties—the LDP, DPJ, and Komeito—there are
21. MHLW/JTA minpaku discussion group, 27 November2015.
22. Ibid., 27 November2015.
23. Ibid., 14 December2015.
24. Regulatory Reform Council minutes, 14 March2016.
25. Jiji Press, 19 May2016.
26. Nikkei Report, 20 May2016.
27. MHLW/JTA minpaku discussion group minutes, 10 June2016.
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industry-specific zoku such as for agriculture, taxis, real estate, and tourism. The zoku originated
during the 1960s as part of a drive by the LDP’s Diet members to bolster their power relative to the
ministries (Krauss and Pekkanen 2011). Although there is sometimes the impression that zoku giin
are losing their importance, in both our cases, they demonstrated continued relevance.
The lodging and real estate industries and their respective zoku allies sought to shape the emerging
minpaku legislation. The real estate coalition argued against restrictions on the number of days,
framing the issue by again invoking foreign-tourism goals and vacant homes. The lodging coalition
countered that a cap of 30days was needed to ensure their economic survival; while continuing to
argue the need for health and safety. Agovernment official noted the strength of both zoku: ‘There
is a gap between the advocacy faction and resistance faction, and a political decision is necessary’.28
In the end—or what seemed like the end—the combination of the real-estate industry’s zoku and the
sway of entrepreneurs like Mikitani gave the pro-Airbnb forces a victory.29
The Diet passed a new law sanctioning Airbnb in June 2017. The head of Japan’s Airbnb unit—
which by this time boasted 5 million guests in Japan over the previous 12months—was pleased,
describing the legislation as ‘easy to understand and realistic’.30 Minpaku would be officially allowed
to operate nationwide with a notification system rather than a more restrictive permission system,
and rentals would be allowed in residential areas nationwide. However, the lodging industry was not
left completely empty-handed. The law stated that a minpaku listing could not accept customers for
more than 180days annually. However, this was far above the lodging industry’s earlier proposal for
a maximum limit of 30 to 60days. Hotels and ryokan also managed to obtain another concession,
whose importance was not fully recognized by pro-minpaku actors at the time: local governments
would be able to impose their own ordinances, as long as they were reasonable, on top of national
regulations.31
5.3. Local Business and Government: ‘Peace and Safety’
Organized labor did not view Airbnb as a significant threat to its members in the upscale hotel
market.32 RENGO—the largest and most influential union federation in Japan, with about seven
million members—formulated its official policy response to Airbnb and Uber simultaneously. For
Airbnb, RENGO’s reaction was milder than for Uber, emphasizing the need for regulations to en-
sure consumer safety. An official said that RENGO was not fundamentally opposed to the sharing
economy but was against policies that infringe upon worker rights. He pointed to the Japanese
labor movement’s tradition of cooperating with management and government in adjusting to new
technologies.33
The lodging industry had, up until this point, struggled to respond to Airbnb and to present a
united front.34 Each of the industry’s segments—small Japanese inns, business hotels, and more
28. Asahi Shinbun, 24 June2016.
29. Lodging-industry consultant, correspondence, December2018.
30. Nikkei Report, 10 June2017.
31. Jiji Press, 8 June 2017; Kankō Keizai Shinbun, 25 March 2017; 27 May2017.
32. Labor union Aofficial, interview, April2019.
33. RENGO official, correspondence, April2019.
34. Lodging-industry consultant, correspondence, December 2018; Real-estate executive, correspondence, February 2019;
Labor union Aofficial, interview, April 2019; JANE official, interview, October 2017; RENGO official, correspondence,
April2019.
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upscale hotels—had its own industry association, or multiple associations, and faced different sets of
rules. As Schaede (2000) showed in her studies of Japan, product diversity significantly lessens the
cohesiveness of industry associations. The lodging industry’s inability to reach a consensus was aggra-
vated by regulatory complexity—especially the division of authority among national, prefectural, and
local bodies.35 However, this provided the industry and other anti-Airbnb groups opportunities for
creating ruptures between the 2017 law legalizing minpaku and its implementation on theground.
An association of ryokan and hotel owners, Zenryoren, launched an aggressive, bottom-up, cam-
paign against Airbnb at the prefectural level.36 Critical to this initiative was directing its frame to the
concerns of the target audience—local citizens, who also are voters—rather than elites in business
and government. The effectiveness of an interest group’s frame depends not just on its content, but
also the focal audience (Edelman 1985:95–113; Klüver etal. 2015). And as Vogel (1999) showed,
citizens in Japan have a history of success in blunting liberalization reforms, as in agriculture, where
the argument against change was based on health and safety. Thus Zenryoren focused its messaging
and shifted the venue: from ministerial and Cabinet committees to the localarena.
The association planned to petition governments in all 47 prefectures to ban minpaku in residen-
tial areas and impose caps below the new national limit of 180days. It recommended street-level
campaigns to arouse public opinion. The association deemphasized concerns over regulatory parity,
which would garner less sympathy in local arenas. Rather, Zenryoren’s chairman cautioned members
to emphasize public safety and not their own interests:
We had the directors of each prefecture’s association gather to study the new minpaku law and prepare for
the regions’ coming battles. What is of importance is peace and safety of the areas in which we conduct
business. We, Zenryoren, would like to use this opportunity to have the 47 prefectures come together even
more as one, to work hard at achieving better results.37
Zenryoren’s strategy met with considerable success. Prefectural ryokan associations and businesses
lobbied local governments38 and received help from friendly local politicians39 who owed loyalty to
local businesses. Facilitating the industry’s lobbying was opposition from local residents—often re-
ported by the media—over noise, safety, and hygiene problems related to having Airbnb’s minpaku
as neighbors.
Local governments reacted by drawing up strict ordinances. For instance, Chuo-ward of Tokyo
banned minpaku from operating on weekdays; Tokyo’s Shibuya-ward banned minpaku in residential
areas when schools were in session (out of a stated concern for student safety); and Kyoto city banned
minpaku except between January 15 and March 16 (when demand from tourists is at its lowest). In
addition to municipal regulations, homeowners’ associations adopted restrictive private orderings.
Acompany that managed 30 buildings, including high-rises in Tokyo, stated: ‘Almost all of those
under our management service in Tokyo have drawn up new regulations forbidding home-sharing
and paid accommodations’.40
35. JANE official, interview, October2017.
36. Kankō Keizai Shinbun, 17 June 2017; 2 September 2017; 7 October2017.
37. Kankō Keizai Shinbun, 2 September2017.
38. Ibid., 7 April2018.
39. Hokkoku Shinbun, 3 February2018.
40. The Japan Times, 1 December2017.
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Soon before the legislation was to take effect, a JTA official noted the decoupling of the new law’s
intent from its implementation. Commenting on the growth of municipal ordinances he stated,
‘Restricting home rental due to vague concerns that foreigners are unsafe or that it is a strange prac-
tice goes against the concept of the new law’.41 Ironically, the first locality to enact restrictions was
Tokyo’s Ota ward, which had also been the first to permit minpaku via the tokku.42 Municipality after
municipality, rural and urban alike, adopted their own ordinances, with some, such as Karuizawa,
seeking a complete ban on minpaku. The mayor of Karuizawa stated, ‘Beyond noise pollution and
other problems, minpaku services themselves threaten the existence of the local lodging industry’.43
By June 2018, Zenryoren’s chairman celebrated the fact that 70% of municipalities had imposed
restrictions.44
5.4. Airbnb Adapts: Cooperation With Opponents
Airbnb’s minpaku owners found not just local regulations but also new national rules to be cumber-
some. The company tried to assist them with recently-mandated registration procedures, but it was
slow going. Shortly before the national law came into force, the JTA—which was now under pressure
from local authorities to ensure enforcement of the national law—told Airbnb to cancel all reserva-
tions for properties that hadn’t received an official registration. Thousands of Airbnb customers vis-
iting Japan were left stranded and Airbnb footed the bill for their change in travel plans. The number
of Airbnb listings in Japan—which by then had surpassed 60,000—dropped 80% by the time of the
national law’s implementation date.45
Nevertheless, through a five-year process, Japan had worked out a way to give Airbnb a sanctioned
market. About one year after the national law went into effect, Airbnb was once again expanding, al-
beit at a more gradual pace and with stricter regulatory oversight.46 The company continued to lobby
local governments to ease restrictions, again citing the 2020 Olympics.47 Airbnb also adapted by
taking a more cooperative approach with government bodies and even with hotels, such as by listing
hotel rooms on its website as a way of supplementing the decline in its private-residence listings.
The outcome was neither the result of consensus-based decision-making nor interest aggregation
through national representative bodies. Rather, it was bottom-up, continuously contested, and an
incremental, instead of synoptic, policymaking process (Braybrooke and Lindblom 1964). It is not-
able that at an event organized to celebrate the new national minpaku law—attended by a long list of
political heavyweights—the president of the property management industry association instead ques-
tioned the new law’s effectiveness. He lamented the growth of ‘strange’ local restrictions, describing
them as counter to the law’s intent. While the property management and real estate industries prom-
ised to seek stronger legislation to undermine local ordinances, the lodging industry vowed to con-
tinue pushing to restrict what it saw as illegal minpaku.48
41. Reuters, 22 April2018.
42. The Nikkei Report, 9 December2017.
43. The Japan News, 5 April2018.
44. Kankō Keizai Shinbun, 16 June2018.
45. The Nikkei Report, 4 June 2018; 13 June2018.
46. Nikkei Asian Review, 17 April 2019; Bloomberg, 5 June2019.
47. Reuters, 19 November2019.
48. Jūtaku Shinpō, 19 June 2018; Kankō Keizai Shinbun, 30 June 2018; Shūkan Tōyō Keizai, 30 June2018.
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6. Uber
Uber had a lot going for it at the time it arrived in Japan, including a full-fledged endorsement from
Abe and his administration in October 2015. With Mikitani and Son, Uber had as advocates a pair
of prominent business leaders, and JANE was popular with LDP politicians enamored of Silicon
Valley-style entrepreneurialism (Whittaker 2009). Abe-appointed rideshare proponents had leeway
to decide which companies and industries would be allowed to benefit from the tokku system’s regu-
latory vacuum. By emphasizing the problem of inadequate transportation in the countryside, the
Uber forces hoped to obtain permission to initially operate in rural tokku. Approval would legitimate
future attempts to enter urban tokku, including Tokyo, the largest taxi market in the world and the
prize on which Uber had itseye.
However, Uber and its allies encountered sustained resistance from diverse actors who reacted
quickly to adjust their defense strategies. The main opposition came from three groups: the taxi in-
dustry, MLIT, and, this time, organized labor. They labeled Uber as shirotaku—a colloquial term
denoting an illegal taxi service that has connotations of illegitimacy.49 Interpreting Uber through the
lens of existing institutions—as something recognizable and illicit, rather than new and necessary—
was a strategy to prevent the decoupling of regulation from enforcement. Opponents also labeled
Uber a ‘black ship’ (kuro fune). The term harked back to 1853, when Commodore Perry’s gunboats
threatened force if Japan did not open its doors to foreign trade. This use of culture as a ‘toolkit’
(Swidler 1986) enabled the opposition to construct a frame that could mobilize anti-Uberforces.
6.1. Taxi Industry: ‘Irresponsible shirotaku
Unlike the lodging industry, the taxi industry had a dominant industry association, Zentakuren.50
Early on, it framed Uber as a foreign shirotaku operation and, by extension, an illegal taxi service that
put public safety at risk. The frame helped mobilize companies with long-standing rivalries.
Zentakuren’s president Tomita warned members in 2015 about JANE’s lobbying and the pro-
Uber activity in and around the cabinet.51 Saying that Uber was not a boon to the countryside
but a threat to regional transportation, Tomita requested each prefectural taxi association to adopt
the ‘Emergency Resolution Standing Firmly Against Shirotaku Acts Endangering the Survival of
Regional Public Transportation and Threatening Public Safety’. Noting the outsized political clout
of rideshare advocates, Tomita argued that the taxi industry must be unrelenting in its drive to block
any attempt to revise the RTL. He told members to be prepared for the possibility of ‘guerrilla war-
fare’ in the tokku. Tomita closed his remarks with the following statement:
The taxi industry, which has continued unbroken in the seventy years of the post-war era, is facing its big-
gest crisis; beyond just a matter of deregulation or re-regulation. The shirotaku industry which developed
in America is merely a matching service that uses nonprofessional drivers, and is only a business to refer
drivers. In case of an emergency, there is no obligation to compensate passengers if an accident were to
occur. Will such irresponsible business conditions be permitted to be brought into Japan? For shirotaku
companies, safety and peace of mind are secondary. The taxi industry’s enemy is currently coming not
49. Shirotaku (literally ‘white taxis’) because their white license plates show them to be private, not commercial.
50. Some of the major taxi companies in Zentakuren are parts of large, diversified corporations. For example, a Tokyo-based
taxi company, Teito, is part of the Keisei group that includes 130 companies in diverse areas such as rail and bus transpor-
tation, real estate, and construction. Larger taxi companies like Teito have more resources—economic and political—than
the smaller stand-alone firms that characterize the industry in the US and some other parts of theworld.
51. Zentakuren general meeting, 23 June 2015. Accessed from www.taxi-japan.or.jp/content/pdf.php?f=6868
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from the inside, but from the outside. In closing, Iam strongly, strongly asking all 6,456 companies of
Zentakuren, without a single exception, to show solidarity and unity in recognizing this together.
Tomita proclaimed that Zentakuren would take countermeasures to prevent the sinking of the taxi
industry through ‘one ant hole’ (equivalent to ‘a small leak will sink a great ship’). First, the associ-
ation aimed to cut short Uber’s rural forays. This included Tomita himself visiting the mayors of the
cities Uber was courting, including Kyotango and Yabu.52 There he ‘heard the public transportation
conditions of their respective areas and deepened his understanding of them’53 (Kyotango, after
being approached by Uber, had officially requested a private-car exemption through the tokku).54
Second, Zentakuren petitioned each prefecture’s elected Diet members to oppose the legalization of
shirotaku.55 Third, it worked with the Diet’s taxi zoku to bolster its counter-attack.56
The taxi industry had been criticized, even internally, for not adequately addressing the needs of
rural residents, many of them elderly.57 Zentakuren’s concern was that its retreat from the country-
side strengthened claims by pro-Uber actors that strict regulations banning nonprofessional drivers
were outdated. Tomita worked to counter this characterization of the taxi industry. He instructed
Zentakuren members, ‘From now on, if you receive requests for cooperation from depopulated or
rural areas, Iwant you to right away, without exception, provide counsel. If it is beyond your capaci-
ties, without exception, contact the prefectural taxi association; and if it cannot be addressed there,
Zentakuren will respond’. Zentakuren continued to monitor the situation in Kyotango and two
other rideshare cities, lobby them to abandon their plans, and report on Uber-related developments
at Zentakuren’s meetings.58
6.2. The Taxi zoku: Coordinating and DisseminatingFrames
The taxi industry’s economic significance is dwarfed by the lodging and real estate industries.
However, cities and towns throughout Japan have local taxi companies and their drivers who, like
local lodging businesses, can provide support to Diet candidates. As a taxi company executive ex-
plained, Uber had many friends in the Cabinet, but ‘it’s too dangerous for Diet members to be a
friend of Uber, with taxi companies all over Japan…Being a friend of Uber, no, no, not good for an
election’.59
The taxi zoku, working with the taxi industry, fought against attempts to legalize rideshare. Each
of the three major parties has its own taxi zoku, whose policy goals overlap. ADPJ Diet member and
the secretary-general of the party’s taxi zoku characterized ridesharing as ‘dangerous’, touted Japan’s
tough safety regulations, and said the public was moving in the direction of ‘safety first’. She further
reported that the taxi zoku of the LDP and Komeito were opposed to deregulation: ‘Many politicians
from LDP and Komeito have big support from the taxi industry for elections. So even if the Cabinet
52. Yabu, led by a reformist mayor, was also selected as the test case for Abe’s agricultural deregulation program via the tokku.
53. The Tokyo Hire-Taxi Association report, Taxicabs in Tokyo2016.
54. Kyotango official and NPO executive, interview, July 2016; Kyotango presentation to Tokku Working Group,
September2015.
55. Nikkan Jidōsha Shinbun, 30 October2015.
56. Ibid., 4 December2015.
57. Taxi company Aexecutive, interview, February2018.
58. Nikkan Jidōsha Shinbun, 19 February2016.
59. Taxi company B executive, interview, November2016.
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Office, one part of the government, wanted to legalize [rideshare], the political parties, LDP and
Komeito, have more power [than the cabinet]’.60
The taxi zoku served as an important mechanism for opposition, including coordinating and
disseminating frames. Following JANE’s ‘Japan Ahead’ proposal, the LDP and DPJ taxi zoku held
several separate meetings with Zentakuren’s Tomita and representatives of organized labor.61 At one
meeting of the DPJ’s taxi zoku—in which the taxi industry and unions expressed their opposition
to rideshare—the chair criticized the Abe cabinet for continuing to do ‘whatever it pleases’. He said
‘it would be strange’ if the DPJ failed to work with their fellow Diet colleagues from the LDP’s taxi
zoku, and he reported cooperation among the taxi zoku from the three main parties.62 Even when the
DPJ split into two new parties at the end of 2017, Diet members from the two halves held unified
taxi zoku meetings.63
6.3. Organized Labor: ‘Stop the Safety-Destroying shirotaku
Regarding Japanese unions, there are two contending views. One says that at the enterprise level,
unions have been docile since the 1950s while at the national level, they have been excluded from co-
ordinative bodies of elected officials, bureaucrats, and businesses that formed Japan’s ‘iron triangle’.
Hence there exists in Japan ‘corporatism without labor’ (Pempel and Tsunekawa 1979). Arevisionist
perspective contends that enterprise unions effectively protect their members at the workplace level,
although in a generally cooperative manner, and that RENGO and the industry federations still have
economic and political influence at peak levels (Kume 1998; Shinoda 2017).
Taxi drivers in Japan are not typical seishain (regular employees). They are not hired as recent
graduates, although a few large Tokyo taxi companies are exceptions. Their pay system is similar to
piecework albeit with minimum guarantees, and their wage curve is unrelated to seniority. But like
typical seishain, they have employment security and full-time jobs, receive paid vacations, and are
eligible for legally-mandated benefits offered only to full-time employees, including dismissal pro-
tection and the right to bargain collectively.64 In Japan, Uber wanted its drivers to be self-employed
contractors, as in the US. As such they would not enjoy any of the advantages associated with seishain
status. However, drivers would be able to set their own hours, a point emphasized byUber.
For our purposes, the significant finding is that the labor movement’s resistance was one of the key
forces preventing rideshare in Japan, in contrast to the Airbnb situation. The vast majority of Japanese
taxi drivers are company employees (approximately 85% in 2015)rather than self-employed.65 Acon-
siderable number of drivers belong to labor unions. At the base are enterprise unions that exist in
most large and mid-size taxi companies. The enterprise unions have a secure status and engage in
consultation and participation with management. The national union density rate for corporate taxi
workers has decreased since 2001 (when it was 45%) but at 35%, it is still higher than the national
60. Interview with Tsujimoto Kiyomi, member, Lower House (Shūgiin), DPJ taxi zoku secretary-general, November2016.
61. Nikkan Jidōsha Shinbun, 26 June 2015. Ibid., 4 December2015.
62. Ibid., 4 December2015.
63. Labor union B official, interview, July2018.
64. Labor union C official, interview, October2016.
65. Based on the number of sole-proprietorship (kojin) versus corporate (hōjin) taxis on the road. Data from MLIT. http://
www.mlit.go.jp/common/000147689.pdf. By contrast, in the US drivers are generally self-employed or independent
contractors (Los Angeles Taxicab Commission official, interview, July 2016; San Francisco Municipal Transportation
Agency official, interview, March2017).
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average for all workers. Density is higher in Tokyo, Osaka, and Kyoto, where the figures are 49%,
52%, and 55%, respectively.66
Most enterprise unions are embedded in a network of industry federations (Kume 1998; Sako 2006;
Carlile 2011). The three largest federations for taxi drivers are Zenjiko (Federation of Automobile
Transport Workers Unions), Jiko-soren (Federation of Automobile Transport Workers’ Unions),
and Kotsu-roren (Federation of Transport Workers’ Unions). Industry-level federations are affiliated
with one of two national union centers: RENGO (Japanese Trade Union Confederation), which is
moderate and has ties to DPJ,67 and Zenroren (National Confederation of Trade Unions), which is
left-wing and close to the Communist Party (JCP). Of unionized taxi workers, 43% fall under the
RENGO umbrella, 12% under Zenroren, and 45% are in unaffiliated enterprise unions.68
The labor movement strenuously opposed Uber through political channels.69 In a white paper,
RENGO expressed concerns over the Cabinet Office’s push for rideshare legalization by empha-
sizing ‘the safety of ordinary citizens and users, guaranteed under the current regulations’.70 It is
notable that the potential impact on drivers is listed as RENGO’s second area of concern, only after
‘user safety and security’. RENGO also promised to take ‘actions toward the arousal and formation
of public opinion’. It lobbied Diet members against the legalization of rideshare, while representa-
tives from RENGO-affiliated unions were regularly included in meetings of DPJ’s taxi zoku. When
the Japanese Council for Transport Workers held a conference at the Diet in November 2017 to
discuss rideshare, in attendance were five DPJ Councilors from Japan’s upper house.71 Labor also
applied political pressure at the local level. In 2016, the Japanese Council of Transport Workers’
Unions (Zenjiko is a part) visited Yabu, a small city earlier approached by Uber,72 to protest the city’s
rideshare proposal to the tokku bodies.73
Unions made use of more visible protest methods as well. Eight transportation unions from across
the labor movement held a joint rally and march in Tokyo in 2016 to oppose the Cabinet’s attempts
to legalize rideshare in the tokku.74 This is notable given past tensions between these unions.75 The
framing again was squarely on safety, with the rally titled, ‘Stopping Shirotaku Legalization that
Would Destroy Safety! Hire-Taxi General Assembly’. After the rally, attendees conducted a demon-
stration march chanting, ‘stop the safety-destroying shirotaku’; ‘protect safe taxis’; ‘we don’t need
shirotaku, which don’t bear responsibility for accidents’; and ‘absolutely against shirotaku legaliza-
tion’. In addition to representatives from the opposition parties and LDP, the rally included a guest
speaker from the taxi industry association, Zentakuren. Labor and taxi management viewed Uber as a
66. Zentakuren survey of member companies: rōdō kumiai soshiki jittai chōsa [Factual investigation of labor union structure],
October2016.
67. The DPJ split at the end of 2017 into what would become the Constitutional Democratic Party and the Democratic Party
for the People. Zenjiko—a RENGO-affiliated union—maintains ties toboth.
68. Zentakuren survey of member companies: rōdō kumiai soshiki jittai chōsa [Factual investigation of labor union structure],
October2016.
69. Labor union D official, interview, November 2016; Labor union B official, interview, February2018.
70. RENGO. (16 June 2016). ‘RENGO’s Interim Response to Ride-sharing in the Sharing Economy’. Accessed through
correspondence with RENGO official, October2016.
71. Taxi Japan, no.311, 25 November2017.
72. Kobe Shinbun, 13 December2015.
73. Ibid., 19 February2016.
74. Zenjiko website, 6 April 2017, http://www.zenjiko.or.jp/news/news_20160406.html
75. Labor union C official, interview, October2016.
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common threat. In 2017, three Japanese unions—members of the International Transport Workers’
Federation—held a Tokyo rally protesting attempts to legalize rideshare. They submitted petitions to
the lower and upper houses of the Diet.76
6.4. Ministerial Authority and the Tokku: ‘Illegitimacy Versus Innovation’
The taxi industry was regulated and supported by MLIT, which had asserted jurisdiction over the
rideshare problem ever since Uber’s attempt in Fukuoka to use nonprofessional drivers. MLIT fought
vigorously over Kyotango’s push to introduce rideshare through the tokku.77 Kyotango’s proposal
had included a transfer of decision-making authority from the local body on which taxi companies sit
to an organ of the Cabinet’s Tokku council. The proposal also would have permitted corporations,
not just NPOs, to take advantage of a long-standing ‘private-car’ exemption in the RTL. For Uber,
a tokku exemption to the RTL would create a precedent to operate in tokku throughout the country.
The proposal, like tokku in general, was precedent in another way: it challenged MLIT’s authority
over the administration of the Road TransportLaw.
The Tokku Working Group (TWG), clearly supportive of rideshare, was frustrated with MLIT.
Each side tried over a period of months to impose their own framing of the situation. While the
members of the TWG portrayed Uber as new and innovative, MLIT portrayed it as something fa-
miliar but illegitimate:
Kyotango is saying their assumption is [to use] Uber. Uber’s model is to not employ drivers, not do op-
erational control and not bear responsibility for accidents. This is [their] business model. [Their] global
standard business model. That is precisely shirotaku itself...78
Members of the TWG characterized MLIT’s position as ‘nonprofit fundamentalism’ and said inclu-
sion of taxi companies in the decision-making process was counter to the essence of regulatory re-
form, and was characteristic of old-style politics. They rejected the notion that private-car transport
should by definition be illegal, pointing to overseas acceptance of rideshare. Finally, they were critical
of MLIT’s intentions, with the chairman stating: ‘Since the prevention of allowing new things from
entering is useful for protecting [vested] interests, these sound like remarks coming from the [vested]
interests’ spokesperson’.79
However, MLIT adamantly opposed any alteration of its taxi safety regulations. As in the case of
Airbnb, the frame of ‘peace and safety’ resonated with the preferences and values of the target audi-
ence: the Japanese public (Vogel, 1999). Frames centered around consumers’ economic interests
were less effective. MLIT’s stance took on substantial significance following a widely publicized bus
accident in Karuizawa in January 2016, in which 15 people died and many more were injured. The
accident raised concern that watering down licensing requirements was risky. In a TWG hearing,
MLIT argued that in light of the accident, taxi deregulation would be inconsistent with the nation’s
desire to enhance, rather than relax, transport safety.80
76. International Transport Workers’ Federation, 15 March 2017. https://www.itfglobal.org/en/news/itf-backs-japan-uber-
protest
77. Kyotango includes the area of Tango, targeted byUber.
78. Tokku Working Group minutes, 2 October2015.
79. Ibid., 2 October, 9 October, and 16 October2015.
80. Ibid., 28 January 2016; 12 February2016.
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Despite the Cabinet’s attempts to tame MLIT, the 2016 tokku bill was, at most, incremental with
respect to rideshare. It altered the tokku implementation procedure for a private-car exception to
the RTL, but the approval process was complicated. Not only would approval of the Prime Minister
be required for each project—even in the smallest of cities—but also approval from MLIT’s min-
ister. Safety regulations would remain stringent, and importantly, operation of a private-car transport
system would remain limited toNPOs.
Further, when the Cabinet introduced the 2016 bill into the Diet, each party’s taxi zoku tried to
limit its impact by appending a number of supplementary resolutions. Supplementary resolutions do
not have the force of law, but their inclusion makes explicit the legislators’ intent. Hence they can
prevent subsequent attempts at legal reframing. The resolutions sought a level playing field by saying
that passenger safety with an NPO-operated private-car service must be secured by the same meas-
ures to which taxis are subject. The resolutions also explicitly stated that the bill did ‘not authorize
the introduction of what is called “rideshare”’. The Cabinet’s bill, enacted in June 2016, was not
supported by the DPJ or JCP but the supplementary resolutions were backed by all parties except the
JCP.81 The legislation made untenable any entry into the tokku of Uber’s ridesharemodel.
Even after the bill’s passage, opposition to its implementation continued as organized labor tried
to thwart the rideshare-tokku strategy. RENGO stated that in addition to monitoring developments
in the Diet through coordination with the DPJ, local RENGO centers would petition local govern-
ments to prevent the introduction of rideshare in their tokku.
6.5. Adopting the Good Parts: CooptingFrames
Pro-rideshare forces continued to argue that MLIT’s regulatory institutions were archaic, having
been formulated at a time when smartphones did not exist. MLIT and leaders of the taxi industry
formulated a defensive approach: on the one hand, revamping regulations to close the split between
rules and current technology, and, on the other nudging the industry to innovate andadapt.
One of the industry’s leaders was Kawanabe Ichiro—CEO of Japan’s largest taxi company, Nihon
Kotsu, and chairman of the Tokyo Taxi-Hire Association. Referred to as the Taxi Prince, Kawanabe
is an MBA graduate of the Kellogg School and former McKinsey consultant, credentials that cast him
as a forward-looking business person. Nihon Kotsu had developed its own app, JapanTaxi, which
some other taxi companies were joining. Kawanabe is also the third-generation successor to the
family’s taxi business, and the grandson-in-law of former Prime Minister Nakasone Yasuhiro, which
gave him access to, and legitimacy within, elite networks.82 He cautioned at a board meeting of the
Tokyo Taxi-Hire Association that the ‘painful battle’ was not over and added ‘…rather than simply
making enemies of Uber, we have no choice but to learn from their good parts, and to switch over
to a direction of adopting them’.83
MLIT released a Taxi Innovation Plan recommending that the industry adopt innovations char-
acteristic of Uber and Lyft: pre-trip fare estimation, app-based dispatching, and driver ratings. The
ministry said that it ‘has an attitude to include the good parts of rideshare’.84 Working with MLIT
officials on the plan were a variety of stakeholders: Kawanabe and Tomita, representatives of the
81. Correspondence with the Japan’s House of Representatives Research Bureau, February2018.
82. Japan Times, 15 November2017.
83. Nikkan Jidōsha Shinbun, 20 May2016.
84. MLIT official, interview, November2016.
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three largest taxi union federations, a consumer group, and academic experts. The taxi industry
then picked up the innovation baton. Zentakuren created a committee for ‘Countermeasures to the
Rideshare Problem’ to develop its own plan for the industry.85
However, when Zentakuren released its report late in 2016, labor unions were not enthusiastic.
One union official said that while he understood Zentakuren’s push to modernize the industry, his
union opposed the report’s endorsement of carpool taxis, predetermined fares, and watered-down
license requirements.86 It feared that these practices would erode pay and working conditions. And
there were skeptics even within Zentakuren: some taxi companies saw plans to modernize the in-
dustry as offering little help to small firms, including those in the countryside.87
JANE and the Cabinet continued to seek deregulation. JANE tried to make Zentakuren appear
incapable of innovating on its own, arguing that its modernization attempts would never have been
made had there not been a threat from rideshare. By this time, the Cabinet had created a ‘Sharing
Economy Committee’ on which sat a JANE official who was a strong advocate for rideshare.88 But
resistance remained significant, including from MLIT, which kept a close eye on the group and at-
tended its meetings. ACabinet Secretariat official stated, ‘There is a lot of suspicion that we are plot-
ting to create loopholes for ride-sharing services’; while a committee member stated, ‘If we summon
Uber to testify, the council’s discussions will get nowhere fast…The political risk is too large’.89
However, concern grew among anti-Uber forces that the powerful Regulatory Reform Council
would make an attempt to legalize rideshare. Kawanabe appeared before the council and touted
the changes planned by the taxi industry, trying to undermine claims that the industry was
technologically antiquated. He also argued that Uber did not match the ‘national character’ of
Japan and was a threat to public safety. To add gravitas and a sobering image, he reminded the
council that MLIT officials had recently visited the site of the bus accident on its one-year an-
niversary. There, he said, they ‘put their hands together [to pray]’.90 In the end, the Council’s
report, presented to the Prime Minister in late May, refrained from recommending a lifting of
the rideshare ban.91
The strategy of adopting Uber’s ‘good parts’ bore fruit with the development of Uber-style tech-
nology platforms for the taxi industry. Nihon Kotsu created its own app—JapanTaxi—and formed an
alliance with Toyota, which invested $69 million.92 JapanTaxi includes the largest number of taxis—
over 70,000—of any app in Japan. And in 2019, JapanTaxi partnered with the Softbank-backed
rideshare company, Grab, based in southeast Asia.93 Sony also entered the fray, partnering with six
other taxi companies to develop its own taxi platform.94
85. Nikkan Jidōsha Shinbun, 20 May2016.
86. Labor union B official, interview, February2018.
87. Taxi company C executive, interview, November 2017; Taxi company Aexecutive, interview, February2018.
88. JANE official, interview, October2017.
89. Nikkei Asian Review, 17 October 2016; Nihon Keizai Shinbun, 14 October,2016.
90. Regulatory Reform Council minutes, 7 February2017.
91. Nikkan Jidōsha Shinbun, 7 March, 2017; Nikkei Asian Review, 27 May2017.
92. Nikkei Asian Review, 9 February2018.
93. Nikkei Keizai Shinbun, 5 November2019.
94. The Japan Times, 20 February2018.
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Meanwhile, Softbank, drawing on its experience in world markets (Oyson and Whittaker 2015),
was in the midst of assembling a global portfolio of rideshare companies. In addition to stakes in Ola,
Grab and Didi, it invested, late in 2017, $1 billion in Uber and spent an additional $6 billion on
buying out Uber’s early investors. With that, Softbank became Uber’s largest shareholder and was
the greatest beneficiary of Uber’s 2019 initial public offering.95 Softbank, however, favored for the
Japanese market a different company in its portfolio, China’s Didi. Didi too entered the business of
licensing its own app to Japanese companies. The Didi app was a convenience for Chinese tourists,
who make up 30% of foreign visitors to Japan.96 Together Softbank and Didi formed a joint venture
and partnered with a major taxi company, Daiichi, and soon with dozens of other taxi companies
acrossJapan.
After the Softbank investment, Uber’s new CEO, Dara Khosrowshahi, insisted that he would
not cede Japan. Khosrowshahi had been traveling the world, trying to improve Uber’s image
ahead of the company’s IPO. In a trip to Japan, he met with Prime Minister Abe and others
and touted his new approach of partnership with the Japanese taxi industry. Afterward, a se-
nior MLIT official said that Uber ‘now intend[s] to give first priority to cooperation with the
taxi industry in Japan, with a business model created in observance of Japanese law’.97 Said
Khosrowshahi:
I saw Japan as an incredible opportunity, and when Iasked the team why wasn’t our Japan business larger,
Istarted learning the history of our approach to Japan, and it was an approach that frankly didn’t work…
It’s clear to me that we need to come in with partnership in mind, and in particular a partnership with the
taxi industry here.98
While significantly lagging behind Didi and JapanTaxi, Uber Japan has managed to build a few part-
nerships, including an arrangement with 12 taxi companies in Fukuoka that use the Uber platform.
Explaining the decision to license the platform, a Fukuoka taxi-company president stated that Uber
had promised from now on not to pursue rideshare.99
Yet rideshare advocates in Japan still sought legalization. Softbank’s Son Masayoshi publicly ex-
pressed his frustration over the lack of progress on legalizing rideshare, calling the government
‘stupid’.100 In March 2019, Prime Minister Abe, through yet another arm of his Cabinet appar-
atus—the Future Investment Council—once again announced his desire to expand private-cars in
areas with inadequate transportation—the original Uber gambit. The labor movement responded
that very day when two unions, Jikosoren (Zenroren affiliated) and Zenjiko (RENGO affiliated), or-
ganized demonstrations in Tokyo. Close to 500 drivers and hundreds of taxis flooded Kasumigaseki
and surrounded METI (a ministry often aligned with the Cabinet). They also visited Softbank’s
headquarters.101
95 Rakuten, which had invested in Lyft in 2015, was the largest beneficiary of Lyft’sIPO.
96 Japan National Tourism Organization, https://statistics.jnto.go.jp/en/graph/#graph--inbound--travelers--transition
97 MLIT official, correspondence, March2018.
98 The Japan Times, 21 February2018.
99 Nikkei Keizai Shinbun, 17 October2019.
100 Wall Street Journal, 19 July2018.
101 Kobe Shinbun, 8 March 2019; Tokyo Shinbun, 16 March2019.
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7. Conclusion
The experiences of Airbnb and Uber in Japan show how actors formulate frames to garner support
for, or foment opposition to, deregulation. The process was dynamic. Actors adjusted over time,
modifying their frames and targeting new audience groups. To be sure, pre-existing institutional ar-
rangements played an important role. However, our process-based analysis finds ex-ante power bases
to be insufficient to explaining institutional outcomes. Through framing processes, actors—both for
and against the sharing economy—sought to mobilize coalitions, counter the opposition, and ad-
vance their interests.
For Airbnb, the ‘sharing economy’ narrative—that technological innovation renders established
rules irrelevant—propelled the nation’s new minpaku law. Pro-Airbnb forces embellished the narra-
tive by framing minpaku as a means to achieve regional revitalization and higher levels of tourism.
As for anti-Airbnb actors, the delay in offering a persuasive counter-frame allowed rapid growth in
minpaku and contributed to a loss at the national level. However, the anti-Airbnb coalition found
success when they focused their frame around ‘peace and safety’ and redirected it toward local citi-
zens. The new strategy was consistent with Japan’s history of consumer-driven advocacy for safety
regulations (Vogel 1999). The resistance slowed Airbnb’s trajectory and forced the company to re-
formulate its strategy.
Uber and its proponents adopted a similar narrative: that the sharing economy represented techno-
logical advance held back by archaic rules. Unlike Airbnb, Uber encountered immediate pushback
from organized labor, the taxi industry, and MLIT. The framing of Uber as ‘safety-destroying
shirotaku’ helped mobilize the resistance and offered a potent counter-narrative. When the pro-
Uber coalition made another run at legalizing rideshare, the taxi industry modified its frame. Now
it advocated the adoption of Uber’s ‘good parts’, appealing to those supportive of Uber. In doing
so, the taxi industry and MLIT coopted elements of Uber’s system and undermined the framing
of the industry as backward. What emerged was a hybrid: traditional taxis using advanced platform
technologies.
Our contextualized approach reveals framing tournaments that lasted several years and produced
mixed outcomes in both cases. The study thus highlights the need to bore down into the oft-
ambiguous complexities found within a single national context. Such within-country comparisons
can contribute to the emerging literature on regulation of the sharing economy and other industries.
Note that despite opposition, in both of our cases, the sharing economy induced institutional change
that was neither intended nor anticipated. Airbnb continues to operate in Japan, regulated by a new
national law, but one whose intent was significantly obstructed. And while Uber’s rideshare business
failed in Japan, its technology had a lasting impact on the taxi industry.
Abe Shinzo—the longest serving prime minister in the country’s history—scored a few successes
with his deregulatory third arrow. One example from the private sector is electricity, where the Abe
administration obtained a passel of deregulatory legislation, despite polling data showing a public
concerned over nuclear energy and climate change (Incerti and Lipscy 2018). Another success was
agricultural reform, a far-more studied industry. As with the sharing economy, it was driven by the
Cabinet, which faced resistance from the powerful agricultural cooperative organization (JA) and
its allies, who historically fought liberalization by touting the need to protect Japan’s food security.
However, in recent years the opposition found itself slowly ‘unravelling’ due to TPP and an erosion
of domestic support (George Mulgan 2016; Maclachlan and Shimizu 2016). The lodging and taxi
industries are a notable contrast to agriculture, beside whom they pale in size and, historically, in
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power and influence. But through effective framing strategies and coalition building, they success-
fully turned back attempts to deregulate their industries.
Lurking in the background during the 2010s was greater skepticism of the Washington Consensus
than when Koizumi and his predecessors shook the foundations of several major industries. Indeed,
Abe struggled to usurp the ministries, control the Diet, and sustain market reforms. Ultimately, the
case of the sharing economy reveals the precariousness of Abe’s liberalization project.
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