Is it really the reason they give, or is it your friend interpretation ?
I mean, the Japanse censorship rely on
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(pdf in English):
"A person who distribute, sells or display in public an obscene document, drawing or other objects shall be punished by emprisonment with work for not more than 2 years, a fine of not more than 2.500.000 yen or a pretty fine. The same shall apply to a person who possesses the same for the purpose of sale."
So yeah, the display is private, but it's believable that they don't really care to this detail. In their mind, it's illegal to distribute, sells or display, dot. What make them react isn't the fact to see genitalia, but that your friend is doing something that is near to be illegal ; looking at an uncensored porn on his phone on the street, train or whatever public place would be legally a display in public, since anyone who could see the phone would also see its content.
As for the "disgusted for the genital parts", it's also opened to interpretation. They can just react out of decency, not wanting to see the genitalia of a girl who isn't their girl, and who haven't explicitly gave them the right to see it.
I can't even measure how fucked is your psychological to measure the reaction of someone who have a so radically different culture than yours, to your sole point of view. As if wanting to enforce a change in the Law of another country for the sole purpose to have uncensored porn wasn't already some fucked up move.
Despite its censoring, that can perfectly be due to decency more than to morality, Japan is one of the countries with the more lax attitude regarding sex. The sexual majority is at 13yo (if I remember correctly), it have one of the, if not the, biggest porn market by number of capita, and there's the famous love hotels. Loli porn is legal as long as it don't involve real person (or that they are sexually major), and while prostitution is said illegal, the Law limit it to vaginal penetration and do not really include sanction (except for those who profit from it) ; globally, this law can be summarized by "you can't pay to vaginally penetrate someone, or be payed to be vaginally penetrated, but if you do, we will just tell you that you can't".
But well, accordingly to one guy on Internet, that base his knowledge on what one of his friend told him, it's a country that is castrating his citizens...