Microsoft, AWS & Oracle: Why Big Tech is Investing in Japan

We explore what Microsoft, Oracle, AWS and Google Cloud’s multi-billion dollar investments mean for the digital landscape in Japan

Despite its reputation as one of the world’s most technologically advanced nations and its position as Asia’s second-largest economy, Japan has been considered comparatively slow when it comes to the adoption of digital technologies. 

According to a 2023 report by the International Institute for Management Development, Japan ranked 32nd of 64 economies surveyed when it came to adopting digital technologies, while the country currently faces a drastic shortage of digital workers. According to the Japan Times, last year the country was estimated to have one million digital workers; short of the projected 2.3 million digital workers Japan will need in 2026.

To combat this, in recent months several tech giants have announced sizable investments in Japan, aimed at boosting cloud and AI infrastructure. Here, Technology Magazine highlights some of these recent developments and what they mean for the tech landscape in Japan looking forward.

AWS boosts cloud infrastructure in Japan and tackles digital skills gap

In January 2024 AWS said it was to invest ¥2.26tn (US$15.24bn) in Japan by 2027 to expand cloud computing infrastructure in the country.

In addition to expanding its facilities in Tokyo and Osaka, AWS said it planned to help Japan unlock its cloud potential by addressing the digital skills gap through AWS education programmes, training and certification. 

AWS-commissioned research by AlphaBeta shows that cloud and cybersecurity skills will be the top two most sought-after digital skills by Japanese employers by 2025. AWS has trained over 400,000 individuals in Japan with cloud skills since 2017, providing them with in-demand cloud skills and best practices to help learners and organisations innovate in the cloud.

“For over a decade, AWS has been committed to helping our Japanese customers access the latest cutting-edge technology, build digital solutions on highly resilient and secure cloud infrastructure, and adapt their businesses to maintain an edge in today’s complex economic environment,” said Tadao Nagasaki, President of AWS in Japan. “Our investment into cloud infrastructure generates a ripple effect across the Japanese industries including the public and government sectors. It will help more Japanese organisations with the ability to access and adopt new, emerging and transformational digital technologies such as artificial intelligence and machine learning. We are committed to and excited about the future of Japan’s digital economy.”

Microsoft invests in hyperscale cloud computing and AI infrastructure 

Microsoft has also announced plans to invest in Japan over the next two years, aiming to increase hyperscale cloud computing and AI opportunities. 

The company aims to do this by expanding its existing digital skills programmes with the goal of providing AI skills to more than three million people over the next three years. This follows a recent similar commitment to teach millions in India about AI by 2025.

Microsoft also plans to open its first Microsoft Research Asia lab and states it seeks to deepen its cybersecurity collaborations with the government of Japan.

The US$2.9bn commitment is Microsoft’s largest investment into Japan in the 46 years it has been present in the country. With this financial boost, Microsoft will be able to provide more advanced computing resources in Japan, including the latest graphics processing units (GPUs) to speed up AI workloads.

“We are honoured to contribute to Japan and its future with our largest investment to date, technology and knowledge,” says Miki Tsusaka, President of Microsoft Japan. “In collaboration with our partners, Microsoft Japan is fully committed to supporting the people and organisations of Japan to solve social problems and achieve more.” 

Google Cloud investing in digital connectivity through subsea cables

Google Cloud has announced a US$1bn investment in digital connectivity to Japan, including the expansion of the Pacific Connect initiative and delivery of two new subsea cables, aimed at creating new fibre-optic routes between the continental United States and Japan in support of Google’s Japan Digitization Initiative, while improving the reliability and resilience of digital connectivity between the US, Japan, and multiple Pacific Island countries and territories.

Subsea cables can bring economic and productivity gains to the places where they land. For example, in Japan, studies estimate Google network infrastructure investments drove an additional US$400m in GDP in the previous decade. With increased access to digital services, more people can take advantage of skill development and career opportunities, while businesses and public sector organisations can better serve their customers and constituents. 

“We’re excited about the long-term benefits that these latest Pacific initiatives will bring to people, our users, and our customers,” wrote Brian Quigley VP of Global Network Infrastructure at Google Cloud in an announcement. “We’ll continue to share more as we continue working with partners to reduce the digital divide across the Pacific.”

OpenAI expands into Japan, opens office in Tokyo

OpenAI meanwhile recently announced its first office in Asia, together with the release of a GPT-4 custom model optimised for the Japanese language.

The AI startup said it is providing local businesses with early access to a GPT-4 custom model specifically optimised for the Japanese language, offering improved performance in translating and summarising Japanese text and operating up to three times faster than its predecessor.

“We are committed to collaborating with the Japanese government, local businesses, and research institutions to develop safe AI tools that serve Japan’s unique needs and to unlock new opportunities,” the company said in an announcement blog. “We chose Tokyo as our first Asian office for its global leadership in technology, culture of service, and a community that embraces innovation.”

OpenAI says it is working with leading businesses like Daikin, Rakuten, and TOYOTA Connected who are using ChatGPT Enterprise to automate complex business processes, assist in data analysis and optimise internal reporting.

“We’re excited to be in Japan which has a rich history of people and technology coming together to do more,” said Sam Altman, CEO of OpenAI. “We believe AI will accelerate work by empowering people to be more creative and productive, while also delivering broad value to current and new industries that have yet to be imagined.”

Oracle: Investment to meet growing demand for cloud computing and AI infrastructure

In April Oracle Corporation Japan announced that it plans to invest more than US$8bn over the next 10 years to meet the growing demand for cloud computing and AI infrastructure in Japan. The investment will grow Oracle Cloud Infrastructure’s (OCI) footprint across Japan. In addition, to help customers and partners address the digital sovereignty requirements in Japan, Oracle will significantly expand its operations and support engineering teams with Japan-based personnel.

Oracle plans to increase local customer support of its public cloud regions in Tokyo and Osaka and its local operations teams for Oracle Alloy and OCI Dedicated Region. This will enable governments and businesses across Japan to continue to move their mission-critical workloads to the Oracle Cloud and embrace sovereign AI solutions. 

“We are dedicated to meeting our customers and partners where they are in their cloud journey,” said Toshimitsu Misawa, member of the board, corporate executive officer and President of Oracle Corporation Japan. “By growing our cloud footprint and providing a team to support sovereign operations in Japan, we are giving our customers and partners the opportunity to innovate with AI and other cloud services while supporting their regulatory and sovereignty requirements.”

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