Japan is falling behind in the field of deep learning and artificial intelligence (AI), which prompted the Japanese government to formulate an AI strategy in 2019. In 2023, the launching of ChatGPT, a new startup by OpenAI in the United States, fueled the fear of the Liberal Democratic Party, the ruling party in Japan, that the government's actions were too slow. Therefore they established the Project Team on Evolution and Implementation of AI of The Liberal Democratic Party of Japan ('The Project Team') in February 2023. Members of parliament and political parties will collaborate with scholars and businesses, which may lead to Japanese government investment in cloud platforms and AI models.
According to a report from the Nikkan Kogyo Shimbun, the establishment of the Project Team signifies a major shift in the leadership of Japan's AI strategy policy. The policy has shifted from Kasumigaseki, the executive branch, to Nagatacho, the Prime Minister's residence and the National Diet, the country's parliament. In the past, policies were proposed by the executive branch and reviewed by the National Diet. However, the policy was proposed by political parties in the National Diet this time, creating a new precedent.
From the perspective of AI technology and industry, the significance of this change is the people who joined the Project Team, which includes Joichi Ito, Director of the Center for Radical Transformation (CRT) at Chiba Institute of Technology, which cooperates with OpenAI, Hiroaki Kitano, the Chief Technology Officer of Sony, and Yoshua Bengio, professor at the University of Tokyo and AI researcher. It is believed that these individuals can propose specific demands from the industry side.
According to a report from the Nikkan Kogyo Shimbun, currently the most advanced structure of the AI industry can be broadly divided into three layers. Firstly, data centers and cloud platforms, account for 10-20% of the market revenue. The sector has already become an oligopoly. Secondly, AI model development and brokerage, account for 10-30% of the market revenue. The sector is witnessing ongoing oligopolistic competition. Thirdly, apps and services, account for 50-60% of the market revenue. However, the market sizes of individual applications are still small.
Japan's AI industry believes that Japan can and should enter the field of AI development and app services. However, the Cabinet of Japan holds a different view in terms of AI development. Judging from the AI strategy announced and revised by the Office from 2019 onward, the focus was on investing in education reform, establishing AI and data application systems, and promoting AI social and economic applications. As a result, Japanese businesses can only offer contract services for app development and have to give up AI development and cloud platforms, which is not considered a wise move.
The reason why Japanese businesses have not invested in the field of AI models and cloud platforms is that it would require more than 10 years and JPY 100 billion (approximately USD 754 million) in time and funding, which is not something that businesses can afford on their own. Without government investment in AI development, Japanese businesses do not stand a chance in the AI market. The establishment of the Project Team may urge the government to provide funds for AI research and development and cloud platforms. However, whether they can win the market over is another issue.
