Cloud Developer Sakura Internet to Get ¥600 Mil. Subsidy from Japan Govt to Bolster Economic Security; Money to Go to IT Staff Hires

The Yomiuri Shimbun

16:00 JST, February 15, 2024

The Economy, Trade and Industry Ministry intends to provide a ¥600 million subsidy for tech development to Sakura Internet Inc., which has been selected as a domestic provider of government cloud services that handle personal information and other data held by local governments.

With the nation dependent on U.S. IT giants for cloud computing, Japan urgently needs to build a homegrown cloud platform to bolster its economic security.

Cloud platforms were designated as “specified critical products” under the Economic Security Promotion Law in December 2022, and the subsidy will come from a fund related to economic security.

Sakura is a midsize IT company established in 1999. The Osaka-based company became the first Japanese company to be selected as a government cloud provider in November. However, it has yet to meet the requirements for such providers, and was selected on the condition that all requirements be met by the end of fiscal 2025.

To meet the requirements, Sakura must significantly improve the functionality of its services in a short period of time. If it hopes to succeed, it will need to acquire talented IT personnel who can develop advanced software.

Sakura expects to use the subsidy mainly to secure such personnel, and plans to hire up to 200 people in fiscal 2024, as it aims to speed up development in data storage and encryption, among other technologies.

Cloud computing is viewed as indispensable for data management by the public and industry. However, the three U.S. IT giants — Amazon.com Inc., Google LLC and Microsoft Corp. — have a market share of over 60% in Japan, and Japanese companies are losing market share. This has stoked concerns that Japan lacks data sovereignty, or the ability to protect its data itself.