Japan’s Sakura Internet Officially Chosen as ‘Government Cloud’ Services Provider

The Yomiuri Shimbun

20:00 JST, March 28, 2026

The Digital Agency announced on Friday that it had officially selected IT company Sakura Internet Inc. as a provider for the “government cloud,” a shared information system infrastructure used by the central and local governments.

This marks the first time a domestic government cloud service provided by a Japanese company has been made available, having previously been limited to U.S. tech giants such as Amazon.com, Inc.

“The inclusion of a domestic provider will also contribute to the public’s sense of security,” said digital minister Hisashi Matsumoto at a press conference on Friday.

During an interview with The Yomiuri Shimbun, Sakura Internet President Kunihiro Tanaka said: “This is the result of our technical capabilities and reliability as a domestic cloud services provider being recognized. We will be able to contribute as a viable option for the central and local governments.”

Sakura Internet is a midsize IT firm established in 1999, and its main office is in Osaka City. Its main business is the provision of cloud services, and it operates data centers in Tokyo, Osaka Prefecture and Hokkaido. Its consolidated sales for the fiscal year ending March 2025 were ¥31.4 billion.

High hopes for domestic provider

There is strong demand for domestically developed cloud services for reasons such as economic security, and expectations are high for domestic companies to provide them. Attention is being paid to whether they will be able to make a dent in the cloud market, which has long been the stronghold of U.S. tech giants.

According to a survey by a research firm MM Research Institute, Ltd. in 2025, about 17,000 of 21,000 respondents said that domestically developed cloud services should be used for the government cloud. Concerns about security and data leaking overseas underpin this figure.

When those who stated that domestic cloud services should be used were asked to provide reasons, the top responses were, “Data will not leak overseas” at 38% and “It provides peace of mind regarding security” at 34%.

Under the government cloud plan, systems related to 20 municipal operations — including the Basic Resident Register, the national pension system and resident taxes — are scheduled to be transferred to the government cloud, and the personal information of residents associated with these systems will also be stored there.

Oligopoly

Despite the high expectations for domestic providers, Japanese companies have had a limited presence in the cloud market. The domestic market is dominated by U.S. companies, with Amazon, Microsoft Corp. and Google LLC accounting for 80%.

With Sakura Internet now officially selected as a provider of government cloud services, signs of change are beginning to emerge.

“Sakura Internet has raised its performance to a level suitable for the government cloud,” said a researcher at MM Research Institute. “One could say that it has finally caught up to the giant tech companies.”

However, whether Sakura Internet will actually provide cloud services to the central and local governments is another matter.

Since local governments are required to transfer their systems to the government cloud by the end of fiscal 2025. it is believed that many local governments have already completed the selection of their cloud service providers.

Government support key

According to data compiled by the Digital Agency, Amazon is the choice of many local governments for cloud services, with about 1,580 — about 80% of them — using it. The remainder is dominated by other U.S. providers such as Oracle Corp. and Google, leaving little room for domestic providers to enter the market for local governments.

An information systems official at one local government said, “Domestic cloud services offer greater peace of mind,” but added, “Sakura Internet apparently has fallen behind, so it will likely be difficult for the company to provide services to local governments for the time being.”

Meanwhile, a cloud provider had been selected for only about 160 out of about 1,100 central government information systems — such as those of ministries and agencies — as of the end of January this year.

A person familiar with the issue said that the selection of Sakura Internet as an official provider for the government cloud will “make it easier for Sakura Internet to be chosen for government-related systems.”

Based on the view that relying on foreign companies for cloud services — a critical part of the nation’s social infrastructure — poses a threat to economic security, the central government has been supporting the development of domestic services through such means as providing subsidies.

However, even if Japanese companies are selected as providers, the goal of “breaking free from dependence on foreign firms” would be difficult unless they achieve widespread adoption. The nature of government support will be key moving forward.

“The central government should consider measures such as requiring a certain percentage of services of systems to be provided by domestic providers,” said the researcher at MM Research Institute.