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Amazon, Google win Japan government cloud contract

  • October 26, 2021
  • , Nikkei Asia , 7:42 p.m.
  • English Press

WATARU SUZUKI, Nikkei staff writer

 

TOKYO — Japan’s Digital Agency has picked Amazon Web Services and Google Cloud Platform as the first service providers for its nationwide cloud computing project, giving the U.S. tech groups a foothold in an industry dominated by domestic service providers.

 

The two services were chosen because they met about 350 requirements across security, data management and legal issues, among others, a Digital Agency official said on Tuesday. They will initially be used to run the agency’s website, as well as by eight municipalities on a trial basis.

 

A Digital Agency official said the budget for government cloud computing until March 2022 is about 2 billion yen ($17 million) but the budget for the upcoming years is as yet undetermined.

 

The government cloud project aims to unify and standardize digital infrastructure across ministries and roughly 1,700 municipalities, which currently operate their own systems. The management of data centers and business applications are often outsourced to domestic system integrators, which government officials say led to customized systems with high maintenance costs and functions that overlap.

 

This so-called vendor lock-in has also prevented the speedy rollout of public services and hampered Japan’s COVID-19 response.

 

The Digital Agency began operations in September and will control most of the government’s IT budget. It is encouraging local governments to fully shift to the government cloud by fiscal year 2025. An official said shifting entirely to the cloud could reduce the annual IT budget, which currently stands at about 800 billion yen ($7 billion), by about 30%.

 

One industry expert said the choice of AWS and GCP was within expectations, but would nevertheless mean business would be “tough” for domestic system integrators. “Some domestic players have sold their services as a safer alternative to foreign products. Obviously that argument won’t work anymore.”

 

Still, it is unclear whether the U.S. tech companies can maintain their lead in the public sector. The Digital Agency said more vendors, including domestic ones, would be selected next fiscal year if they meet the requirements.

Experts say Japan’s ministries are still divided over the safety of using cloud services to handle sensitive personal information, such as health-related data.

 

“By providing cloud services under a direct contract with the Digital Agency, we will be the first to deliver cutting-edge technologies and best practices from around the world to help the Japanese government modernize its information systems,” Amazon Web Services Japan said in a statement. Google did not immediately respond to a request for comment.

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