Commentary / Japan

The global battle over big data

During this year’s annual meeting of the World Economic Forum, popularly known as the Davos conference, in late January, Prime Minister Shinzo Abe’s attendance — his first in five years — attracted attention. The Group of 20 summit will be held in Osaka in June, and Japan will serve as its chair for the first time since the G20 summit came to gain today’s weight after the 2008 Lehman Brothers shock. At a time when the world is embroiled in serious problems ranging from the U.S.-China confrontation to Brexit, great attention was paid to what Abe, who will chair the upcoming G20 summit, said in his speech at Davos.

Abe devoted the first one-third of his 30-minute speech to changes in the Japanese economy. He said that in the six years since he came to power, share prices went up by 2.5 times, the jobless rate fell to 2.5 percent and the ratio of job openings to job seekers, which had fallen to 0.4 right after the Lehman shock, increased to 1.6. Abe also explained that although Japan’s working-age population declined by 4.5 million over the period, the impact has been almost offset by the greater participation of women and elderly people in the labor market.

What attracted particular interest was his proposal as G20 summit chair to work out a global rule for the use of big data. Today, artificial intelligence and big data are creating a new wave called the Fourth Industrial Revolution. The issue was one of the major points of discussion in last year’s Davos conference. German Chancellor Angela Merkel noted that future economic competition will revolve around big data above all else and that how to cope with China, which collects and sorts out big data under state capitalism in a manner different from Western economies, will be a big challenge.

In the United States, gigantic information technology companies like Google, Apple, Facebook and Amazon (collectively called GAFA) emerged under the principle of the free market. In China, the government played a leading role under state capitalism in the creation of IT giants like Alibaba and Tencent. The corporate value of these Chinese firms today matches those of GAFA. On the other hand, European economies have placed an emphasis on protection of personal data, as symbolized by the introduction of European Union’s General Data Protection Regulation. In the absence of a common international rule, individual countries and regions have competing interests concerning the extremely important issue of big data.

Abe first referred to the size of big data in today’s society, in which a massive amount of data is being produced through the widespread use of smartphones and other devices. The amount reaches 2,500 quadrillion bytes every day. That’s 250,000 times more than the printed data stored in the Library of the U.S. Congress.

If such an enormous amount of data is cleverly utilized, it will bring great benefits to our society. Digital marketing will enable us to obtain what we really need at the lowest possible cost. The government will be able to carry out efficient policies aimed at people who truly need help. Abe pointed out that utilization of big data will help rectify income gaps and social schisms that the disparity creates. He said this will be nothing less than a “gap buster.”

However, there is a major question that must be addressed in utilizing big data — whether privacy information and human rights will be adequately protected.

In some countries where progress has been made in big data use, a tendency toward disregard of human rights is being observed. Keeping this problem in mind, Abe emphasized the importance of “data free flow with trust.” He then went on to call for launching the work to create a global rule to put the idea into practice at the G20 summit in Osaka. It is safe to say that his call was highly welcomed by the audience.

Important discussions are going on in Japan over data governance. The discussions concern the behavior of the so-called digital platform companies. Businesses that offer platforms on the internet such as GAFA obtain an enormous amount of data on the people who use their platforms.

While they have the advantage of being able to deliver ads and services to the users on the basis of the data they have obtained, there also is the risk that the platform companies can gain a monopolistic position through their access to an immense amount of data. The government is now pushing discussions with a view to setting up a new organization within the Cabinet secretariat to devise a competition policy for platform companies.

Excessive regulations stifle innovation. Democratic countries must tackle the question of how to accumulate and utilize big data while adequately protecting personal data under a reliable and transparent rule. The government is now seeking to draft a legislation to build a “super smart city,” which will be a model of a future city that can gather and utilize big data with the consensus of its residents. Some other countries and regions have begun similar attempts to manage urban life through the use of big data. Worldwide competition over big data is accelerating.

If the super smart city idea is realized, Japan will have a chance of standing on the frontier of this competition.

Heizo Takenaka, a professor emeritus at Keio University, served as economic and fiscal policy minister in the Cabinet of Prime Minister Junichiro Koizumi from 2001 to 2005. He is a member of the government’s Industrial Competitiveness Council.

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