Japan is known for its futuristic technology. But the nation is lagging behind in the generative AI race and is trying to create its own large language models.
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Countries are racing to develop their own generative artificial intelligence algorithms, but high tech Japan is already behind.
Generative AI has been the trendiest topic in tech since OpenAI made waves with its chatbot ChatGPT. Breakthroughs in generative AI possess the potential to fuel a 7% increase in global GDP, or almost $7 trillion, over the next decade, according to Goldman Sachs research.
Key to generative AI development are large language models which underpin the likes of ChatGPT and Baidu’s Ernie Bot, capable of processing vast data sets to generate text and other content. But Japan is currently trailing behind the U.S., China and the EU in developing these algorithms, said Noriyuki Kojima, co-founder of Japanese LLM startup Kotoba Technology.
Chinese organizations, including tech giants Alibaba and Tencent, have launched at least 79 LLMs domestically over the past three years, Reuters reported in May citing research from a consortium of state-run institutes. U.S. corporate powerhouses such as OpenAI, Microsoft, Google and Meta play a significant role in propelling the country’s LLM advancements, said Kojima.
Japan lagging behind in generative AI
Japan, however, lags behind the U.S., China and Europe in the scale and speed of its LLM development.
“Japan’s trailing position in the field of generative AI largely stems from its comparative shortcomings in deep learning and more extensive software development,” said Kojima.
Deep learning requires a “robust community of software engineers” to develop necessary infrastructure and applications, Kojima added. Japan, however, will face a deficit of 789,000 software engineers by 2030, according to the Ministry of Economy Trade and Industry. The nation is now ranked 28th out of 63 countries in terms of technological knowledge, according to the IMD World Digital Competitiveness Ranking.
Japan also faces hardware challenges as LLMs need to be trained using AI supercomputers like IBM’sVela and Microsoft’s Azure-hosted system. But no private company in Japan possesses its own “world-class machine” with those capabilities, Nikkei Asia reported.
Government-controlled supercomputers like Fugaku therefore “hold the key” to Japan’s pursuit of LLMs, Kojima explained.
“Access to such large-scale supercomputers forms the backbone of LLM development, as it has traditionally been the most significant bottleneck in the process,” he said.
How Japan’s supercomputers can help
Tokyo Institute of Technology and Tohoku University plan to use Fugaku to develop LLMs based primarily on Japanese data in collaboration with the supercomputer’s developers Fujitsu and Riken, Fujitsu announced in May.
The organizations plan to publish their research results in 2024 to help other Japanese researchers and engineers develop LLMs, Fujitsu added.
The Japanese government will also invest 6.8 billion yen ($48.2 million), about half the total cost, to build a new supercomputer in Hokkaido that will begin service as early as next year, Nikkei Asia reported. The supercomputer will specialize in LLM training to promote Japan’s development of generative AI, said Nikkei Asia.
In April, Japanese Prime Minister Fumio Kishida said the country supports the industrial use of generative AI technology. Kishida’s remarks followed his meeting with OpenAI CEO Sam Altman, who said the company is looking to open an office in Japan.
Japanese companies pursuing generative AI
Big Tech players have also joined the fray to boost Japan’s standing in generative AI. In June, SoftBank’s mobile arm said it plans to develop its own generative AI platform, reported local media. This was underscored by SoftBank CEO Masayoshi Son’s announcement that the investment firm plans to shift from “defense mode” to “offense mode” and intensify its focus on AI.
“We would like to be [in] the leading position for the AI revolution,” Son said during a shareholders’ annual general meeting.
SoftBank Group sold its 85% stake in SB Energy to Toyota Tsusho in April and recently agreed to sell its 90% stake in U.S. investment manager Fortress Investment Group, Nikkei Asia reported. Trimming these other investments helps SoftBank free up cash, allowing it to focus largely on AI through its Vision Fund venture capital investment unit.
SoftBank-owned chip design company Arm is also set to pursue a U.S. IPO listing later in the year. “It will be by far the biggest IPO that’s hit the world,” said Amir Anvarzadeh, Japan equity market strategist at Asymmetric Advisors.
The IPO will provide a hefty sum to boost funds at SoftBank, which reported a record 4.3 trillion yen loss at Vision Fund for its fiscal year ending March 31.
Arm originally sought to raise between $8 billion and $10 billion. But with demand for semiconductor chips “through the roof,” Anvarzadeh suggested Arm could raise as much as $50 billion to $60 billion — or “85% of SoftBank’s market cap.”
He said SoftBank’s share price will likely rise, although this does not guarantee the success of its AI efforts.
“Fundamentally, I don’t think SoftBank is going to change Japan’s landscape … they are no savior of Japan’s AI,” he said.
Japanese telecommunications company NTT also announced plans to develop its own LLM this fiscal year, aiming to create a “lightweight and efficient” service for corporations. NTT said it will funnel 8 trillion yen over the next five years into growth areas like data centers and AI, a 50% increase from its previous level of investment.
Local media reported that digital ad company CyberAgentreleased an LLM in May that enables companies to create AI chatbot tools. The company said it is one of few “models specialized in the Japanese language and culture.”
While it has yet to catch up in the generative AI space, Japan is making its first stride with these private sector efforts. Once a “robust infrastructure” is established, the remaining technical challenges are likely to be “significantly mitigated” by using open-sourced software and data from previous pioneers, Kojima said. Bloom, Falcon and RedPajama are all open-sourced LLMs trained on vast amounts of data that can be downloaded and studied.
However, companies venturing into this field should anticipate competition spanning a “relatively longer timeframe,” Kojima said. Developing LLMs requires substantial capital investment and a workforce highly skilled in natural language processing and high-performance computing, he explained.
“SoftBank and NTT, joining this competition, will not change the AI landscape in the short-term.”
AI regulation in Japan
Japanese tech companies’ increased participation in generative AI development coincides with a positive stance on AI adoption in other sectors. Over 60% of companies in Japan have a positive attitude toward using generative AI in their operations, while 9.1% are already doing so, a survey by Teikoku Databank found.
Hitachi has established a generative AI center to promote employee’s safe and effective use of the technology, it said in May. With the expertise of data scientists, AI researchers and relevant specialists, the center will formulate guidelines to mitigate the risks of generative AI, the conglomerate said.
Japan will even consider government adoption of AI technology like ChatGPT, provided that cybersecurity and privacy concerns are resolved, said Chief Cabinet Secretary Hirokazu Matsuno.
As Japan becomes more open to the use of generative AI, the government should formulate and facilitate soft guidelines regarding its use, while assessing the need for hard regulation based on specific risks, said Hiroki Habuka, research professor at Kyoto University’s Graduate School of Law.
“Without clearer guidance on what actions companies should take when using generative AI, practices may become fragmented,” the professor said.
An employee walks past a quilt displaying Etsy Inc. signage at the company’s headquarters in the Brooklyn.
Victor J. Blue/Bloomberg via Getty Images
Etsy is trying to make it easier for shoppers to purchase products from local merchants and avoid the extra cost of imports as President Donald Trump’s sweeping tariffs raise concerns about soaring prices.
In a post to Etsy’s website on Thursday, CEO Josh Silverman said the company is “surfacing new ways for buyers to discover businesses in their countries” via shopping pages and by featuring local sellers on its website and app.
“While we continue to nurture and enable cross-border trade on Etsy, we understand that people are increasingly interested in shopping domestically,” Silverman said.
Etsy operates an online marketplace that connects buyers and sellers with mostly artisanal and handcrafted goods. The site, which had 5.6 million active sellers as of the end of December, competes with e-commerce juggernaut Amazon, as well as newer entrants that have ties to China like Temu, Shein and TikTok Shop.
By highlighting local sellers, Etsy could relieve some shoppers from having to pay higher prices induced by President Trump’s widespread tariffs on trade partners. Trump has imposed tariffs on most foreign countries, with China facing a rate of 145%, and other nations facing 10% rates after he instituted a 90-day pause to allow for negotiations. Trump also signed an executive order that will end the de minimis provision, a loophole for low-value shipments often used by online businesses, on May 2.
Temu and Shein have already announced they plan to raise prices late next week in response to the tariffs. Sellers on Amazon’s third-party marketplace, many of whom source their products from China, have said they’re considering raising prices.
Silverman said Etsy has provided guidance for its sellers to help them “run their businesses with as little disruption as possible” in the wake of tariffs and changes to the de minimis exemption.
Before Trump’s “Liberation Day” tariffs took effect, Silverman said on the company’s fourth-quarter earnings call in late February that he expects Etsy to benefit from the tariffs and de minimis restrictions because it “has much less dependence on products coming in from China.”
“We’re doing whatever work we can do to anticipate and prepare for come what may,” Silverman said at the time. “In general, though, I think Etsy will be more resilient than many of our competitors in these situations.”
Still, American shoppers may face higher prices on Etsy as U.S. businesses that source their products or components from China pass some of those costs on to consumers.
Etsy shares are down 17% this year, slightly more than the Nasdaq.
Google CEO Sundar Pichai testifies before the House Judiciary Committee at the Rayburn House Office Building on December 11, 2018 in Washington, DC.
Alex Wong | Getty Images
Google’s antitrust woes are continuing to mount, just as the company tries to brace for a future dominated by artificial intelligence.
On Thursday, a federal judge ruled that Google held illegal monopolies in online advertising markets due to its position between ad buyers and sellers.
The ruling, which followed a September trial in Alexandria, Virginia, represents a second major antitrust blow for Google in under a year. In August, a judge determined the company has held a monopoly in its core market of internet search, the most-significant antitrust ruling in the tech industry since the case against Microsoftmore than 20 years ago.
Google is in a particularly precarious spot as it tries to simultaneously defend its primary business in court while fending off an onslaught of new competition due to the emergence of generative AI, most notably OpenAI’s ChatGPT, which offers users alternative ways to search for information. Revenue growth has cooled in recent years, and Google also now faces the added potential of a slowdown in ad spending due to economic concerns from President Donald Trump’s sweeping new tariffs.
Parent company Alphabet reports first-quarter results next week. Alphabet’s stock price dipped more than 1% on Thursday and is now down 20% this year.
In Thursday’s ruling, U.S. District Judge Leonie Brinkema said Google’s anticompetitive practices “substantially harmed” publishers and users on the web. The trial featured 39 live witnesses, depositions from an additional 20 witnesses and hundreds of exhibits.
Judge Brinkema ruled that Google unlawfully controls two of the three parts of the advertising technology market: the publisher ad server market and ad exchange market. Brinkema dismissed the third part of the case, determining that tools used for general display advertising can’t clearly be defined as Google’s own market. In particular, the judge cited the purchases of DoubleClick and Admeld and said the government failed to show those “acquisitions were anticompetitive.”
“We won half of this case and we will appeal the other half,” Lee-Anne Mulholland, Google’s vice president or regulatory affairs, said in an emailed statement. “We disagree with the Court’s decision regarding our publisher tools. Publishers have many options and they choose Google because our ad tech tools are simple, affordable and effective.”
Attorney General Pam Bondi said in a press release from the DOJ that the ruling represents a “landmark victory in the ongoing fight to stop Google from monopolizing the digital public square.”
Potential ad disruption
If regulators force the company to divest parts of the ad-tech business, as the Justice Department has requested, it could open up opportunities for smaller players and other competitors to fill the void and snap up valuable market share. Amazon has been growing its ad business in recent years.
Meanwhile, Google is still defending itself against claims that its search has acted as a monopoly by creating strong barriers to entry and a feedback loop that sustained its dominance. Google said in August, immediately after the search case ruling, that it would appeal, meaning the matter can play out in court for years even after the remedies are determined.
The remedies trial, which will lay out the consequences, begins next week. The Justice Department is aiming for a break up of Google’s Chrome browser and eliminating exclusive agreements, like its deal with Apple for search on iPhones. The judge is expected to make the ruling by August.
Google CEO Sundar Pichai (L) and Apple CEO Tim Cook (R) listen as U.S. President Joe Biden speaks during a roundtable with American and Indian business leaders in the East Room of the White House on June 23, 2023 in Washington, DC.
Anna Moneymaker | Getty Images
After the ad market ruling on Thursday, Gartner’s Andrew Frank said Google’s “conflicts of interest” are apparent by how the market runs.
“The structure has been decades in the making,” Frank said, adding that “untangling that would be a significant challenge, particularly since lawyers don’t tend to be system architects.”
However, the uncertainty that comes with a potentially years-long appeals process means many publishers and advertisers will be waiting to see how things shake out before making any big decisions given how much they rely on Google’s technology.
“Google will have incentives to encourage more competition possibly by loosening certain restrictions on certain media it controls, YouTube being one of them,” Frank said. “Those kind of incentives may create opportunities for other publishers or ad tech players.”
A date for the remedies trial hasn’t been set.
Damian Rollison, senior director of market insights for marketing platform Soci, said the revenue hit from the ad market case could be more dramatic than the impact from the search case.
“The company stands to lose a lot more in material terms if its ad business, long its main source of revenue, is broken up,” Rollison said in an email. “Whereas divisions like Chrome are more strategically important.”
Jason Citron, CEO of Discord in Washington, DC, on January 31, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
The New Jersey attorney general sued Discord on Thursday, alleging that the company misled consumers about child safety features on the gaming-centric social messaging app.
The lawsuit, filed in the New Jersey Superior Court by Attorney General Matthew Platkin and the state’s division of consumer affairs, alleges that Discord violated the state’s consumer fraud laws.
Discord did so, the complaint said, by allegedly “misleading children and parents from New Jersey” about safety features, “obscuring” the risks children face on the platform and failing to enforce its minimum age requirement.
“Discord’s strategy of employing difficult to navigate and ambiguous safety settings to lull parents and children into a false sense of safety, when Discord knew well that children on the Application were being targeted and exploited, are unconscionable and/or abusive commercial acts or practices,” lawyers wrote in the legal filing.
They alleged that Discord’s acts and practices were “offensive to public policy.”
A Discord spokesperson said in a statement that the company disputes the allegations and that it is “proud of our continuous efforts and investments in features and tools that help make Discord safer.”
“Given our engagement with the Attorney General’s office, we are surprised by the announcement that New Jersey has filed an action against Discord today,” the spokesperson said.
One of the lawsuit’s allegations centers around Discord’s age-verification process, which the plaintiffs believe is flawed, writing that children under thirteen can easily lie about their age to bypass the app’s minimum age requirement.
The lawsuit also alleges that Discord misled parents to believe that its so-called Safe Direct Messaging feature “was designed to automatically scan and delete all private messages containing explicit media content.” The lawyers claim that Discord misrepresented the efficacy of that safety tool.
“By default, direct messages between ‘friends’ were not scanned at all,” the complaint stated. “But even when Safe Direct Messaging filters were enabled, children were still exposed to child sexual abuse material, videos depicting violence or terror, and other harmful content.”
The New Jersey attorney general is seeking unspecified civil penalties against Discord, according to the complaint.
The filing marks the latest lawsuit brought by various state attorneys general around the country against social media companies.
In 2023, a bipartisan coalition of over 40 state attorneys general sued Meta over allegations that the company knowingly implemented addictive features across apps like Facebook and Instagram that harm the mental well being of children and young adults.
The New Mexico attorney general sued Snap in Sep. 2024 over allegations that Snapchat’s design features have made it easy for predators to easily target children through sextortion schemes.
The following month, a bipartisan group of over a dozen state attorneys general filed lawsuits against TikTok over allegations that the app misleads consumers that its safe for children. In one particular lawsuit filed by the District of Columbia’s attorney general, lawyers allege that the ByteDance-owned app maintains a virtual currency that “substantially harms children” and a livestreaming feature that “exploits them financially.”
In January 2024, executives from Meta, TikTok, Snap, Discord and X were grilled by lawmakers during a senate hearing over allegations that the companies failed to protect children on their respective social media platforms.