Seven Perspectives for Realizing a Data-Driven
SocietyJune 6th, 2022
Digital Policy Forum Japan1

I. Core vision of a data-driven society“On the threshold of the 21st century, Japan must take revolutionary yet realistic actions
promptly, without being bound by existing systems, practices and interests, in order tocreate a ʻknowledge-emergent society,ʼ where everyone can actively utilize information
technology (IT) and fully enjoy its benefits.”

This is the first sentence of the e-Japan Strategy adopted by the IT Strategy Headquarters(Advanced Information and Telecommunications Network Society Promotion Strategic
Headquarters) in January 2001.

Some 20 years have passed since the conception of

the e-Japan Strategy, and while Japan has become the world's most advanced indeveloping broadband infrastructure, including optical fiber networks, digitalization invarious areas, including government, healthcare, and education, has been noticeably slow.
We will examine the reason behind this from two aspects. First, looking at the corporate
management level of digital investment, digital investment in Japan has been primarily
aimed at cost reduction. It has not focused on creating new value or revenue opportunities.
Another criticism is that digital investment has focused only on easy-to-reach and visible
areas, such as advanced terminals and high-speed lines (digitization), thus turning themeans into the end. On the other hand, digital investment has lacked a BPR-oriented2
perspective that reviews the business process itself (digitalization).
The other aspect is that digital technology providers have been reluctant to adopt
This proposal is a summary, made as comprehensively as possible, of the discussion at the DPFJ. Still,there may be cases in which the opinions of individual DPFJ members (incorporators and proponents) or
the opinions of organizations to which they belong differ from those expressed in this proposal.
2
BPR (Business Process Reengineering) means not merely the introduction of digital equipment andservices but also a fundamental review of the business process itself, taking advantage of the characteristics
of digital technology.
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openness, which ensures the interoperability of different devices and services, even amid
rapid technological innovation. They prefer to protect their current interests (oldsystems) and pursue vendor lock-in. At the same time, new digital technologies havefocused on the supply-oriented perspective of technological feasibility, lacking aperspective that considers how to solve problems facing the real world with familiar digitaltechnologies and whether the solutions are self-sustainable and scalable.
Data-driven society / a society we should strive forJapan faces a wide range of challenges, but one of the biggest is population decline.
Japan's population is estimated to decline to about 60 million in 21003. This is about half
the population at its peak in December 2004 (about the same as the population at the endof the Taisho era, some 100 years ago). If no measures are taken, the significant
contraction of the economy will likely have serious consequences, including fiscal deficits,
increased social security costs, and a decline in diplomatic power (proportional toeconomic power).
In this context, data is the key to a thriving economy in the 21st century. Through thecollection, accumulation, and analysis of big data, it is necessary to shift from problem
discovery to problem-solving, from past analysis to future prediction, and from partial
optimization to overall optimization while utilizing artificial intelligence.
In doing so, it is vital to maintain the cycle of (a) identifying issues in our socio-economic
framework, (b) studying solutions to those issues using IoT devices, etc., (c) verifying theoperational feasibility of the solutions, (d) improving the solutions. Data circulation thattranscends the boundaries between the real world and cyberspace is at the core (vision)of an ideal data-driven society.
Furthermore, in the past few years, we have experienced two ongoing global crises:
COVID-19 and the invasion of Ukraine. Amid these global crises, the pros and cons ofdigital technology are also becoming more evident than ever before. It is the responsibilityof our generation to take the lessons learned and implement them in society.
Based on these fundamental concepts, the following summarizes the seven perspectives
required to achieve a data-driven society.

3"Population Projections for Japan's Future (2017 Estimates)," National Institute of Population and Social

Security Research (July 2017).

2

II. Data-driven society: the seven perspectives
1. A problem-solving society

We are in the process of building a data-driven society. We will solve various issues facing
the economy and society through big data analysis and solution development andoperation. The quantity, quality (granularity), and distribution speed of data will be
crucial for building a problem-solving society in the face of rapid population decline andsevere fiscal constraints in the future.
Therefore, (1) developing a data linkage infrastructure, (2) establishing the right to selfmanage data, and (3) accelerating government digitalization will be extremely important.
1-1) Developing data linkage infrastructure
Until now, attempts at informatization (digitization) have focused only on areas suchas administration, education, and healthcare. The walls of vested interests have largely
thwarted even these attempts. However, if we envision a data-driven society, data linkage(systems of systems functioning as a unified virtual system) that transcends theboundaries of such areas (systems) will play an important role.
To achieve this kind of data linkage, it is essential to ensure interoperability among data
sets by standardizing data formats, to develop a trading market for data distribution, torealize data linkage (by third parties) through the use of common APIs (Application
Programming Interface), and to ensure interoperability among data linkage
infrastructures. To break down barriers between areas, we should adopt a cross-industry
approach rather than separate, industry-specific methods in developing an environment
to promote data distribution. In addition, we need to change tacit know-how into
established knowledge by combining lifeless data collected by the IoT (Internet ofThings) with human actions (know-how) through data linkage, and build a framework forthe next generation to share this knowledge.
It is also necessary to expedite the creation of an institutional framework for data4 linkage.
For example, the European Commission has published a framework for data-related laws.
Japan must also urgently consider an institutional framework5 (data competition law) to4

Here, data includes personal and non-personal data generated by IoT devices, etc.

5

In February 2022, the European Commission published “Data Act : Proposal for a regulation on
harmonized rules on fair access to and use of data.” This proposal is based on the European Data Strategy

3promote data utilization and prevent data monopolization (oligopoly). This future
legislation must work in conjunction with the Personal Information Protection Law(protection and utilization of personal information) and establish a competitive
framework in the digital market (prevention of oligopoly and promotion of competitionin the digital market).
1-2) Establishing the right to self-manage data
Given that data monopolization by platform operators is the primary obstacle to soundcompetition, it is necessary to establish a mechanism that incorporates the right to selfmanage data by design, from the institutional- and system-design-stages, whendeveloping a data linkage infrastructure.
In building a mechanism that allows self-management and distribution of information
belonging to and generated by oneself based on one's clear intention, it is necessary torealize a cooperative system of authentication consisting of trust services such as
electronic certificates stored in smartphones through public-private partnerships, proofof authenticity of data holders, verification of data non-tampering, timestamps for datatransmission, and confirmation of delivery (e-delivery). These trust services should beinteroperable through a coordinated system by Europe and other major countries.
1-3) Accelerating government digitalization
In September 2021, Japan launched the Digital Agency to lead the government's digitalpolicy. The digitalization of the public sector is essential for realizing a problem-solving
society, and we look forward to the efforts of the Digital Agency. For the government's
digitalization efforts, three points are of immediate importance: ensuring openness,making the benefits visible, and opening up the system, as well as strengthening thegovernance of organizations.
First, openness (transparency) in system procurement and policy-making processes
must be maintained continuously. In particular, measures closely related to people's lives,(February 2020). It aims to make more data available to society as a whole, including making the data
generated by IoT devices accessible to the users of the devices (whether natural or legal persons) and,upon their request, to third parties other than the manufacturers of the devices in question (data owners)
for a reasonable fee (excluding gatekeepers as defined in the Digital Markets Act). The Commission alsoplans to publish industry-specific data bills in the future, such as for health care, automobiles, etc.

4such as cloud computing of government information systems pursued by the Digital
Agency, have many stakeholders and require a careful review process. We would like to
see the Digital Agency take the initiative in creating a forum for a wide variety of
discussions, information dissemination, and exchanging opinions that make maximum
use of digital technology.
Second, it is indisputable that the purpose of government digitalization should be to
improve its usefulness to the people. At the same time, however, it must also be clear what
added value digitalization will bring to the relevant agencies within government
departments. Therefore, a new budget system that provides incentives to the various
ministries is worth considering: e.g., a mechanism whereby a portion of the cost savings
from digitalization is used for new policy areas.
In addition, consideration should be given to adopting openness for a one-stopgovernment system. As with the opening of APIs for information systems in private
financial institutions, we should establish a mechanism that enables private companies tobecome aggregators and competitively provide one-stop government services by opening
APIs for government information systems and freely combining authentication
infrastructure, data (public databases), system functions, etc. Such efforts, with theDigital Agency taking the initiative to solve issues, can be beneficial in terms ofidentifying bottlenecks that prevent the openness of administrative systems throughcollaboration with the private sector.

2. A decentralized and shared economy

With the advent of digital technology and the widespread use of the Internet in theprivate sector, Web 1.0 became a reality, enabling traditional media and a wide variety of
information providers, including businesses, to deliver information online to users. Web
1.0 was followed by the emergence of Web 2.0, a world in which the general public, who
had previously been merely information users, could transmit and share information
widely. In the evolution of a Web 2.0 society, platform operators appeared as third parties
that acted as intermediaries between information providers and information users. Whilethe existence of platform operators has been credited with dramatically improving theefficiency of information access, various problems have been pointed out, as described
below.
In the world of digital technology, for example, computing capacity has responded to
the needs of the time through a mix of centralization and decentralization, from the eraof mainframe-centered centralization (of computer resources) to the age of5

decentralization with the spread of personal computers, to the return of centralization
through cloud computing, to partial decentralization through the use of edge computing,and so on.
How will we address the issues that platform operators are facing? When considering
the answer, it could become a discussion on how to deal with platform operators, who
represent an era of centralization, and how to shift the emphasis from over-centralization
toward decentralization slightly.
In this sense, the society we should aim for is a decentralized and shared economy (thebest mix of decentralization and centralization), and two critical issues for consideration
here are (1) advancement of measures to enforce platform responsibilities and (2)utilization of blockchain technology (to accommodate Web3).
2-1) Promoting measures toward platform operators
In an era where data plays a central role in our socio-economic system, platform
operators are taking advantage of the characteristics of two-sided markets6, the network
effect 7 , zero marginal costs 8 , and non-competing goods 9 to increase their market
dominance and exercise market dominance over other sectors. In particular, the personal
information that platform operators obtain goes far beyond the benefits that users receivein return and provides excess profits to the platform operators. As a result, a
concentration of wealth may lead to economic stagnation through underinvestment andover saving while the labor share remains low. To solve these problems, reviewing theoperation of competition laws, promoting data distribution, and creating new markets will
be necessary.
First, concerning reviewing the operation of competition laws, the current Antimonopoly
Act lacks the criteria for recognizing the market dominance of platform operators. It has
6
A two-sided market means that the platform operator's market consists of two markets: a market fortrading between the platform operator and the companies operating on its platform, and a market fortrading between the platform operator and the users (end users). The conversion and accumulation of value
take place across these two markets.
7
A network effect is a process whereby the following occurs; an increase in the number of platform users
leads to the accumulation of personal information about users, and businesses seeking this accumulated
personal information further participate in the platform. The number of businesses participating in theplatform increases the number of options available to users, which leads to a further increase in thenumber of users.
8
In the case of digital goods, the marginal cost becomes zero because there are no additional costs
associated with producing additional goods.
9
Data is a non-competitive good because its value does not decrease when one person consumes (uses) it,
and others can benefit from the same value.

6become challenging to prove abuse of market dominance, such as predatory fees.
Therefore, it is necessary to consider revising the law to a new competition law, modeled
after the European Digital Markets Act and others, and including an ex-ante regulatory
element that applies regulations to platform operators that exceed a specific size10. To
measure a specific scale, in addition to sales, the government could adopt indices that
accurately reflect the reality of Internet-related markets, such as the number of monthly
active users (MAU), the number of registered users, etc.
In addition, platform operators often bundle their services. Therefore introducing amechanism to disclose the structure and process of how these businesses make profits
from user data is also worth considering, such as independently recording revenue forbusiness units that have acquired MAUs above a specific size. Based on such a mechanism,
there could be a functional separation of platform operators (e.g., limiting mutual use of
personal data between different services or allowing competing operators to use data
under identical conditions provided that they pay appropriate compensation) with
objectively recognized market dominance11.
Next, from the standpoint of facilitating data distribution, ensuring data portability,
which allows platform operators to retrieve stored data (personal and corporate data) on
their own and transfer this data to another entity, is a possible solution. Developing
information banks and data distribution markets that delegate these business processes
to third parties will also contribute significantly to data distribution. In particular,
developing a data distribution market will effectively clarify the economic value of data as
an intangible asset.
Furthermore, to encourage the creation of new markets, it is imperative to improve
workforce skills and, specifically, to create an environment that fosters digital humancapital. Measures to support venture businesses will also be essential. In doing so, it isCompetition laws generally have an ex-post regulatory character. Ex-post regulation will continue to beeffective, but the government should consider another approach (considering ex-ante regulatory elements
referred to in these recommendations) in cases where conventional regulatory measures are difficult toapply, such as in digital markets. For example, dominant-carrier regulation in The Telecommunications
Business Act is intentionally ex-ante. In contrast, the Antimonopoly Act provides ex-post regulation, andthere have been considerations that their overlapping application (from differing angles) may be possible insome cases (see "Guidelines for Promotion of Competition in the Telecommunications Business Field" by
the Japan Fair Trade Commission and the Ministry of Internal Affairs and Communications). Still, it would
be necessary to reorganize these factors between business laws and new competition laws once again.
11
From a standpoint of eliminating market dominance, one method to achieve this, called functional
separation, is to create an information barrier or other organizational and operational separation between
the division with market dominance (A) and other divisions (B) to ensure equality between the entity thatowns A and other competing entities that use A. If this functional separation is not enough, there is also atechnique known as structural separation, which organizationally separates A from B.
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necessary not simply to transplant overseas business models to Japan but to actively
support initiatives for distinct capabilities that aim to develop unique technologies,
establish profit models, and help foster the development of companies that can expand
globally in the future. It is also essential to create a community for such distinct skills.
2-2) Utilizing blockchain technology (compatible with Web3)
Recently, services utilizing blockchain technology (distributed ledger technology) havedeveloped rapidly. The spread of crypto assets such as Bitcoin has been a typical example.
Still, we can expect various applications such as NFTs (non-fungible tokens),
decentralized finance (DeFi), and distributed autonomous organizations (DAOs) toemerge. Web3, with its related technology suite and developed business model, has also
gained high expectations. However, such applications are still in their infancy.
Indeed, while web 1.0, which offered information from suppliers to users in one
direction, has progressed to web 2.0, where both sides supply information in either
direction, platform operators have gained market dominance by intervening between
suppliers and users in web 2.0 and have distorted market competition. We must counterthe presence of such entities with corrective measures, urgently.
Concurrently with these measures, however, it will be essential to discuss the future
landscape of cyberspace. Although it is not yet certain whether the world of Web3 will
arrive, discussions of the significance and state of the decentralized and shared economy
that Web3 embodies provides an excellent opportunity to consider the future of theInternet's service layer.
We can expect Web3 to foster loose communities of service providers and users, but it
is unlikely that Web3 will encompass all socio-economic activities. Instead, we can expect
a long coexistence between a traditional centralized society and a decentralized, sharedsociety such as Web3, where the latter gradually takes over.
Therefore, it is best to precisely follow trends in Web3 and only facilitate clarificationof the minimum required targets, such as ensuring transparency and accountability ofbusiness models, etc. It would also be best to further accelerate Web3-related innovation
by clarifying operational policies (ensuring policy predictability), such as implementing
specific rules through a soft-law approach only and not through hard laws and regulations.
On the other hand, it is also important to analyze trends in Web3 through fixed-point
observation.

83. Converged content distribution

The digital content market is worth over \13 trillion 12 , and its growth will havesignificant economic ripple effects. In addition, digital content has cultural ripple effects,
such as improving a nation's image and cultural understanding. Therefore, it is essential
to implement vitalization programs to expand the size of the market and bring its output
up to the optimal level for society. On the other hand, there has been a debate on thenature of digital content policy in terms of the need for procedures to protect thestandards of expression and pluralism while curbing uneconomical external factors suchas inappropriate content.
However, the environment of the digital content market is changing radically.
Content production, distribution, and consumption have become wholly digitalized, witheverything processed as data. Content has become one of the key digital goods in a datadriven society. In particular, since the web 2.0 era, the market environment has become
one in which everyone is both a creator and a user (consumer) of content. In Web3, theuse of NFTs (a concept of scarcity for digital goods) and the use of complex cyberspaces
such as the metaverse is growing, and new forms of secondary content use, sharing,
circulation, etc., have emerged. In addition, we expect the environment surrounding
communities and media to change even more rapidly, including using DAOs.
Under these circumstances, conventional content policies have based themselves on
differences in utilization technologies and transmission channels, and it is upon thesepolicies that policymakers have discussed intellectual property strategies and IT strategies
separately while shaping policy. However, given the radical changes in the digital
environment described above, it is necessary to examine once again the nature ofconverged content distribution within the overarching digital policy framework. In
addition, as cross-border digital content distribution becomes increasingly significant, it
is also necessary to maximize the global distribution of content.
Therefore, to promote the distribution of converged content, it is vital to (1) achieve
flexibility in content distribution, (2) ensure media diversity without limitations due totransmission channels, and (3) address global issues.
3-1) Achieving flexibility in the content distribution environment

12("Japan and World Media x Digital Content Market Database 2022 Vol. 15 [Preliminary Report]",February 2022, Human Media, Inc.)

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In the past, there have been discussions about the convergence of
telecommunications and broadcasting. The discussions of the public nature of broadcast
media and those of the development of transmission channels sometimes became
conflated in the process, leading to confusion. An important principle to keep in mind isthat the function of providing information (content production) by broadcast media,
including local media, is essential in society and should be highly valued. In addition, as
issues such as the spread of fake news and slander on social networking services become
increasingly prevalent, the function of the media (including its role as a fact-checking
organization) to earn society's trust should continue to be highly valued.
In the EU, instead of basing regulations on transmission channels, webcasting, likebroadcasting over the airwaves as a non-linear service, is regulated as an audiovisual
service13. Additionally, non-linear on-demand services are also subject to rules such as notincluding content that incites racial or religious hatred and separating advertisementsfrom programming.
Video sharing platform services are also subject to the above regulations. In the future,
UGC (user-generated content), shared on social networking services and other platforms,
will also be subject to content moderation and other rules14.
In the future, Japan must seriously consider shifting to a system of regulations thatconsiders the social impact of content and broadcast media, rather than dichotomizing
regulations into telecommunications and broadcast media.
In addition, content distribution infrastructure should continually develop,
maximizing its efficiency by introducing cloud services and shared facilities to continue
to fulfill its role as broadcast media in the future.
3-2) Ensuring media diversity without limitations due to transmission channels
If access to broadband services through optical fiber networks (including 5G/6G)
becomes a universal service, large-capacity video transmission services such as IP
multicast will be available across Japan without regional disparities. Therefore, to secure
broadband transmission lines at a minimum national level while avoiding overlapping
investment, it may be possible to systematically allow a portion of the broadcastingtransmission network to be wireless.
In addition, a content policy that goes one step ahead in terms of its reach should be

See the EU's AVMSD (Audiovisual Media Services Directive) and DSM (Digital Single Market
Strategy).
14
These regulations will be applied under the DSA (Digital Services Act), to be enforced in the future.
13

10

considered, such as the introduction of a (pay-as-you-go) subscription model on acollaborative content distribution platform and the use of NFTs to guarantee the rarity ofcontent and its distribution.
3-3) Addressing global issues
As digital content distribution across borders increases, it is becoming increasingly
important to ensure proper transactions between global platform operators and content
providers and to take measures to protect consumers. In addition, anti-piracy measures
should not be confined to a single country but rather require cooperation among nations
and coordination among private businesses operating on a global scale. Furthermore,
many issues need urgent sorting out regarding the metaverse and NFTs, such as the lackof domestic and international systems to protect developers' rights and avatars.
To this end, implementing "digital special zones" to identify institutional or customary
obstacles to the distribution of digital content and redefining the rules should be
encouraged through international collaboration, and establishing review panels of
relevant parties should be considered to strike a balance between protection andutilization (creation). At the same time, efforts should be made to develop contentcreating human capital that can work globally.

4. Data risk management

In a data-driven society where digital technology permeates society and data circulates
beyond the boundaries of the real and cyber worlds, managing data risks to protect datafrom tampering thoroughly is essential. As already mentioned, if data linkage (a systemof systems) that extends beyond individual domains advances through digital technology,
the effects of data tampering will not be confined to a single realm; they will extend to theentire socio-economic system. Moreover, the greater the influence of data, the moresignificant its impact on our socio-economic system.
Therefore, from a data risk management perspective, we will address two points: (1)promoting risk countermeasures that transcend organizational boundaries and (2)establishing data security measures.
4-1) Promoting risk countermeasures that transcend organizational boundaries

11Given the growing severity of cyber threats and the rising geopolitical risks in the AsiaPacific region, there is an urgent need to create a framework for comprehensive risk
assessment in cyberspace as part of digital policy. Since the boundaries between public
and private sectors, domestic and foreign in cyberspace, are ambiguous, there is an urgent
need to organize risk assessment systems and allocate roles related to risk response
between public and private sectors.
In particular, it is important to envision a wide range of risk scenarios in cyberspace (moresevere than ever before) and to consider a wide range of issues such as the division ofroles between the public and private sectors for each case, information sharing, andcoordination mechanisms, and to share rational and objective decision-making in advanceto keep residual risks within an acceptable range. In particular, while being conscious ofrecent heightened geopolitical risks, we expect precise examination by the government
from a perspective of how to maintain the functions of critical infrastructure sectors in
the event of a centralized cyber-attack with suspected state involvement (mission
assurance to prevent the breakdown of essential services and ensure their continuity ofprovision).
4-2) Establishing data security measures
Data security will become much more important in a data-driven society. To ensure
confidentiality, integrity, and availability, which are the cornerstones of information
security, first, from the perspective of confidentiality, it is necessary to consider, forexample, that highly confidential data held by public entities should be stored in Japan,
where domestic laws secure it. Specific consideration should also be given to theorganization of data supply chains. In addition, efforts should be made to develop
guidelines to promote the use of a Software Bill of Materials (SBOM) 15 to address
software supply chain risks.
In addition, countermeasures against fake news are necessary to secure data integrity.
In the recent invasion of Ukraine, the mass dissemination of fake news has caused a great
deal of confusion. In some aspects, fact-checking organizations' efforts have minimized
these situations' deterioration. Regularly, efforts are made to minimize fake news
suspected of state involvement (e.g., labeling with alerts and warnings, banning retweets,and suppressing displays) as countermeasures. Still, there are many issues to consider,such as whether maintaining a similar system in emergencies is sufficient and how to

In the U.S., a federal government initiative, the Executive Order on Improving the Nation's
Cybersecurity (May 2021), addressed SBOMs. In July of the same year, the NTIA of the Department ofCommerce drafted and published "The Minimum Elements for a Software Bill of Materials."15

12establish a strategy for the state to analyze false information as part of its security
measures16.
Furthermore, it is necessary to hasten discussions on how the right of cyber-self-defense
should be exercised (including the scope of permissible active defense) in cases where
cyber-attacks cause extensive damage and have suspected state involvement.

5. Internet freedom

The Internet is now the basic infrastructure of our socio-economic system. Because ofthis, the management and operation systems of the Internet (Internet governance) is an
essential subject of discussion that affects the nature of the Internet. The Internet hasdeveloped based on the principle of Internet freedom, allowing different networks andapplications to interoperate beyond the bounds of national regulations and controls while
maintaining the basic principles of autonomy, decentralization, and cooperation.
However, while taking into account the fact that the Internet was developed and operated
as a U.S. research and development project (NSFNET) until its commercialization(opening to the private sector) in 1991, the critical issue is the extent to whichgovernment reach should be allowed in the Internet's management and operation systems.
The recent invasion of Ukraine has been a significant catalyst for deepening these
discussions.
Thus, the essential discussions on Internet freedom are (1) the application ofinternational rules in cyberspace, (2) the acceleration of free cross-border data
distribution, (3) Internet governance in a broad sense, plus (4) Japan's contribution topromoting international discussions.
5-1) Application of international rules in cyberspaceFirst, there is a debate about the extent to which national (government) reach isacceptable from a security standpoint in cyberspace. The pros and cons of applying
international law in cyberspace have been discussed at the United Nations Group ofGovernment Experts (GGE).

The EU Digital Services Act (DSA) includes a crisis response mechanism that allows the state to be
involved in social media under a state of emergency. In Japan, in addition to discussing what constitutes astate of emergency, it is necessary to carefully consider the balance between security and freedom of
expression/freedom of the press.
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In this debate, there is a divide between the former Western Bloc that believes thatconventional international rules should apply to cyberspace as they are, and China, Russia,
and others. China, Russia, and others claim that the U.S. controls current cyberspace(Internet) rules. Many developing countries also share this view17.
In light of the fact that severe cyber-attacks were conducted along with armed attacks in
the invasion of Ukraine, it is necessary to advance more concrete discussions on theapplication of international law in cyberspace, including how the right of self-defense
should be exercised.
5-2) Acceleration of free cross-border data distribution (international digitalizationagreements)
Discussions on the nature of cross-border data distribution began in the 1980s andwere gradually encompassed in the discussions on the liberalization of trade in services atthe WTO. Today, it is common to offer services (and acquire personal information, etc.)from outside of a country's sovereignty. There is a trend toward data localization in somecountries to prevent data from leaking overseas. However, there are also concerns thatdata localization will create barriers in borderless cyberspace, impeding free economic
activity and undermining the right to know by undermining the free distribution ofknowledge and information.
Therefore, rather than aiming for commonality of systems across countries, such as
ensuring transparency for data distribution, ensuring the interoperability of data acrosssectors, ensuring privacy and security for data handling, and realizing a trust service
system, countries should aim for a standard interface between each nationʼs system where
differences exist and ensure the interoperability of mechanisms for cross-border data
distribution. The first step should be to build consensus for international collaboration
among like-minded countries and then to work toward loose cooperation (bilateral or
intra-regional cooperation agreements) in the form of international digital agreements.
The former Western Bloc, including the U.S., Japan, and Europe, argue that because private investment
built cyberspace, it is reasonable to assert that private activities in cyberspace should be as free as possible,that governments should keep regulation to a minimum, and that existing international law should apply incyberspace.
In contrast, China, Russia, and others argue that the current cyberspace is based on U.S.-led rules, thateach state must manage cyberspace in the name of national sovereignty, and that while international laws,
such as the UN Charter's provisions on national sovereignty, peaceful dispute resolution, and noninterference in internal affairs are important (applicable), the application of the right of self-defense andinternational humanitarian law lacks validity.
17145-3) Realization of Internet governance in a broad sense
The issues of applying international rules in cyberspace and accelerating the freemovement of data across borders are the essence of Internet governance in the narrow
sense of the term. However, Internet governance in a broad sense is also critical inensuring Internet access worldwide, both in regular times and in emergencies.
It is expected that discussions on universal connectivity of the Internet and strengthening
public support for human capital development in developing countries will become more
concrete. Now that COVID-19 has further heightened awareness of the importance ofdigital technology, we must reaffirm the importance of closing the gap between countries(regions/peoples) that have access to the Internet and those that do not and take concrete
action to address this issue.
5-4) Japan's contribution to promoting international discussion
The Internet Governance Forum (IGF) was established at the World Summit on
Information Society (WSIS), held in November 2005, and has convened annually. The
IGF will be held in Japan in the fall of 2023. In preparation for the IGF meeting in Japan,
industry, academia, and government should work together to develop a new agenda18 forInternet governance and a future action plan (the IGF is currently scheduled to be held
until 2025) and to take action to realize an undivided world through the Internet withJapan taking the lead in this effort.

6. Transparency of rules

In traditional discussions, the rules considered were legal regulations (hard laws). Laws
and regulations fall into two broad categories: economic regulations and social regulations.
Economic regulations, which seek order in the economic system, have undergone a seriesof deregulations in line with emphasizing market competition and reducing the degree ofgovernment reach. On the other hand, there have been an increasing number of issues
that are difficult to deal with under conventional economic regulations, such as the rise

The agendas for discussion could include the application of international rules in cyberspace (5-1), freecross-border data distribution (5-2), Internet governance in a broad sense (5-3), and international
harmonization of rules (7-2).
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of platform operators. On the other hand, the importance of social regulations has gainedwide recognition from the standpoint of user protection, etc. Still, some rules are notappropriate to enforce through legislation or compulsory measures, and some regulations
have frameworks that cannot keep up with reality because of rapid technologicalinnovations.
In considering digital policy, amidst the remarkable technological innovation and changes
in market structure, there is a need to reach a consensus on what form of rules isappropriate to apply in which cases, including co-regulation through public-private
partnerships and self-regulation by the private sector. In addition, these rules should aim
to achieve the following three goals: promoting competition (including improving userconvenience), ensuring privacy, and ensuring security. When these three factors arebalanced, we can say that trust is established in cyberspace.
Although the rules for digital policy are diverse, they must meet the requirements of (1)ensuring effectiveness and (2) ensuring transparency and predictability.
6-1) Ensuring the effectiveness of rules
In the digital marketplace, for example, dramatic changes are taking place in the stateof telecommunications networks. Hardware and software in network functions are
increasingly separated, with software offered as a cloud service to define hardware
functions. Additionally, AI-based orchestration (resource allocation) is now taking placevirtually. The current Telecommunications Business Act, based on conventional
principles of equipment installation, does not account for this kind of hardware/software
separation.
Therefore, concrete discussions should take place to significantly revise the framework of
the Telecommunications Business Act, a rule that may become ineffective in the future.
In doing so, the scope of discussion should include NNI (Network/Network Interface)and SNI (Service/Network Interface) openness, including openness through APIs.
6-2) Ensuring transparency and predictability of rules
In the case of self-regulation and co-regulation, which are gaining importance as rulemaking instruments emphasizing soft law, the government summarizes the primary policy
direction, private organizations and businesses play a proactive role in its implementation,and the government objectively evaluates their effect. Organizing the criteria forachieving transparency and objectivity in self- and co-regulation (i.e., establishing16

guidelines) is necessary.
In doing so, we must be clear about the benefits we seek from co-regulation, etc. This isbecause it is necessary to avoid, for example, administrative negligence attempting to
avoid the costs associated with the enactment of hard laws or the use of co-regulation orother measures when stricter regulation is more appropriate because of lobbying from
regulated businesses. It is also necessary to ensure consistency with the EU19 and otherbodies pursuing similar initiatives.
In considering the transparency of rules, we also have to consider the wide range ofsubjects to which these rules apply. For example, decisions made by AI are not made by
an objective and lifeless entity but rather by learned data and algorithms set up by thedeveloper. Therefore, it is necessary to promote the development of tools and guidelines
to ensure the transparency of algorithms.

7. International harmonization of rules

The traditional telecommunications world has emphasized ensuring interoperability,
enabling the interconnection and operation of telecommunications networks in various
countries.

Standardization

has

been

promoted

mainlybytheInternational

Telecommunication Union (ITU), the oldest UN organization dedicated to such matters.
However, rapid technological innovation has increased the importance not only of official
standardization (de jure standards) but also of de facto standards created by thecompetition clause. Furthermore, as the Internet spread around the world, maintaining
the principles of independence, decentralization, and cooperation while ensuring
interoperability, rule formation in the form of standardization was not limited to technicalaspects but expanded into a wide range of socio-economic areas such as government reachin cyberspace, freedom of expression, measures against slander and libel, prevention of
fake news, and so on. While the expansion of such rule formation is in a sense natural
since digital policy is something that involves all areas, on the other hand, there have been

19

In May 2015, the European Commission adopted and published the Principles for Better Self- and Co-

regulation. The Principles fall into 2 phases, the conception and implementation phases of the regulation,
each with 5 points of consideration (10 points in total). (https://digitalstrategy.ec.europa.eu/en/news/principles-better-self-and-co-regulation-endorsed-better-regulationpackage#)17

an increasing number of cases in which the agendas and conflicts of interest of various
countries have come to light.
In cyberspace, where there are no national borders, we need (1) harmonization ofrules/interoperability and (2) international harmonization of soft laws.
7-1) Harmonization of rules / interoperability
Since borderless cyberspace requires effective, transparent, and predictable rules, aninternational discussion is necessary. In doing so, it is essential to ensure interoperability
to accommodate differences in regulations, rather than standardizing or making rules
identical.
In today's borderless cyberspace, where service providers offer their services in multiple
countries, the extraterritorial application of regulations through hard laws would result ina situation where a single country is subject to various legal systems, and domestic
operators subject to these regulations would not be able to cope with such a situation.
Therefore, it is essential to continue carrying out policy dialogue (including developing
assessment tools for interoperability) and other ongoing implementations to achieveinternational harmonization (interoperability) of hard laws.
7-2) International harmonization of soft laws
International collaboration efforts are required not only in hard law but also in rule
formation with emphasis on soft law, such as self- and co-regulation. So far, however,there have been no examples of such international collaboration.
For example, in Japan, the debate over network neutrality has emphasized rulemaking(guideline-making) based on a co-regulation approach, whereas other countries haveadopted various strategies. For this reason, it is vital to deepen the discussion on current
issues of network neutrality in international forums, etc. These discussions are directly
related to the debate over Internet governance.

III The next stage

This text summarizes the discussions that have been held since the establishment of the
DPFJ in September 2021 through online meetings and open conferences 20 and is
DPFJ was established in September 2021 and simultaneously published five discussion agendas: (1)Basic perspectives on digital policy in a data-driven society, (2) Global borderlessness and the state of20

18

organized into seven perspectives that provide a digest of the key issues surrounding
digital policy.
The DPFJ will continue to promote in-depth discussion of the seven perspectives while
simultaneously considering the need to discuss the following three items from mediumto long-term perspectives.
First, it is necessary to envision concretely (model) what a digital society will look likein the mid- to long-term. In this text, we have presented a data-driven society as
something to strive for. However, digital policy is related to all socio-economic structures,and while recognizing rationally that digital technology is an excellent tool for controlling(and in some cases monitoring) society and the economy, Japan, as a country that protects
democracy, freedom of the press, and freedom of expression, needs to consider how to
use digital technology and how to establish and implement rules and regulations for theuse of digital technology to be in line with its identity as a nation.
Second, all stakeholders need to be involved in the above discussions. While there havebeen suggestions that policy discussions in the past were biased toward suppliers(industry), recently, there has been an increased emphasis on measures from the user's
perspective, such as consumer protection. However, as discussed from a Web3 standpoint,
the distinction between providers and users will disappear in the future, and it is necessary
to redefine civil society and consider the nature of the democratic process in envisioning
a medium- to long-term digital society in an age where everyone is a participant incyberspace.
Third, there is also a need to create an environment that widely recognizes the role of ruleconception and facilitates multi-layered discussions. We should recognize that ruleconception in a digital society is an issue that the government should strategically address,
including rule conception from a problem-solving standpoint that is independent of any
single organization, democratic and diverse rule conception that enables the fair
distribution of legitimate benefits, and harmonization of domestic and international rules.

digital policy, (3) Impact of structural changes in digital markets on digital policy, (4) Data-driven society
and the direction of intellectual property and content policy, and (5) the state of rules in a data-driven
society. Accordingly, the DPFJ held a panel discussion commemorating its establishment, entitled "Japan: A
Digitally-Defeated Nation. Which Digital Policies Should be Discussed Now?"
Subsequently, "Open Conference: Digital Policy in a Data-driven Society" was held twice in January 2022
and March 2022 as plenary sessions, bringing together the discussions of each focus group and building on
the above agendas.
For more information, see the DPFJ website (https://www.digitalpolicyforum.jp).

19This document is a draft and will be finalized by summer this year after soliciting opinions
through social networking services. Subsequently, the DPFJ will continue discussions on
digital policy (Phase II) and, as necessary, compile and disseminate proposals on essential
issues to the public, such as the emergency proposal issued in March 202221.

End"Lessons Learned from the Invasion of Ukraine and Digital Technology," DPFJ (March 2022). Based on
this urgent proposal, an emergency open conference was held that same month.
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