UPDATE — SEPTEMBER 2025: Since the Japan Fair Trade Commission (JFTC) released its October 2024 discussion paper on generative AI and competition, several developments have unfolded. The JFTC gathered feedback from domestic and global tech companies, academics, and civil society, and in March 2025 it published an interim report warning of risks from overreliance on foreign AI providers, limited access to Japanese-language datasets, and heavy dependence on major cloud vendors. In June 2025, the JFTC announced plans to monitor AI–cloud service contracts, scrutinize potential self-preferencing behaviors, and coordinate with Japan’s Personal Information Protection Commission on issues where privacy and competition overlap. A set of formal competition guidelines for generative AI is expected by the end of 2025.
Alongside this, Japan passed its AI Basic Act in May 2025, setting broad accountability and transparency principles that the JFTC can build on for enforcement. Meanwhile, the Ministry of Economy, Trade and Industry (METI) launched the Japan AI Compute Project to reduce reliance on imported GPUs, and companies have introduced fellowship programs to address AI talent shortages. Domestic firms welcomed these moves, while global players cautioned against overly restrictive rules. Overall, Japan is moving toward a clearer regulatory framework for generative AI, with competition, privacy, and compute sovereignty all shaping the next phase.
ORIGINAL NEWS POST:
Japan Fair Trade Commission Seeks Input on Generative AI Competition Concerns Amid Rapid Market Growth
The Japan Fair Trade Commission (JFTC) has initiated a major effort to address competition concerns in the rapidly evolving generative AI market. With the publication of a discussion paper titled “Generative AI and Competition,” the JFTC is calling for feedback from industry experts, businesses, and other stakeholders to better understand the potential impacts of generative AI on competition in Japan.
A Rapidly Expanding Market
Generative AI, which includes technologies capable of creating text, images, audio, and video based on user prompts, has seen massive growth in recent years. Since the release of ChatGPT by OpenAI in 2022, generative AI has become a global phenomenon, revolutionizing industries and daily life. In Japan, the market for generative AI is still in its early stages, valued at approximately 118.8 billion yen as of 2023. However, this market is expected to grow exponentially, reaching 1,777.4 billion yen by 2030.
While generative AI promises significant benefits for productivity and innovation, the JFTC is keenly aware of the risks and challenges it poses, particularly in terms of fair competition. The discussion paper outlines several key areas of concern, including the concentration of critical resources like computing power, data, and specialized talent, which are essential for developing high-performance AI models. These resources are currently dominated by a few major players, such as Nvidia, which holds 80% of the global market for GPUs, a crucial component for AI development.
Limited Access to Data
The agency also points to data access as a growing concern. Generative AI systems require enormous training datasets, and high-quality Japanese-language data remains limited. If only a handful of companies can access or control this data, they may obtain an advantage that smaller or newer competitors cannot match. As a result, the JFTC is examining how data availability affects the diversity of AI developers.
Competition for AI Talent
Talent shortages deepen these challenges. Building advanced AI models requires teams of highly skilled researchers and engineers. Yet Japan’s talent pool is small, and large global companies often recruit the best candidates. This concentration of expertise could limit the ability of local startups and smaller firms to innovate.
Additional Risks in Cloud Markets
The JFTC also raises concerns about the cloud-computing sector. Many AI developers depend on cloud platforms from major tech companies, which could lead to anti-competitive behavior. For instance, dominant cloud providers may disadvantage rivals by bundling services or setting contract terms that hinder competition. The paper also notes that self-preferencing—AI companies prioritizing their own products in model outputs—could distort markets.
Invitation for Public Feedback
The JFTC is seeking comments on all issues in the discussion paper. Stakeholders have until November 22, 2024, to submit input. The commission will use the feedback to guide potential regulatory actions and develop future policy tools designed to maintain fair competition in Japan’s AI ecosystem.
Need Help?
If you’re wondering how Japan’s AI policy, or any other government’s bill or regulations could impact you, don’t hesitate to reach out to BABL AI. Their Audit Experts are ready to provide valuable assistance while answering your questions and concerns.
