Japan, long proud of its status as a science and technology leader, is lagging behind its competition so much that it is poised to suffer its greatest defeat since World War II.

With AI transforming every industry, the military and our daily lives, the companies and nations controlling it will be the winners.

And the key to AI's capability lies in how much data it can access and how well it can be directed to return optimal solutions. Therefore, the winners will be the companies and nations that aggregate data.

The US has a fiercely competitive tech sector in which companies collect huge amounts of data, while China is countering with a statewide effort, putting both nations ahead of all others.

Moreover, the two languages of these nations dominate the linguistic world, meaning they also have vast amounts of data. English is spoken by 1.5 billion people worldwide, while Chinese is used by 1.4 billion. This gives them an advantage in the competition for large language models.

In addition, companies in both countries are investing enormous sums in research and development. As a result, US players like OpenAI, Google and Meta dominate, while China's DeepSeek is close behind.

It is often said that data is the 21st century's equivalent of oil, but such a statement is misleading. As the preeminent petrostate, Saudi Arabia has little else to boast about to the world besides its oil reserves, which it has no choice but to sell to accumulate wealth.

Both the US and China compete for global supremacy in economics, military power and technology. Therefore, they will use data and AI to consolidate their leadership positions in every field. Soon, other countries will fade further into insignificance.

The European Union aims to arrest this trend by emphasizing the ethical dangers of AI and pushing for regulation. This is the Brussels effect, where EU bureaucrats attempt to impose their guardrails as global standards.

In the digital field, it started with the 2018 General Data Protection Regulation, followed by 2023's Digital Markets Act and the 2024 Digital Services Act.

The administration of US President Donald Trump opposed these regulations to protect American Big Tech. At the AI Action Summit hosted by the French government in Paris last February, the US government did not sign a joint statement prioritizing safety.

At the summit, US Vice President JD Vance said, "I'm here to talk about AI opportunity," indicating that a "too risk-averse" attitude to AI is counterproductive. It is also difficult to imagine the Chinese Communist Party following the EU's lead.

With only 120 million Japanese speakers worldwide, Japan possesses less than one-tenth of the potential data held by the US and China, putting it in a disadvantageous competitive position.

Some voices remain positive, however, saying, "Japan still has a chance to win," but that reasoning deserves to be questioned.

A Japanese information technology executive laments that the scale of investment in R&D in Japan is one-tenth or one-hundredth of the US or China. Given this inherent disadvantage, he believes Japan's chances of emerging victorious in the AI development race are nonexistent.

Japan should probably focus on how to utilize AI technology developed by US companies and try to benefit as much as possible, though this approach will further subordinate it to the US.

Japan's attitude toward AI, as compared to its peers, demonstrates the scope of the problem.

According to this year's Information and Communications White Paper by the Ministry of Internal Affairs and Communications, Japan's AI usage rate stands at 26.7 percent, far below the United States' 68.8 percent and China's 81.2 percent. It even significantly lags behind the 59.2 percent in Germany, a country, like Japan, not considered an AI leader.

Furthermore, when executives were asked what they expect from AI, Japanese companies placed high expectations on its potential to cut costs through measures such as improving operational efficiency and addressing labor shortages.

In contrast, American and Chinese executives looked at AI as a business expansion tool that can aid innovation. It seems Japan envisions AI as a defensive tool, while the US and China see its offensive potential.

Reflecting these overall trends, Japan ranks a disappointing ninth in the Stanford University AI Vibrancy ranking, an index that comprehensively evaluates AI research and development, policy, infrastructure and public opinion.

The Japanese government held the first meeting of its AI Strategy on Sept. 12 and plans to finalize a basic AI plan within the year. However, compared to China, which announced its Digital Silk Road initiative 10 years ago, and the Trump administration, which declared in July that it would promote the use of American-born AI worldwide, Japan's position appears weak.

Japan's digital trade deficit stands at 7 trillion yen, but an April report compiled by a young team at the Ministry of Economy, Trade and Industry also presented a pessimistic scenario projecting it could grow to 45 trillion (US$46.8 billion) by 2035. This trend casts a pall over the economy.

An official close to the administration of Prime Minister Shigeru Ishiba admitted, "Mr. Ishiba was unfamiliar with AI, and the administration did not act."

Ishiba announced his resignation as Liberal Democratic Party leader and thus prime minister, triggering a leadership election within the party. Among the five candidates running in the election to replace him, none have voiced concerns about Japan's need to act on AI or its data disadvantage.

This is an ominous sign that Japan's deficit with the US and China will continue to go unaddressed. Japan's economic strength is already declining because of its aging and shrinking population. With the defeat in AI development added, the nation may be resigned to this humiliating position.

---

The author is a professor at Meiji University and former chief editorial writer of Kyodo News. The views expressed are personal.