Japan Promotes Big Data for Business, Public Sector but With Privacy Changes

The Japanese government is taking steps to promote big data use by businesses and the public sector by addressing privacy concerns that have hindered the widespread acceptance of the analysis of large-scale databases of combined information, including personal data.

Japan’s privacy laws and regulations don’t at present provide clear guidance on protecting personal information in the big data analytics environment, researchers and policy makers interviewed recently by Bloomberg BNA said.

On Dec. 10, more than two dozen members of a Cabinet Secretariat study group tasked with addressing big data issues met in Tokyo and released a position paper outlining a plan to submit a detailed proposal to revamp Japan’s national data protection legal regime to better address big data.

The position paper said changes to the privacy laws are necessary because the lack of specifics on the parameters for allowable use of personal information inhibit the use of big data analytics. The proposal said its aim is to put in place a meaningful oversight body to protect personal privacy and enforce privacy laws at the same time as the privacy laws are refined to allow companies to mine and use data.

Legislative Proposals Forthcoming.

The study group aims to release guidance for changes to the country’s personal data use legal framework by June 2014, it said in a Dec. 10 statement. The group said it intends to submit specific privacy law amendments to Japan’s Diet—the country’s legislature—by January 2015.

The group referenced a 2012 Ministry of Internal Affairs and Communication white paper on the economic impact of big data for businesses in Japan that predicted companies would see a 10 trillion yen ($97.1 billion) increase in profitability from 2012 to 2020 from all impacts of the use of big data analytics. Public sector cost savings recognized from 2012 to 2020 through the use of big data would be 12 trillion yen ($116.5 billion) to 15 trillion yen ($145.7 billion), the white paper said.

The Japanese government has been exploring new privacy ground rules for big data. In April, the Study Commission on Personal Data Use and Distribution of the Ministry of Internal Affairs and Communications issued an interim position paper asking the government to create new rules on the use and distribution of personal data acquired by businesses. In May, the Ministry of Economy, Trade and Industry unveiled draft guidance on the use of big data by businesses.

A new privacy oversight body would also bring Japan closer to the European Union’s data protection authority model and strengthen the case for the European Commission to decide that Japan’s laws adequately protect privacy so that personal data of EU citizens may be more easily transferred to Japan in compliance with the EU Data Protection Directive (95/46/EC).

Public Concerns.

Japan lags behind other countries in the use of big data due to privacy concerns, Masao Horibe, chair of the Cabinet Secretariat’s study group on personal data and professor emeritus at Hitotsubashi University, in Tokyo, told Bloomberg BNA.

Hiromichi Yasuoka, a member of the Cabinet Secretariat study group and senior consultant at consulting services firm Nomura Research Institute, told Bloomberg BNA that big data isn’t being used much in Japan because the limitations for personal data use haven’t been clear.

Under Japanese privacy laws, unless personal information cannot be linked to an individual to identify him or her, companies are prohibited from using personal data information without consent from individuals, he said.

Mobile telecommunications service provider NTT Docomo Inc., which has been using “spatial statistics,” using geolocation information to improve services, has successfully used big data analytics but must be careful not to breach privacy laws by misusing the collected data, Yasuoka said.

Consumers in Japan are suspicious of big data use, he said, pointing to the revelation in July that East Japan Railway Co. (JR East) sold its passenger transportation data mined from Suica smart cards in July to Hitachi Ltd., Yasuoka said. Suica cards can be used not only on JR East train lines but subways and buses and to make purchases at stores.

There was a public outcry over JR East selling the data to Hitachi without consent from Suica users. Although JR East said the data it sold couldn’t be matched to individuals, some argued that it may be possible for companies to identify individual users based on travel patterns.

Anonymity Technology Limitations.

It’s technically impossible to make all kinds of data completely anonymous using one common method, Ichiro Satoh, professor at the Japanese government-funded research facility National Institute of Informatics told Bloomberg BNA. Satoh was the chairman of the working group that looked at the technical aspects of personal data use for the Cabinet Secretariat study group.

Making personal data anonymous is possible, Satoh said, but it must be done on a case-by-case basis. That approach can be time consuming, he said, adding that a new privacy regulator would need to create general guidelines for de-identifying personal information.

Hiroshi Ishikawa, professor of informatics at Tokyo Metropolitan University, told Bloomberg BNA that in addition to seeking technical solutions to anonymizing data, Japan should take the “soft” approach by having companies better explain to consumers how they collect and use their information.

Seeking EU Adequacy.

With revised laws, Japan hopes to clarify the privacy boundaries to make personal data use easier, Horibe said.

In addition, the EU doesn’t believe Japanese privacy laws are at an “adequate level of protection,” and this has caused problems for Japanese companies, he said.

In the EU, companies are prohibited from transferring personal data information to a country with inadequate levels of privacy protection.

In general, subsidiaries of Japanese companies located in Europe have been unable to send data to parent companies in Japan, and thus information exchange between the EU and Japan has been stifled, Horibe said. Some Japanese companies have been able to exchange data with subsidiaries through other approved means for transfer, such as binding corporate rules, but the Japanese government would like to see such restrictions removed, he said.

Japan will probably try to allow businesses to take advantage of processing personal data as the U.S. does but try to oversee its information privacy practice the way the EU does, Horibe said.

Following the FTC’s Lead.

Kazuhisa Uryu, counsellor to the Cabinet Secretariat, told Bloomberg BNA that Prime Minister Shinzo Abe supports the use of big data as a means of stimulating Japan’s economy.

In seeking to revise its privacy framework, Japan will be referring to the U.S. Federal Trade Commission’s consumer privacy focus outlined in its December 2010 report, “Protecting Consumer Privacy in the Era of Rapid Change”.

Uryu said, however, that priorities for anonymizing data in Japan will likely reflect Japanese consumer preferences.

Japanese consumers have a tendency to not want to disclose their financial information, medical data, name, address and photos, but they are open to disclosing information on their specific activities, whereas Europeans are less inclined to give away activity information, Uryu said.

Consumers in Japan tend to be sensitive about how their information is being used if its use isn’t explained to them, Ishikawa said.

U.S. consumers appear to be presented with more information about how companies will use their data, he said.

Japanese consumers also need to be educated through forums and information posted on company websites on the benefits of allowing their data to be used, Ishikawa said.