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Business Trends

Big-data trading platform to launch in Japan next month

The venue hopes to spur active information exchanges by ensuring safety

163 trillion gigabytes of data will be generated by 2025 as businesses become more digitized.   © Reuters

TOKYO -- A private-sector exchange facilitating sales of big data will go live on Oct. 1 in Japan, providing a secure venue for businesses to obtain a variety of information across different sectors.

The platform aims to promote active data exchanges to spur business innovation even as Japanese companies lag behind their Western peers in tapping the potential of big data. Many still remain reluctant to share their proprietary information. 

The platform will initially start with five companies selling data. Travel agency JTB will offer location information on medical facilities that can provide services in multiple languages, as well as data for ATMs that accept credit cards issued outside Japan. The company taps its roughly 590,000 pieces of data stored in its proprietary tourism platform, the Japan Voyage Navigator.

Operating the data exchange is EverySense Japan, a Tokyo-based startup that manages a separate trading platform for "internet of things" data. 

The exchange will allow JTB to expand data sales outside of its own channels. The company expects demand primarily from developers of smartphone apps that provide travel information to international tourists. Through the platform, JTB aims to rake in 100 million yen ($881,900) in sales from roughly 1,000 client businesses in fiscal 2021.

The other four sellers are all internet companies that will offer consumer data -- ranging from fuel consumption information generated every time 650,000 consumers use the gas pump, to household data on over a million customers, including employment information. Data sellers will obtain the consent of affected individuals and anonymize the information before the sale, to protect privacy.

More participants in the exchange could prompt others to take part, such as for offering car insurance policies that set different premiums based on driving habits.

EverySense will set the rules of the exchange and provide payment services. Data sellers will be charged a 10% service fee on the transaction value, with the goal of realizing a transaction volume of 3 billion yen in 2021.

Driving the formation of the exchange is the Japanese government's push to create a data bank that stores a range of personal information. Along with conventional banks, advertising agency Dentsu recently decided to enter into the business. The exchange would furnish such a platform for those players.

The system will serve as a shortcut pairing companies that hold data with other businesses in need of that information. It will also add a layer of security on payment transfers.

As businesses become more digital, the amount of electronic data around the globe is expected to more than quintuple to 163 trillion gigabytes by 2025. In Japan, the Data Trading Alliance industry group is planning to certify approved data exchanges, and EverySense is looking to become the first operator to receive certification. Advertising group Hakuhodo DY Holdings will launch its own exchange in fiscal 2019.

Google, Apple, Facebook and Amazon -- collectively known as GAFA -- are facing growing scrutiny due to their prowess in translating the volumes of data collected into trillion-dollar market values. The new data exchange strives to level the data-access playing field without the influence of a tech behemoth. By having startups and established companies mutually share data and ideas with startups, the initiative is anticipated to give birth to novel business operations with a strong competitive advantage.

However, one potential barrier to success is reluctance among Japanese corporations to offer their data. Currently any exchange of data is done between individual companies or through partnerships. One example is the deal struck among Yahoo Japan, Nissan Motor and the city of Kobe to use each other's data for marketing and other purposes.

But such cross-industry collaborations are still rare. "Japanese companies have a strong aversion toward handing over [data] to other companies, even if they have no idea what to do with it," said University of Tokyo Professor Yukio Ohsawa, who points out that corporate Japan has fallen behind Western peers in data-sharing. On top of that, there are many cases where buyers are not sure which set of data is needed for forming new businesses, Ohsawa added.

According to estimates from researcher IDC and other sources, Japan is home to about 105,000 data suppliers last year -- well below the 303,000 in the U.S. and the 276,000 in the European Union. The growth of Japan's numbers from 2016 was lackluster as well.

But the launch of a trading platform will not lead to active data-sharing if there are not enough willing participants. "There needs to be more opportunities for companies to discuss ways to utilize and unearth the value of the data they possess," said Ohsawa.

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