Google to invest 100 billion yen in Japan to build data centers

International Business News – Google’s Chief Executive Officer (CEO) Sundar Pichai revealed on October 7 plans to invest 100 billion yen in Japan by 2024. It will be used to build the company’s first data center set up in Japan, among other things. Amid signs of a growing economic slowdown, Pichai made it clear that Google will accelerate its efforts to improve business efficiency while prioritizing growth by investing in the Asia-Pacific region, including Japan.

In an exclusive interview with the Nihon Keizai Shimbun and TV Tokyo in the Tokyo metropolitan area, Pichai, who was visiting Japan, revealed the company’s business approach in Japan and Asia. Pichai explained that “in the four years from last year to 2024, we will invest 100 billion yen, part of which will be used to build data centers,” and that he will invest more in submarine cables and human resources development.

Google will build Japan’s first domestic data center in Chiba Prefecture and put it into operation in 2023. In addition to improving the convenience of Internet services for consumers, Pichai said he “hopes to support the digital transformation of Japanese companies through our company’s cloud computing business.” On the 7th, Pichai met with Japanese Prime Minister Fumio Kishida at his residence to introduce Google’s investment plans.

Pichai pointed out that the Asian region has been impacted by the creation of innovative technologies such as super apps with multiple functions and short videos, and said that “most of our company’s growth in the next 10 years will come from the Asian market.” He also made it clear that “we have a long-term view on Asia and are giving high priority to investment in the region.”

Against the backdrop of the spread of the new epidemic, demand for Google’s services has expanded, and the company’s parent company, Alphabet, has seen accelerated growth. However, inflation and other factors are currently dragging down operations, with profits declining for 2 consecutive quarters through April to June 2022. Google temporarily froze hiring in July and decided to slow down the pace until the end of the year.

Pichai explained that “the advertising business, which is the core of the company’s earnings, has a strong tendency to be impacted by the macro economy and is dealing with the current instability.” For 2023, Pichai said, “we will continue to hire, but at a more measured pace than we did in 2022.” Hiring is expected to continue in product development and technology, but other areas will be compressed.

In terms of business, Google has decided to withdraw from Stadia, a game distribution service that makes full use of cloud technology, and has also decided to downsize its cutting-edge development division, Area 120. In terms of machine development and sales, Google announced new smartphones on October 6, and Pichai explained that “in the (laptop) Pixel book, partners have launched good products and adjusted the (self-developed) plan.”

Google is advancing the screening of investment areas and will continue to invest in artificial intelligence (AI), which is the foundation of all businesses. It will continue to work on its main business, Internet search service and video sharing service “YouTube”, and will also prioritize investments in the basic software (OS) needed to deliver these services to users ” Android” and cloud services, etc.