Japan's digital trade deficit hit a record high of 6.46 trillion yen in 2024, reflecting the dominance of services provided by U.S. technology giants, recent government data showed.

The size of Japan's IT deficit has more than tripled in the past decade from 2.02 trillion yen in 2014, according to preliminary data released by the Finance Ministry earlier this month.

The ballooning imbalance can be attributed to Japanese companies being increasingly reliant on digital technologies provided by U.S. tech giants like Amazon.com Inc, Microsoft Corp and Google LLC to improve efficiency due to a lack of domestic alternatives.

The digital trade balance includes payments for cloud infrastructure services, online advertising and licensing. Revenue generated by major U.S. tech firms is only expected to grow in Japan as individuals and businesses increasingly digitize.

While there has been investment in the development of domestic cloud services, Kengo Wataya, a researcher at the Mitsubishi Research Institute, noted that the gap in development capabilities between Japanese and U.S. firms remains significant.

The digital deficit is unlikely to shrink any time soon, so "Japan needs to leverage digital technologies to generate revenue in other sectors," Wataya said.