Japan's Third Way: How the "AI Promotion Act" Charts a New Course in Global AI Governance

As the United States and the European Union veer down starkly different paths on artificial intelligence regulation, Japan has carved out a distinct "third way." With the passage of its first AI-specific legislation, the "Act on the Promotion of Research, Development and Utilization of Artificial Intelligence-Related Technologies," Japan is making a calculated bet that a "light-touch," pro-innovation framework can position it as a premier global hub for AI development, attracting the world's best talent and investment.

A Philosophy of Partnership, Not Penalties

The core philosophy of the AI Promotion Act, which passed the Japanese Diet on May 28, 2025, is explicitly pro-growth. Unlike the EU’s comprehensive, risk-based AI Act with its tiered obligations and potential for heavy fines, Japan's framework is principles-based, non-binding, and contains no direct penalties for non-compliance. The stated goal is to make Japan "the world's easiest place to develop and use AI." Instead of imposing hard rules, the law seeks to foster a supportive ecosystem built on partnership between government and industry. It establishes a formal "duty of cooperation" for businesses, but compliance is voluntary, relying on shared goals rather than the threat of enforcement.

Mechanisms of Support, Not Restriction

Rather than focusing on what companies cannot do, Japan's law details how the government will actively support them. The Act establishes a new, cabinet-level AI Strategy Headquarters, to be chaired by the Prime Minister, which will coordinate a unified national AI policy. It also mandates that the government actively bolster AI research and development through direct funding, providing shared access to high-performance computing infrastructure, and making curated datasets available to researchers and startups. While the government is empowered to monitor AI trends and investigate serious misuse, such as deepfakes or privacy breaches, its recourse is to issue non-binding recommendations or warnings to companies, guiding them toward responsible practices instead of punishing them.

A Strategic Play on the World Stage

Japan's approach is a calculated strategic maneuver. It recognizes that it cannot compete with the United States on the sheer volume of venture capital or with the European Union on market size. Therefore, it is choosing to compete on its regulatory environment. By offering a framework that is stable, predictable, and supportive—in contrast to the legislative uncertainty in the U.S. and the heavy compliance burden in the EU—Japan aims to become a magnet for global AI talent. This "third way" could be particularly appealing for companies in R&D-intensive fields like robotics and scientific AI, which may value a stable government partner over the volatility and complexity of other major markets, effectively turning its regulatory clarity into a key competitive advantage.