Oracle is at the forefront of developing an air-gapped cloud for Japan.

      Oracle is currently at the forefront of efforts to develop an air-gapped cloud for Japan, which would be isolated from the internet, primarily to address concerns over Chinese hacking as urged by Washington. Before the US commits to sharing more sensitive information with Japan, it expects Japan to ensure the security of that information. Oracle has emerged as the leading candidate, surpassing Amazon, Microsoft, and Google, to provide the Japanese government with this air-gapped solution, as reported by the Financial Times. An air-gapped cloud prevents access from external networks, safeguarding highly sensitive information from the public internet.

      The emphasis of this initiative is on security combined with Larry Ellison’s connections to Donald Trump, which have contributed to Oracle's stock increase following this news.

      The motivation behind this push is China's cyber activities. The US has been urging Japan for years to bolster its cyber defenses against these threats, especially as the two nations strengthen their collaboration on military capabilities to counter Beijing’s influence. Establishing a secure cloud for the government would facilitate the sharing of sensitive information with Tokyo without concerns about breaches. The ultimate goal is to integrate Japan further into intelligence-sharing frameworks among allies, including the Five Eyes alliance.

      No definitive decisions have been made yet, as the FT indicates that Japan may still choose to distribute the project among multiple vendors.

      The deal represents a broader trend where governments increasingly prefer sovereign cloud solutions that they can control rather than utilizing foreign-managed open platforms. For instance, the UK recently identified US cloud services as vital to its financial infrastructure.

      Oracle is capitalizing on this sentiment, with executives suggesting that customers prioritize data control over the underlying cloud model.

      The market is becoming more competitive as defense budgets drive technology firms to innovate. The Pentagon has recently halted a cyber-audit requirement, and military-grade systems are being developed by European laboratories, like Finland’s NestAI, for government ownership.

      For Oracle, securing a deal with Japan would be a significant achievement, while for Washington, it represents a move toward strengthening ties with a key ally. The establishment of this secure cloud is the first step, followed by the sharing of classified information.