| Abstract: |
As digital identity (ID) technologies continue to evolve, governments and regulatory bodies worldwide are accelerating efforts toward standardization. The European Union (EU) has introduced the Digital Identity Wallet initiative, underpinned by the AI Act and General Data Protection Regulation (GDPR), signaling a significant regulatory shift. At the same time, Japan, the United States, and China are pursuing distinct regulatory and technological pathways for digital ID systems, leading to a complex and fragmented global landscape. Furthermore, the dominance of mega-platforms (GAFA) in digital identity solutions has prompted policy responses from the EU and Japan, aiming to reduce dependency on private-sector monopolies and foster more open ecosystems.
This paper examines how private companies should strategically respond to these regulatory and technological developments. First, we analyze the implications of key regulations, including the EU AI Act, GDPR, Japan's My Number system, the U.S.'s decentralized and state-driven ID initiatives, and China’s centralized digital ID infrastructure. We then explore the challenges and opportunities presented by these diverse frameworks, particularly regarding data governance, interoperability, and compliance.
Additionally, we assess the business risks associated with reliance on GAFA-controlled digital ID solutions and propose strategic alternatives for companies seeking to establish independent and interoperable identity frameworks. Through a cross-industry perspective, we identify key factors for businesses to consider in leveraging personal and industrial data while ensuring regulatory compliance and competitive advantage.
By synthesizing these insights, this study seeks to identify actionable recommendations for businesses navigating the evolving digital ID landscape, addressing critical questions of data sovereignty, standardization, and future-proof business strategies in an increasingly regulated environment. |