The public cloud versus colocation debate has been running for fifteen years. In Japan in 2026, the relevant factors are somewhat different from the generic version of the argument: data residency requirements, ISMS certification, and the yen-denominated cost of US-dollar-priced cloud services all shift the calculation.
Data residency and sovereignty ¶
Japanese data protection law (the Act on the Protection of Personal Information, amended in 2022) does not prohibit storing personal data outside Japan, but it does require that transfers to third countries meet specific conditions. For many organisations, the simplest way to satisfy those conditions is to keep the data in Japan. Major public cloud providers operate Japan regions, so this is achievable on public cloud, but it requires careful configuration to ensure data does not replicate to regions outside Japan by default.
The yen cost of dollar-priced infrastructure ¶
Most major public cloud providers price their Japan region services in US dollars. When the yen weakens against the dollar, as it did significantly between 2022 and 2024, the yen cost of cloud infrastructure rises without any change in usage. Colocation infrastructure priced in yen does not have this exposure. For organisations with yen-denominated revenue and dollar-denominated infrastructure costs, the currency risk is a real operational consideration.
Operational control and the blast radius of provider incidents ¶
Public cloud providers have service incidents. When they do, the blast radius for a single-region outage can affect thousands of customers simultaneously. On colocation infrastructure, an incident at the facility level is rare and typically affects a smaller set of customers. More importantly, on bare-metal infrastructure you have direct access to the hardware: IPMI console, physical reboot, direct OS access. On a public cloud VM, your access to the underlying hardware is mediated by the provider's control plane, which may itself be affected by the incident.
When public cloud is still the right answer ¶
For teams that need to scale compute capacity rapidly and unpredictably, public cloud is still the right answer. Bare-metal provisioning takes hours to days; cloud VM provisioning takes seconds. If your workload has large, unpredictable spikes, the elasticity of public cloud is worth the cost and the reduced control. The teams that benefit most from colocation are those with stable, predictable workloads where the cost of public cloud has become significant and the compliance requirements have become more demanding.
The decision is not permanent. Several Husk Mesh Vault customers run a hybrid model: stable, compliance-sensitive workloads on bare metal in Chiba, and burst capacity on a public cloud provider. That architecture is worth considering before committing entirely to either model.