CEO Hiroshi Mikitani’s Vision: Why Rakuten’s Mobile Venture Is Key to AI Success

Rakuten Bets on Mobile for AI-driven Growth in Japan

Rakuten’s ambitious move into Japan’s fiercely competitive mobile market has come under scrutiny for its financial strain, but the company’s CEO remains undeterred.

Despite four years of losses, Hiroshi Mikitani, founder and billionaire head of the e-commerce giant, believes the telecom arm is vital for the company’s future, particularly as it looks to leverage artificial intelligence (AI) to drive growth.

The Telecom Gamble: Losses and Long-Term Vision

Rakuten’s decision to enter the wireless sector has not been easy.

It has led to considerable losses, affecting the company’s primary e-commerce and finance operations.

However, Mikitani views this investment as essential for building a long-term ecosystem that is increasingly powered by AI.

Hiroshi Mikitani, the founder and CEO of Rakuten

The company now has over 8 million mobile users, a rich source of data that helps train the AI that will fuel Rakuten’s future ambitions.

Mikitani is confident that the data generated by Rakuten’s telecom services is uniquely valuable.

He stated,

“The amount of exclusive data Rakuten gathers from its users is extremely powerful. We have no intent to compete against OpenAI or Google. But we will actively build a more vertically integrated, specialised AI.”

This strategy, according to Mikitani, is integral to Rakuten’s evolution, particularly in a country like Japan, where digital adoption has lagged compared to other nations.

Japan’s AI Race: Rakuten’s Place in the Market

Japan has been slow to embrace AI technology, but that could be changing.

While the Japanese government is heavily subsidising local AI development, a clear market leader has yet to emerge.

In this crowded field, companies like SoftBank, NEC, and NTT, alongside international players like OpenAI, are all vying for dominance.

Rakuten, however, sees an opening to carve out a niche.

The company is set to launch an AI assistant that will serve as a travel and shopping agent, encouraging greater engagement with its digital platforms.

Translation:

🌟 New feature! Make your life more convenient with Rakuten Link AI! 🌟

Switch to Rakuten Mobile now and experience Rakuten Link AI! 🤖✨

Rakuten Mobile users can now use the topic generation AI service!

❶ An AI assistant that answers your questions will support you in your daily life!
❷ Make the most of Rakuten's services, including free calls!
❸ Now is your chance to get up to 14,000 points through employee referrals! 💰

By integrating AI deeper into the customer experience, Rakuten hopes to boost traffic and strengthen its foothold in the competitive Japanese e-commerce market, which is currently a two-horse race with Amazon.

Strategic AI Focus Beyond E-Commerce

To bolster its AI capabilities, Rakuten has recruited Ting Cai, a former Google expert in maps and search, to guide the company’s AI expansion beyond just travel and e-commerce.

Mikitani sees AI not only as a tool for enhancing shopping experiences but as the key to integrating Rakuten’s various services, from finance to travel to telecommunications.

Expanding the Ecosystem: Benefits of Mobile Integration

The integration of the mobile network into Rakuten’s broader ecosystem is already yielding tangible benefits.

Mikitani revealed that users on Rakuten’s mobile platform tend to spend nearly 50% more on the company’s online shopping site compared to non-mobile customers.

The advantages are not limited to retail; Rakuten’s mobile users are also more engaged with the company’s credit card, banking, travel, and brokerage services.

Financial Strains and Strategic Adjustments

The mobile venture, while central to Rakuten’s future, has proven to be costly.

To support its telecom ambitions, Rakuten has made moves to strengthen its balance sheet.

This includes selling a 15% stake in its profitable credit card business to Mizuho Financial Group and taking its banking arm public in 2023.

Rakuten is slowly recovering from its early mobile losses.

In November 2024, the company reported its first quarterly operating profit since 2020, with the mobile segment’s losses beginning to shrink.

Satellite-based Expansion: Aiming for Nationwide Coverage

Rakuten is now focused on expanding its mobile network’s reach.

To achieve 100% smartphone coverage in Japan, it is partnering with US-based AST SpaceMobile to offer satellite-based services, with plans to roll out the technology in 2026.

Mikitani emphasised his ambitions for Rakuten's global expansion, stating,

"We want to become one of the top-tier profitable companies in Japan and, in the future, in the world."