(Bloomberg) — Rakuten Group Inc.’s chief dismissed skeptics who call the Japanese e-commerce pioneer’s mobile foray a mistake and said the telecom arm is central for future growth through artificial intelligence.
Most Read from Bloomberg
A decision to enter Japan’s cutthroat wireless market has saddled Rakuten with four years of losses, weighing on its cash-churning online shopping mall and finance operations. But that mobile arm and its 8 million-plus users help train an AI poised to expand the conglomerate’s business, according to billionaire founder Hiroshi Mikitani.
The amount of exclusive data Rakuten gathers from its users is “extremely powerful,” Mikitani said in an interview with Bloomberg TV. “We have no intent to compete against OpenAI or Google. But we will actively build a more vertically integrated, specialized AI.”
Rakuten sees an opportunity in Japan, which has been a laggard in the adoption of digital and AI-powered technologies. While Tokyo is extending hefty subsidies to homegrown AI providers, no clear winner has emerged. The race to create a go-to Japanese large language model is now crowded with the likes of SoftBank Corp., Nippon Telegraph & Telephone Corp., NEC Corp., CyberAgent Inc. and of course OpenAI.
Rakuten, which is in a dead heat in online shopping against Amazon.com Inc. in the world’s No.4 economy, is now preparing to launch an AI assistant that serves as a travel and shopping agent to drive further traffic and engagement. It’s also recruited former Google maps and search expert Ting Cai to steer its AI development beyond travel and e-commerce.
The benefits of the mobile business to Rakuten’s ecosystem are “huge,” Mikitani said. Users on the Rakuten mobile network spend almost 50% more on Rakuten’s online shopping mall, with benefits spilling over into its credit card, travel, banking and brokerage operations, the 59-year-old said.
It’s been a costly gamble, however. The mobile business has stretched the company’s balance sheet, prompting the online retailer to sell a roughly 15% stake in its profit-churning credit card arm to Mizuho Financial Group Inc. It’s also raised funds by taking its banking business public in 2023.
In November, Rakuten reported its first quarterly operating profit since 2020, after losses in its mobile segment shrank.
