Rakuten CEO justifies big losses as strategic bet on AI

Rakuten’s founder and CEO Hiroshi Mikitani defends the company’s loss-making mobile division as a strategic investment in artificial intelligence development.

Strategic vision; Rakuten’s mobile telecommunications division, despite operating at a loss for four years, is positioned as a crucial component of the company’s long-term AI strategy.

• The mobile division has accumulated more than 8 million users, providing valuable data for AI training and development
• Losses from the mobile division have impacted Rakuten’s profitable e-commerce and financial services operations
• Mikitani’s defense comes in response to critics who question the wisdom of entering Japan’s highly competitive wireless market

Market context; Japan’s telecommunications sector presents significant challenges for new entrants, even for established companies like Rakuten.

• Rakuten entered a mature market dominated by established carriers
• The company has had to invest heavily in infrastructure and customer acquisition
• Competition in Japan’s wireless market has led to pricing pressure and narrow margins

Business integration; Rakuten’s strategy appears focused on leveraging synergies between its diverse business units.

• The mobile division provides data that can enhance Rakuten’s e-commerce and financial services operations
• AI development using mobile user data could create competitive advantages across the company’s ecosystem
• The strategy aligns with broader industry trends of using telecommunications data for AI advancement

Looking ahead; While the mobile division’s losses have raised concerns among investors, Rakuten’s bet on AI-driven growth represents a long-term strategic gamble that could reshape the company’s future trajectory.