Rakuten Billionaire Justifies Mobile Arm Losses with Big AI Bet

Rakuten Group's billionaire founder and CEO, Mickey Mikitani, is doubling down on his company's mobile arm, despite mounting losses, by placing a big bet on artificial intelligence (AI). Mikitani believes that AI will not only transform Rakuten's mobile business but also drive growth across the company's diverse ecosystem of e-commerce, fintech, and mobile services.

Rakuten Mobile, launched in 2020, has been a significant financial burden for the group, with losses continuing to mount. In the third quarter of 2022, Rakuten Mobile reported an operating loss of 120.9 billion yen (US$864 million), although this was a sequential improvement. Despite the losses, Mikitani remains optimistic about the mobile arm's long-term prospects, attributing the setbacks to upfront capital investments and the ongoing rollout of its 4G and 5G networks.



Mikitani's faith in Rakuten Mobile's future is bolstered by the company's unique network architecture, which is disaggregated, software-centric, and cloud-native. This cutting-edge network design, based on Open RAN standards, allows for greater flexibility in implementing new technologies such as 5G, edge computing, and AI. Mikitani believes that this network architecture will ultimately lead to significant cost savings and operational efficiency gains.

To capitalize on the potential of Rakuten Mobile's network, Mikitani is betting big on AI. In a recent partnership with OpenAI, Rakuten aims to leverage its vast and diverse data set to train powerful AI models and empower its businesses and clients with AI tools. By doing so, Rakuten can improve operational efficiency, enhance customer experiences, and drive revenue growth across its e-commerce, mobile, and fintech segments.

Rakuten's AI strategy aligns with its mobile arm's financial projections by focusing on operational efficiency, customer experience, and revenue growth. By leveraging AI to improve these areas, Rakuten can achieve its financial goals and maintain its competitive edge in the market. However, investors should be aware of the potential long-term benefits and risks associated with Rakuten's AI bet, including AI model bias and fairness, data privacy and security, AI model explainability and interpretability, and AI model obsolescence.

In conclusion, Rakuten's billionaire founder, Mickey Mikitani, is justifying the mobile arm's losses with a big bet on AI. By leveraging AI to improve operational efficiency, enhance customer experiences, and drive revenue growth, Rakuten can achieve its financial goals and maintain its competitive edge in the market. However, investors should be aware of the potential long-term benefits and risks associated with Rakuten's AI bet.