Rakuten Mobile and Cloudflare's Security Alliance: A Game-Changer for Japan's SMBs

In a rapidly digitizing Japan, where small and medium-sized businesses (SMBs) face escalating cyber threats but lack the resources to combat them, Rakuten Mobile and Cloudflare have forged a partnership that could redefine the cybersecurity landscape. By combining Rakuten’s telecom prowess with Cloudflare’s global infrastructure, the duo is offering SMBs a managed Zero Trust security solution—marking a critical step toward democratizing advanced cybersecurity.

The Problem: Cybersecurity Gaps in Japan’s SMB Sector

Japan’s SMBs—businesses with fewer than 1,000 employees—form the backbone of the economy, accounting for over 99.7% of all companies. Yet, they remain disproportionately vulnerable to cyberattacks. Cloudflare’s data for Q1 2025 reveals that Japan’s businesses face 385 million cyber threats daily, with retail, gaming, IT, and telecom sectors among the hardest hit. Despite this, SMBs often lack the budget or expertise to deploy advanced security systems like Zero Trust architectures, which require continuous authentication and network monitoring.

The Solution: Zero Trust as a Managed Service

Rakuten Mobile has become Japan’s first Managed Security Service Provider (MSSP) partner with Cloudflare, offering Zero Trust as a fully managed service. This means SMBs no longer need to manage firewalls, authentication protocols, or threat detection in-house. Instead, they can outsource these tasks to Rakuten’s team, which leverages Cloudflare’s global network and SASE (Secure Access Service Edge) platform. The service integrates seamlessly with Rakuten’s high-speed internet offerings, such as KOSOKU Access, creating a unified package that simplifies cybersecurity for businesses.

Why This Partnership Matters

1. Cost Efficiency: Bundling cybersecurity with telecom services reduces the total cost of ownership (TCO) for SMBs, which often struggle to justify standalone security solutions.
2. Scalability: The partnership scales with businesses. As SMBs grow, they can easily expand their security coverage without overhauling their infrastructure.
3. Competitive Edge: By addressing SMB pain points, Rakuten and Cloudflare are targeting a segment underserved by traditional cybersecurity giants like Cisco or Palo Alto Networks, which focus on enterprise clients.

Market Potential and Risks

Japan’s SMB cybersecurity market is ripe for disruption. A 2023 report by Fujitsu Research projected the Japanese SMB cybersecurity sector to grow at a 12% CAGR through 2028, driven by hybrid work adoption and stricter data protection laws. However, risks remain. The partnership’s success hinges on execution: delays in service rollout or customer adoption could dampen returns. Additionally, regulatory scrutiny over data localization rules in Japan could complicate Cloudflare’s global infrastructure model.

The Broader Industry Shift

The alliance underscores a global trend: the rise of SASE-driven managed security services. By merging networking and security into a single stack, SASE reduces complexity for businesses. Rakuten’s move positions it not just as a telecom provider but as a critical player in Japan’s digital transformation. Meanwhile, Cloudflare strengthens its foothold in Asia, a region projected to account for 30% of global cybersecurity spending by 2027.

Conclusion: A Strategic Win with Long-Term Upside

Rakuten Mobile and Cloudflare’s partnership is a masterstroke. By targeting Japan’s SMBs—a segment with 9.8 million businesses and rising digitization needs—they’re addressing a $2.3 billion cybersecurity market gap. The 385 million daily threats statistic alone underscores the urgency, while the managed service model lowers barriers to entry.

For investors, the partnership offers two compelling angles:
- Rakuten gains a new revenue stream and strengthens its position in managed IT services, a sector expected to grow at a 9% CAGR in Japan.
- Cloudflare, already a SASE leader, secures a beachhead in Asia’s fastest-growing cybersecurity region, boosting its $12 billion valuation.

While execution risks linger, the partnership’s alignment with Japan’s digital priorities—such as its 2025 National Cybersecurity Strategy—suggests strong tailwinds. This isn’t just a deal for SMBs; it’s a blueprint for how telecom and cybersecurity giants can collaborate to shape the future of enterprise security.