Betting on the future: Mikitani talks Mobile and AI at Rakuten Technology Conference 2024

At the recent Rakuten Technology Conference in Tokyo, company Chairman and CEO Mickey Mikitani took to the podium to share Rakuten’s innovation backstory and offer a bold vision for its future with engineers around the globe.

“When we started Rakuten in 1997, some of you were not even born,” he joked. “Everybody thought the internet was going to be very, very powerful.”

Even as the dot-com bubble wiped out many of the first internet businesses, Mikitani’s faith remained unshaken.

“The power of the internet lies in connecting all information and data as one gigantic virtual index… We believed that the connection of data would change the world, so that’s how we started. Fast forward, now Rakuten has been growing, adding new services, challenging conventional wisdom,” Mikitani told the audience. “We bet on the future. Now we are a leader in e-commerce, credit cards, digital banking, online brokerage, online travel, and Rakuten is a very global company.”

Dragging the telco industry into the digital age

Shopping, finance, travel – the early 2000s saw the internet revolutionize industry after industry.

“We thought about what we should do in this kind of transformative, revolutionary period,” Mikitani recalled. “There was just one thing that had not really transformed: mobile networks.”

Even as the numbers have changed from 1G to 5G and beyond, the telecommunications industry has continued to rely on old systems. “Fundamentally, the architecture of mobile networks has never been modernized. It’s all based on proprietary, specialized software.”

Rakuten Mobile commercially launched in April 2020, and has grown rapidly to exceed 8 million subscribers as of October 2024. “I thought it was a crazy idea,” Mikitani admitted. “I said okay, let’s try it. It’s a risk, but we’re going to take that risk because we have been challenging the status quo for so long.”

Rakuten’s cutting-edge, fully virtualized cloud native network built on Open RAN standards, set a new benchmark for modern telecommunications, relying entirely on software and non-proprietary hardware. It’s an approach that allows for much greater flexibility to implement new tech, including 5G, edge computing and AI.

“What does this mean? Number one, costs go dramatically down,” Mikitani explained. “With software we can really create new functions, new compute much easier. That’s the difference between Rakuten Mobile and other mobile companies – not only in Japan but globally speaking. That’s huge.”

The effects of Rakuten Mobile’s innovation and aggressive pricing are being felt across Japan’s economy.

“What Rakuten created is not just competition among mobile carriers in Japan; we kind of destroyed the vertical walls of the mobile industry,” Mikitani continued. “Because of the competition we created, while the Japanese retail price index went up, only mobile bills came down – more than 20% in Japan. Japanese households altogether saved 4 trillion yen per year.”

Rakuten Mobile’s tech has already made its way to Europe, where German carrier 1&1 launched Europe’s most modern mobile network. Rakuten has also announced a licensing program to make its cutting-edge systems available to other ambitious carriers around the globe. “What we have done in Japan is now influencing the whole world.”

Wake up: AI is transforming society

Mikitani asked the audience to consider one fundamental question: What is AI?

“We are talking about letting machines do what humans have been doing, maybe even better in some cases… they can connect points that we think are totally irrelevant and come up with new solutions,” he remarked. “We know AI is massive. It’s not just incremental improvement or incremental innovation; it will completely redefine the world. But it must be used responsibly. As an AI empowerment company, our vision is human intelligence augmented by AI.”

The importance of AI tech going forward is something that everyone needs to face.

“Now, not only Rakuten – entire businesses, entire organizations, society, community, government – everybody needs to realize this,” Mikitani warned. “Maybe the future won’t just be an extension of history; we may see something we have never seen.”

For Mikitani, the strategy is clear: “Rakuten is doing two things. One is partner with innovative AI companies, such as OpenAI and others. The other is basically developing our own large language models,” he revealed. “We want to give AI to our businesses, to our clients. The concept of Rakuten is to empower through AI.”

In this new tech race, Rakuten has one major advantage: data.

“Our strength – on top of our engineering power – is that we probably have the richest, most unique set of data among all companies in the world,” Mikitani professed. “These AI tools we train based on data. Without the data, you cannot do it.”

An AI bridge to the Rakuten Ecosystem

In addition to employees and clients, Rakuten is also trying to get AI tools into the hands of customers: The newly announced Rakuten Link AI is a cutting-edge chat service, free to use for Rakuten Mobile subscribers.

“What we are trying to do is create an AI bridge to our services,” Mikitani explained. “Before, if you think about what Rakuten has done, we’ve basically had three strategies: one brand, one ID, one point program. That’s it. That’s how we have been bridging one service, one app to another: utilizing data, cross-selling, lowering customer acquisition cost, maximizing lifetime value. But this is costly.”

In the future, Mikitani envisages using AI to connect all of Rakuten’s offerings through a concierge-like experience. For a trip to Hokkaido, for example, it could book a hotel through Rakuten Travel, order some warm clothes from Rakuten Ichiba, and reserve a restaurant through Rakuten GURUNAVI – all in a single conversation.

“We are already combining Rakuten Ichiba, Rakuten Travel, Rakuten Books and Rakuten Mobile, but all our other services will be combined too,” Mikitani stated. “We can really connect our services using AI, and this is one of the initiatives that we are doing called Rakuten AI Assistant.”

Englishnization to AI-nization

The theme of the 2024 Rakuten Technology Conference was ‘AI-nization 4 all,’ a play on Rakuten’s famous ‘Englishnization‘ initiative. Without this big bet on English over a decade ago, Rakuten would never have been able to attract such a diverse group of talent.

“It was one of the boldest projects, I think, in the recent history of Japanese business society. Now we are trying to do the same thing for AI.” he stressed. “The company in which everybody can use AI versus the company in which nobody can use AI – who’s going to win? It’s very obvious.”

Even as Rakutenians look to leverage the power of AI, Mikitani reiterated that they mustn’t lose sight of the company’s core philosophy: “We really want to make sure that AI is not going to harm society, but empower people, and make life more enjoyable.”