CEO Mikitani: Rakuten is well-positioned for the AI age

“This is going to be one of the biggest businesses in human history.”

At the recent Rakuten Technology Conference, one topic dominated discussion: the rise of AI. During his keynote in Tokyo, Rakuten Group Chairman and CEO Mickey Mikitani underscored just how important this up-and-coming tech is for Rakuten.

“Rakuten wants to use AI to empower people, make our work more efficient, make our products better, make our services even richer – and make it really simple.”

2023 was a year of astonishing progress in the fields of generative AI and natural language processing. But in order to ensure that everyone has equal access to this powerful tech, Mikitani stressed that leadership from companies like Rakuten will be paramount.

“AI may be even bigger than anything we have seen over the last 30 years of internet innovation,” he told the audience. “To make this AI usable, entrepreneurship will be very important.”

Teaming up with OpenAI to leverage Rakuten’s powerful data

At Rakuten’s summer Optimism conference, Mikitani was joined onstage virtually by none other than OpenAI CEO Sam Altman to announce a collaboration between the two companies. “Why are OpenAI and other AI companies interested in doing business with us?” Mikitani posed. The answer is clear: data.

“If you think about it, is there any company like Rakuten in the world? Credit card, banking, brokerage, travel, e-commerce, points, insurance – all this data, under one data set. No other companies have the data set we have. So, if we train it, it is going to become super powerful,” Mikitani predicted. “We’re not just talking about online shopping – we’re talking about how we can use our data, utilizing generative AI and making our users’ experience much richer.”

This level of data diversity under a single roof is rare in the tech industry – even among major data-driven Silicon Valley companies.

“They have behavioral data but they do not have transactional data,” Mikitani explained. “So that’s very unique.”

Empowering Japanese businesses with AI tools

Another reason AI companies are eager to do business with Rakuten is the company’s deep roots in the local business community.

“We do business with 900,000 clients in Japan. Many AI companies don’t know how to train or tailor generative AI so that these companies can use it. We are planning to empower our merchants, hotels, and everyone with AI so that not only us, but our clients, merchants and partners can really enjoy utilizing AI.”

Mikitani touched on the recent unveiling of the Rakuten AI for Business platform powered by OpenAI. The platform’s goal is to make AI useful for businesses of any and all sizes and industries.

“Not only for automating editing of stores – we’re going to use it for marketing, sales, customer support, operation, maybe strategic planning, and of course engineering,” Mikitani said. “We wanted to really make sure that we don’t just talk about it, but get it done.”

Within Rakuten’s own ecosystem, meanwhile, engineers have been busy conducting trials of AI-powered search and recommendations technology – a core part of the e-commerce business. The tech utilizes semantic search, which carries out searches not just on the keywords being searched for but also their meaning.

“I want to go to a picnic today but it’s a little bit cold. Give me a jacket. Now our search feature will answer that query. Before, there was no answer,” Mikitani said. The tech is already in play on Rakuten Fashion: “We have improved our GMS transaction through search by 5%.”

But Rakuten isn’t looking to stop at e-commerce.

“What we want to do is not just transactions. For example, ID checks, KYC, automation, customer center operations, automated response, advertising,” Mikitani listed. “And of course, logistics – we’re going to use AI in warehouse operations, picking and packing, routing and delivery, price and inventory management, and search optimization.”

Rakuten Mobile is AI-ready

The launch of Rakuten Mobile had a major impact on Japan’s telecommunications industry, driving average cell costs down dramatically. Thanks to Rakuten’s efforts to democratize the mobile market, using a cell phone is now significantly cheaper in Japan.

The cutting-edge tech that Rakuten employed to achieve this also lends itself particularly well to taking advantage of AI tech.

“What we’ve done with Rakuten Mobile is we basically disaggregated hardware and software,” Mikitani explained. “We want to bring in AI to operate our network.”

Older mobile carriers primarily rely on physical hardware to operate their networks, meaning all maintenance, upgrades and changes must be carried out on inflexible, physical machines over a vast geographical area. Rakuten’s software-centric network, meanwhile, can leverage software-based tech innovations like AI much more easily.

“We are bringing automation to wireless networks,” Mikitani declared. “Scaling, healing – everything will be done by AI. That’s what Rakuten Mobile is… We can do this because we are not trapped by hardware.”

Placing AI at the center of the Rakuten Ecosystem

“We would like to really make sure that AI is our friend,” Mikitani stressed. “I think we’re very unique because of the data set we have, the people we have, and the culture of Rakuten… I think we are one of the few companies in Japan with the ability to develop top-class generative AI.”

Rakuten’s AI strategy will be driven by a mix of in-house innovation and strategic partnerships. But Mikitani was clear that Rakuten must do more than simply use other companies’ tools.

“We’re not talking about AI as one of our tools. AI is going to be at the center of our ecosystem.”