Rakuten's struggling mobile business has become essential for the e-commerce group's foray into AI, CEO Hiroshi Mikitani says.
He said in an interview with Bloomberg TV the huge volumes of data in Rakuten Mobile will be "extremely powerful" for the group's AI business. "We have no intent to compete against OpenAI or Google. But we will actively build a more vertically integrated, specialized AI," Mikitani said.
The mobile project has been a grueling exercise for Rakuten, Japan's largest online shopping company.
Mikitani wasn't the only one to have grossly overestimated the potential of 5G, but he also seems to have underestimated the difficulty in being a challenger in a fully served market. The mobile unit has racked up more than $7 billion in losses since its launch in April 2020, but is now close to break-even, Mikitani says.
The parent company reported a quarterly operating profit in Q3, its first in four years, thanks mainly to declining mobile losses. Rakuten's mobile competitors are only now recovering from the brutal discount war ignited by its entry.
AI to cut power consumption
Its subscriber total crossed the 8 million mark last October, but that is still less than 5% of the total market, which is dominated by NTT DoCoMo with around 90 million subs.
Mikitani says that besides the potential benefits of the mobile business to the company's AI ecosystem, Rakuten Mobile users spend almost 50% more in its online stores and are also customers of its credit card and stock trading businesses.
When it comes to AI, one part of Rakuten's strategy is to use third-party LLMs with partners like Open AI while also developing its own large models, Mikitani said.
But he ruled out moving into AI semiconductors. Rival SoftBank, the 100% owner of UK-based ARM, is weighing an acquisition of data center chip designer Ampere, a Rakuten technology partner.
"Our business is centred on utilizing data, providing better experience for the consumer, and [letting] them transact," he said.
The company also appears to have ruled out adopting another SoftBank approach, AI-RAN, based on Nvidia GPUs at the edge. It has attracted interest across the industry, but Rakuten thinks it's not viable because of the cost of the GPUs.
But one AI use case it is pursuing this year is driving down power cost. Mikitani says AI will help cut energy consumption by 20% this year – in part helped by its Ampere partnership.
He said the mobile business accounted for 90% of the Rakuten group's total electricity use.