Artificial Intelligence (AI) has gained geo-strategic importance. Russian President Vladimir Putin asserted that whoever became the leader in the field would rule the world.
Countries are jostling to stay ahead of the game. China, UK, France, Germany, Finland, Canada, Japan, South Korea, India, Singapore, Mexico, Kenya, Tunisia, and the United Arab Emirates (UAE), among others, have released national plans to promote the development and use of AI. They are very different, each building on the country’s strengths. Only a few, such as China and France, have evolved strategies.
The rest, including the EU, have published guidelines but have yet to make specific policy announcements. The UAE is the first country in the world to institute a Ministry of Artificial Intelligence. How do these countries’ strategies compare? And what are the implications for the world? I have selected six countries with very different approaches which will have a significant impact outside their national boundaries.
Distinctive characteristic Defend the lead; private sector the envy of the world
State role Largely silent
- Clear lead in AI in terms of leading-edge research, advanced algorithms, specialised computing hardware, fast-growing inventory of data and talent. Tech giants such as Google, Amazon, Facebook and Apple are investing billions in AI R&D.
- No central AI policy, but government agencies such as the Defense Advanced Research Projects Agency (DARPA) and the Intelligence Advanced Research Projects Activity (IARPA) are funding AI projects. DARPA, which is responsible for the development of emerging technologies, recently announced an investment of $2 billion (£1.52 billion) to build the next-gen AI. But the bridges that the Defense Department has tried to build with Silicon Valley have come under pressure due to the employee protests from companies such as Google and Microsoft.
Recent government policies are seen as putting a dampener on the growth of the AI industry. Tightening of the immigration rules is starving Silicon Valley of much needed talent.
Statements from a one-page fact sheet released by the White House and the speech by Michael Kratsios, Deputy Assistant to the President for technology policy, that set the tone for the national strategy:
- America has been the global leader in AI and the Trump administration will ensure “our great nation” remains in that position.
President Trump has taken executive action to give US workers the skills to succeed in the 21st-century economy.
Distinctive characteristic Platform strategy: attract the best; lead in ethical AI
State role Enabler
- Pursues the vision set out by the UK’s industrial strategy to be the world’s most innovative economy.
- Ambitious but pragmatic plan to make the UK a global centre for AI by upgrading data infrastructure, attracting the best talent, making it easy to start a business and driving regulatory innovation. Targets a potential contribution of £200 billion or 10% of UK GDP by 2030.
Aims to lead the world in the safe and ethical use of AI and strengthen cybersecurity capability.
Statements from the ‘AI Sector Deal’ and the House of Lords report that set the tone for the national strategy:
The Sector Deal reinforces the five foundations of the Industrial Strategy: ideas, people, infrastructure, the business environment and places.
- It is essential that ethics take centre stage in AI’s development and use.
- The UK is unlikely to be able to rival the scale of investments of the US and China.
Distinctive characteristic Defend Europe’s digital sovereignty; lead in ecological AI
State role Interventionist
- Aims to shift the balance of power from giant US tech platforms to European businesses, drawing especially on Europe’s world-leading General Data Protection Regulation (GDPR). Focuses on building open data ecosystems for the development of AI within Europe, but is against free data-flows with the rest of the world.
- Aspires to be globally distinctive in applying AI to four sectors: health, transport, environment and defence – in which France has an edge.
- Targets to include AI in initiatives emerging as part of the Paris Agreement on climate change.
- Government promised to invest $1.8 billion (£1.37 billion) in AI up to 2022.
Statements from the report published by the task force led by Cédric Villani, mathematician and member of the French Parliament, that set the tone for the national strategy:
- The role of the state must be reaffirmed: market forces alone are proving an inadequate guarantee of true political independence.
- Data policy needs to be structured around the goals of sovereignty and strategic autonomy – a prerequisite to avoid becoming “digital colonies” of the Chinese and American giants.
- By 2040 the energy required for computation will have exceeded world energy production.
- Limited budgets mean that we must not be tempted to spread resources too thinly.
Distinctive characteristic “AI garage” for developing world; solve big socioeconomic problems
State role Enabler
- Three-pronged focus:
Opportunity: the economic impact of AI for India.
AI for greater good: social development and inclusive growth.
“AI garage” for 40% of the world: solution provider of choice for the emerging and developing economies (excluding China) across the globe.
- Government focus on five sectors (where private-sector-only initiatives will not lead to achieving desired societal outcomes): health, agriculture, education, smart cities, smart transportation.
- AI to boost India’s annual growth rate by 1.3 percentage points by 2035.
Statements from the National Strategy for AI published by NITI Aayog, the policy think-tank for the government, that set the tone:
- Strategy is to maximise late-movers’ advantage, acknowledging that India is some distance away from delivering homegrown AI solutions.
- Barriers to AI development and deployment can effectively be addressed by adopting the marketplace model – one that enables market discovery not only of the price, but also of different approaches best suited to achieving the desired results.
- The government has to play the critical role of catalyst in supporting partnerships, providing access to infrastructure, fostering innovation through research and creating the demand.
- “Solved in India” (i.e. by Indian IT companies) could be the model to promote India’s potential as a leader in AI.
Distinctive characteristic Goal to dominate the AI world by 2030 through a potent mix of capability, capacity and strategy
State role Driver
- Three-step approach: Match the AI level in the Western world by 2020, achieve “major breakthroughs” by 2025 and be AI world leader by 2030.
- Revenue goal for 2030: 1 trillion RMB (about £114 billion) for the core AI industry and 10 trillion RMB for related sectors.
- Towering ambition is backed by substantial funding. For example, Beijing is planning to build a 13.8 billion RMB (£1.61 billion) AI development park. The City of Tianjin has announced a 32.5 billion RMB (£3.8 billion) fund to support the AI industry. Government is taking an active role in funding AI ventures, having invested more than 6.5 billion (RMB £0.76 billion) in domestic start-ups, with a major shift toward AI.
- Private sector is being roped in to support the national goal. The Ministry of Science and Technology (MOST) has designated national champions – Baidu for the autonomous vehicle platform, Tencent for medical, Alibaba for Smart Cities and iFlytek for speech intelligence.
- China is pursuing a national strategy of “military-civil fusion” and is enlisting technology companies and universities to support the mission. For example, tech giant Baidu has partnered with a state owned defence industry conglomerate to create the Joint Laboratory for Intelligent Command and Control Technologies. Tsinghua University, China’s MIT, has established a state-of-the-art laboratory for military intelligence.
Statements from the Next Generation Artificial Intelligence Development Plan that set the tone for the national strategy:
- Build the first-mover advantage in AI, speed up the construction of an innovative country and the world’s scientific and technological power, and formulate this plan in accordance with the deployment requirements of the Party Central Committee and the State Council.
- Focusing on the urgent need to raise China’s international competitiveness in AI, next-generation AI key general technology R&D and deployment should make algorithms the core; data and hardware the foundation; and upping capabilities in sensing and recognition, knowledge computing, cognitive reasoning, executing motion, and human–machine interface in order to form openly compatible, stable and mature technological systems.
Distinctive characteristic Industrialisation, social implementation and fusion of technologies
State role Enabler
- Clear leader in industrial robotics.
- Seeking new societal models, given energy and resource constraints and greying workforce; might be better placed than other countries to cope with the advances of automation, given ageing workforce and lifelong employment practices.
- Three-phased approach:
Phase 1: (till 2020): use of AI in different domains (personal, workspace, urban, industry).
Phase 2: (2020–2025): public use of AI and data developed in different domains.
Phase 3: (Beyond 2025): Crosspollination across domains.
Statements from the Artificial Intelligence Technology Strategy report published in March 2017 by the Strategic Council for AI Technology led by Yuichiro Anzai that set the tone:
- For Japan to lead the world, it is necessary to come up with a challenging roadmap oriented towards industrialisation based on AI technology and other related technology, grounded in the strengths Japan possesses with regard to pressing social issues.
- Fusing AI with other related technologies holds out the possibility of resolving a number of social issues.
- Be the leader in medical care and welfare technologies by utilising big data together with AI as Japan becomes the world’s most rapidly ageing society.
One country not included above that we need to keep an eye out for is Germany, which is expected to publish its AI strategy at a Digital Summit in December 2018. Germany’s federal cabinet released a paper in July 2018 that outlines the goals of the strategy.
In short, the focus is “AI Made in Germany” i.e. expand German and European research in AI and transfer research results to the private sector for creating AI applications.
How will these plans change the world?
Here are three significant implications:
Rebalancing of tech power across nations:
- Rise of the Chinese giants: China has placed big bets on AI for political and economic reasons. A strong track record in delivering results suggests there is a strong possibility that the country can make its AI vision real. Homegrown tech giants will be beneficiaries, building on the structural advantage of enormous data sets, flexibility to use them in AI applications and unparalleled government support. Beijing could rise to become a global innovation centre for AI on a par with Silicon Valley.
- Headwinds for the US tech giants: European resolve to tilt the balance of power and its starved treasuries pose a challenge to the highly profitable US near-monopolies. When governments have budget deficits, they will always find a way to go where the money is. The cash-rich US tech giants are the obvious target. These companies have not helped themselves either, with the public perception that they are not paying their fair share of taxes. Moreover, the FAANGs (the best-performing tech stocks) are for the first time facing talent shortages at home because of the restrictive US visa regime. Investors need to be wary of current sky-high valuations – but these headwinds for the US companies bode well for the UK and India.
- Ascent of the UK as the AI R&D hub despite Brexit: The UK is getting its act in place to attract the best. It is blessed with a large talent pool in established institutions like Cambridge and Oxford, which have given birth to companies such as Google DeepMind, Arm and Evi (creator of Amazon’s Alexa). These factors make the UK an attractive destination for the US tech giants and companies from other countries to set up their AI innovation hubs.
- Growing importance of India to the Western tech companies: Now the only big market that is friendly to the Western tech companies, India’s importance will continue to rise for the Western giants as it expands. India is currently facing a cold-start problem on AI as dominant local tech firms struggle to upgrade from ‘coded’ software to a ‘codeless’ AI future. But once it gets its bearings, it will likely surge on the AI scene, given the massive databank of a 1.34 billion population and vast talent pool.
- Birth of European national champions in AI: With a favourable regulatory framework and government support, Europe will likely create AI equivalents of Airbus, Germany’s BMW and France’s Orano (formerly Areva). These champions might be from the B2B world with distinctive strengths in AI applications in sectors such as manufacturing, healthcare, defence and chemicals, in which Europe has an edge.
Headwinds to growth:
- Data localisation: Global flows of goods, services, finance, people and data have raised world GDP by at least 10% in the past decade, according to estimates by McKinsey. But data localisation measures are growing. Preventing cross-border fl ows of data might help in creating national champions, but it will come at the cost of growth. Data ‘balkanisation’ could reduce Chinese GDP by up to 3.4% by 2025 and that of the EU by 0.5%, according to reports.
- Mass personalisation: Thank AI (when done ethically) for a world without spam that allows marketers to offer the right product, at the right price, with the right message, at the right time to their consumers. McKinsey thinks personalisation could boost growth for companies by up to 10%. While GDPR comes with a host of advantages, the measure is slowing down customer-facing data-driven innovation in Europe. Companies are taking a cautious approach, given fines of up to 4% of global revenues for breaches. This is a temporary phase while companies and the regulator get a grip on compliance monitoring. But loss of a year in the fast-moving AI world could mean a lot for European firms when their counterparts are running unshackled elsewhere.
Ethical and socially responsible AI:
Despite very different national strategies, all countries agree on the need for ethical AI and for ensuring that all their citizens are onside. This commonality of vision gives cause for cautious optimism that nations will unite to keep rogue actors in check.
Abhijit Akerkar (MBA2008) is Head of Applied Sciences, Business Integration, Lloyds Banking Group
What every CEO needs to know about AI. Part one: growth