The global race for AI supremacy
The geopolitics of artificial intelligence competition
Reva Goujon
Vice President of Global Analysis, Statfor
- This article was originally published as part of the 2018 edition of Bled Strategic Times, the official gazzette of the Bled Strategic Forum (BSF) international conference. You can access the full version of this and other BSF publications by visiting our official website.
For better or worse, the advancement and diffusion of artificial intelligence technology will come to define this century. Whether that statement should fill your soul with terror or delight remains a matter of intense debate. Techno-idealists and doomsdayers will paint their respective utopian and dystopian visions of machine-kind making the leap from what we know now as ‘narrow AI’ to ‘general AI’ to surpass human cognition within our lifetime. On the opposite end of the spectrum, yawning skeptics will point to Siri’s slow intellect and Captain Sully’s human instinct to wave off AI chatter as a heap of hype not worth losing sleep over.
The fact is that the development of AI — a catch-all term that encompasses neural networks, machine learning and deep learning technologies has the potential to fundamentally transform civilian and military life in the coming decades. Regardless of whether you’re a businessman pondering your next investment, an entrepreneur eyeing an emerging opportunity, a policymaker grappling with regulation or simply a citizen operating in an increasingly tech-driven society, this is a global force that demands your attention.
An unstoppable force
Willingly or not, even the deepest skeptics among us are feeding the AI force nearly every minute of every day. Every Google (or Baidu) search, Twitter or (Weibo) post, Facebook (or Tencent) ad, Amazon (or Alibaba) purchase is another click creating mountains of data — some 2.2. billion gigabytes globally every day — that companies are using to train their algorithms to anticipate and mimic human behavior. This creates a virtuous (or vicious, depending on your perspective) cycle: the more users engage with everyday technology platforms, the more data is collected; the more data that’s collected, the more the product improves; the more competitive the product, the more users and billions of dollars in investment it will attract; a growing number of users means more data can be collected, and the loop continues.
The geopolitical backdrop to the global AI race
AI is both a driver and a consequence of structural forces reshaping the global order. Aging demographics — an unprecedented and largely irreversible global phenomenon– is a catalyst for AI development. As populations age and shrink, financial burdens on the state mount and labor productivity slows, sapping economic growth over time. Advanced industrial economies already struggling to cope with the ill effects of aging demographics with governments that are politically squeamish toward immigration will relentlessly look to machine-learning technologies to upsurge productivity and economic growth in the face of growing labor constraints.
The global race for AI supremacy will feature prominently in great power competition between the United States and China. China was shocked by Google DeepMind’s 2016 AlphaGo victory against the greatest living player of Go, an ancient Chinese strategy game (an event dubbed by Chinese AI state planners as their ‘Sputnik moment’) and has been deeply shaken by Trump’s trade wars and a growing imperative by the West to keep sensitive technology out of Chinese competitors’ hands. Just in the past couple years alone, China’s focus on AI development has skyrocketed to ensure its technological drive won’t get shortcircuited by its competition with the US.
Do or die for Beijing
The United States, for now, has the lead in AI development when it comes to hardware, research and development and a dynamic commercial AI sector. China, by its sheer size, has a much larger data pool, but is critically lagging behind the US in semiconductor development. Beijing, however, is not lacking in motivation to overtake the United States as the premier global AI leader by 2030. And while that timeline may appear aggressive, China’s aggressive development in AI in the coming years will be unfettered by the growing ethical, privacy and antitrust concerns occupying the West. China is also throwing hundreds of billions of dollars into fulfilling its AI mission, both in collaboration with its standing tech champions and by encouraging the rise of unicorn start-ups.
By incubating and rewarding more and more start-ups, Beijing is finding a balance between focusing its national champions on the technologies most critical to the state (sometimes by taking an equity stake in the company) without stifling innovation. In the United States, on the other hand, it would be disingenuous to label US-based multinational firms parking most of their corporate profits overseas as true ‘national’ champions. Instead of the state taking the lead in funding high risk and big impact research in emerging technologies as it has in the past, the roles in the West have been flipped; private tech companies are in the driver’s seat while the state is lunging at the steering wheel, trying desperately to keep China in its rear view.
The ideological battleground
The United States may have thought its days of fighting globe-spanning ideological battles ended with the Cold War. Not so. AI development is spawning a new ideological battlefield between the United States and China, pitting the West’s notion of liberal democracy against China’s emerging brand of digital authoritarianism. As neuroscientist Nicholas Wright highlights, China’s 2017 AI Development Plan “describes how the ability to predict and ‘grasp group cognition means ‘AI brings new opportunities for social construction.’” Central to this strategic initiative is China’s diffusion of a “social credit system” (due to be fully operational by 2020) that would assign a score based on a citizen’s daily activities to determine everything from airfare class and loan eligibility to what schools your kids are allowed to attend. A tech-powered state-driven approach to parse model citizens from the deplorables, so to speak.
The ability to harness AI-powered facial recognition and surveillance data to shape social behavior is an appealing tool, not justfor Beijing, but for other politically paranoid states who are hungry for an alternative path to stability and are underwhelmed with the West’s messy track record in democracy promotion. Wright describes how Beijing has exported to Thailand and Vietnam its Great Firewall model to barricade the Internet and has been supplying surveillance technology to the likes of Iran, Russia, Ethiopia, Zimbabwe, Zambia and Malaysia. Not only does this aid China’s goal of providing an alternative to a US-led global order, but it widens China’s access to even wider data pools around the globe to hone its own technological prowess.
The european hustle
Not wanting to be left behind in this AI great power race, Europe and Russia are hustling to catch up, but will struggle in the end to keep pace with the United States and China. Russian President Vladimir Putin made headlines last year when he told an audience of Russian youths that whoever rules AI will rule the world. But the reality of Russia’s capital constraints means that Russia will have to choose carefully where it puts its rubles. Moscow will apply a heavy focus on AI military applications and will rely on cyber espionage and theft to try and find short cuts to AI development, all while trying to maintain its strategic alignment with China to challenge the United States.
While France harbors ambitious plans to develop an AI ecosystem for Europe and Germany frets over losing its industrial edge to US and Chinese tech competitors, unavoidable and growing fractures within the European Union will hamper Europe’s ability to play a leading AI role on the world stage. The EU’s cumbersome regulatory environment and fragmented digital market has been prohibitive for tech start-ups, a fact reflected in the EU’s low global share and value of unicorn companies. Meanwhile, the UK, home to Europe’s largest pool of tech talent, will be keen on unshackling itself from the bloc’s investment-inhibitive regulations as it stumbles out of the bloc.
A battle over talent and standards
But wherever pockets of tech innovation already exist on the continent, those relatively few companies and individuals are already prime targets for US and Chinese tech juggernauts prowling the globe for AI talent. AI experts are a precious global commodity. According to a 2018 study by Element AI, there are roughly 22,000 PhD-educated researchers in the world, only around 3,000 are actually looking for work and around 5,400 are presenting their research at AI conferences all over the world. US and Chinese tech giants are using a variety of means mergers and acquisitions, aggressive poaching, launchings labs in cities like Paris, Montreal and Taiwan — to gobble up this tiny talent pool.
Even as Europe struggles to build up its own tech champions, the bloc can use its market size and conscientious approach to ethics, privacy and competition to push back on encroaching tech giants through hefty fines, data localization and privacy rules, taxation and investment restrictions. The EU’s rollout of General Data Protection Regulation (GDPR) is designed to give Europeans more control over their personal data by limiting data storage times, deleting data on request and monitoring for data breaches. While big tech firms have the means to adapt and pay fines, the move threatens to cripple smaller firms struggling to comply with the high cost of compliance. It also fundamentally restricts the continental data flows needed to fuel Europe’s AI startup culture.
The United States in many ways sharesEurope’s concerns over issues like data privacy and competition, but it has a fundamentally different approach in how to manage those concerns. The European Union is effectively prioritizing individual privacy rights over free speech, while the United States does the reverse. Brussels will fixate on fairness, even at the cost of the bloc’s own economic competitiveness, while Washington will generally avoid getting in the way of its tech champions. For example, while the EU will argue that Google’s dominance in multiple technological applications is by itself an abuse of its power that stifles competition, the United States will refrain from raising the antitrust flag unless tech giants are using their dominant position to raise prices for consumers.
US and European government policy overlap instead in their growing scrutiny over foreign investment in sensitive technology sectors, especially when it comes to China’s aggressive overseas investment drive and the already deep integration of Chinese hardware and software in key technologies used globally. A highly diversified company like Huawei, a pioneer in cutting-edge technologies like 5G and a mass producer of smartphones and telecommunications equipment, can leverage its global market share to play an influential role in setting international standards.
Washington, meanwhile, is lagging behind Brussels and Beijing in the race to establish international norms for cyber policy. While China and Russia have been persistent in their attempts to use international venues like the United Nations to codify their version of state-heavy cyber policy, the European Union has worked to block those efforts while pushing their own standards like GDPR.
This emerging dynamic of tightening restrictions in the West overall against Chinese tech encroachment, Europe’s aggressive regulatory push against US tech giants and China’s defense and export of digital authoritarianism may altogether lead to a much more balkanized market for global tech companies in the future.
The AI test of the century
There is no shortage of AI reports by big-name consulting firms telegraphing to corporate audiences the massive productivity gains to come from AI in a range of industries, from financial auto, insurance and retail to construction cleaning and security. A 2017 PWC report estimated that AI could
add $15.7 trillion to the global economy in 2030, of which $6.6 trillion would come from increased productivity and $9.1 trillion would come from increased consumption. The potential for double-digit impacts to GDP after years of stalled growth in much of the world is appealing, no doubt.
But lurking behind those massive figures is the question of justhow well, how quickly and how much of a country’s workforce will be able to adapt to these fast-moving changes. As Austrian Joseph Schumpeter described in his 1942 book, “Capitalism, Socialism and Democracy” the ‘Creative Destruction’ that results from socalled industrial mutations “incessantlyrevolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” In the age of AI, the market will incessantly seek out scientists and creative thinkers. Machines will incessantly render millions of workers irrelevant. And new jobs, from AI empathy trainers to life coaches, will be created. Even as technology translates into productivity and economic gains overall, this will be a wrenching transition if workers are slow to re-skill and if wage growth remains stagnant for much of the population.
Time will tell which model will be better able to cope with an expected rise in political angst as the world undergoes this AI revolution: China’s untested model of digital authoritarianism or the West’s time-tested, yet embattled, tradition in liberal democracy.
