Nations will spar over AI

It’s not a trade war but a research, investment, and talent one, and China is moving quickly. What this prediction–and seven—mean for your business in 2018.

AI is going to be big: $15.7 trillion big by 2030, according to our research. The AI pie is so big that besides individual companies, countries are working on strategies to claim the biggest possible slice.

The US started off strong, with a trio of reports in 2016. They outlined a plan to make the US an AI powerhouse and thereby boost both the economy and national security.

Recommendations included increased federal funding, regulatory changes, the creation of shared public data sets and environments, the definition of standards and benchmarks, workforce development and ways for AI to bolster cybersecurity and the military.

But since a new administration entered at the start of 2017, the government has abandoned this plan. It’s cutting AI research funds.

Its recently passed tax reform, however, could boost AI in the US. The lower corporate tax rate, provisions for repatriating cash from overseas and permission to expense 100 percent of capital investments is likely to spur investment in AI and other technologies. And the current administration’s emphasis on deregulation could help AI in certain sectors, such as drones and autonomous vehicles.

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The new AI leaders

The UK last year launched a plan to improve access to data, AI skills and AI research and uptake. Its latest budget added funding for a Centre for Data Ethics and Innovation to drive responsible AI, for exploratory work on data trusts and for new AI fellowships and researchers.

Canada—already an AI leader—is also working to make AI a lynchpin of its future economy. The federal government last year launched its PanCanadian Artificial Intelligence Strategy. The program includes funding for AI research centers in collaboration with private companies and universities. It also aims to attract and retain top AI talent.

Japan meanwhile released an AI technology strategy with a three-phase plan to achieve a true AI ecosystem. Building on successes in robotics, Japan’s government envisions joining AI with other advanced technologies, such as the internet of things, autonomous vehicles and the blending of cyber and physical space.

Other countries with recently released national AI plans include Germany with ethical guidelines for automated driving and its Industrie 4.0 initiative, and the UAE with a strategy to use AI to boost government performance and various economic sectors.

China stands apart

China’s next-generation AI plan, released in 2017, declared AI as a strategic national priority for the country and showcased the top leadership’s vision for a new economic model driven by AI.

Unlike the US, the Chinese government is putting this plan into practice. For example, it recently commissioned Baidu to create a national “deep learning laboratory” together with leading universities—and it’s investing an undisclosed sum in the effort.

The country is already strong in AI. Baidu, Alibaba and Tencent are among the global AI leaders. Chinese programmers recently won the ImageNet AI competition. And its leading ecommerce companies are using highly sophisticated AI in their warehouses and across the business.

Other countries also have innovative engineers, universities and companies. But China stands apart in the extent to which its government is prioritizing AI. Our research indicates that China will reap the most benefit from AI over the next decade: some $7 trillion in GDP gains by 2030, thanks to an uptick in productivity and consumption.

China will reap the most benefit from AI over the next decade: some $7 trillion in GDP gains by 2030, thanks to an uptick in productivity and consumption.

Implications

China’s investment may awaken the West

If China starts to produce leading AI developments, the West may respond. Whether it’s a “Sputnik moment” or a more gradual realization that they’re losing their lead, policymakers may feel pressure to change regulations and provide funding for AI.

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More national and regional strategies will come

More countries should issue AI strategies, with implications for companies. It wouldn’t surprise us to see Europe, which is already moving to protect individuals’ data through its General Data Protection Regulation (GDPR), issue policies to foster AI in the region.

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Collaboration may come too

National competition for AI will never cease—there’s too much money at stake. But we do expect growing opportunities, facilitated by the UN, the World Economic Forum and other multilateral organizations, for countries to collaborate on AI research in areas of international concern.

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Anand Rao
PwC Global and US Artificial Intelligence and US Data & Analytics Leader, PwC US
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Chief Technologist, PwC New Ventures, PwC US
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US Assurance Innovation Leader, PwC US
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