COMMENT:
The dominant sentiment in modern-day Europe is anxiety. Its defining need is protection. And the defining feature of its collective mindset is complacency.
In the European Commission's white paper on artificial intelligence all three come together in an almost comical manner: the fear of a high-tech digital future; the need to protect oneself against it; and the complacency inherent in the belief that regulation is the solution. Fear and complacency also pervade the EU's foreign policy and security strategy, which seems to be critically contingent on Donald Trump not being re-elected US president.
I was not surprised to find that the EU's AI white paper was focused mostly on regulation. What I found shocking, however, is how the commission underplays the extent to which the US and China are dominating the market. The EU is using data from 2016, but the gap has increased dramatically since. Stanford University's AI index report shows that the US and China account for almost all global AI investment. The only two other countries with meaningful investments in the technology are the UK and Israel.
Guntram Wolff, director of the Bruegel think-tank in Brussels, notes that the US and China together account for 85 per cent of AI patent filings. The EU is simply not a player in this field. Any intelligent strategy would need to start from realisation of this fact, and not waffle on about "ecosystems of trust".
The only European country with any meaningful presence in AI is the UK. The UK is outspending the US on a per capita basis on mathematics research.
The EU's absence in AI is by choice, not necessity. The EU could have carved out a niche for itself. France and Germany still have some of the best mathematicians and engineers in the world. But politics has intruded. The EU has chosen to prioritise data protection over AI investment. The commission's white paper also excludes defence from its remit, one of the most important applications.
The EU is not a player in military AI. China devised a long-term AI strategy in 2017, closely followed by Russia and the US. The US has already used AI technology in Iraq and Syria. The spillovers from defence to the civilian sector will thus benefit companies in the US and China but not in the EU.
In European discussions on technology the analogue mindset still rules. I recall when a German manufacturer in the 1990s ended up producing the most sophisticated analogue telephone exchange ever when digitalisation was already advancing.
During the same decade, Germany and France supported a joint analogue standard for a high-definition television, a technology that mercifully never saw the light of the day.
European carmakers are late to the market of electric cars, and have little knowhow of AI-based systems. Europe's loss of innovation is closely related to the end of the analogue age, and shifting political preferences.
The digital revolution started in the last century, but most of its economic impact is still ahead of us. A growing proportion of trade between now and the end of the century will be in data. Just-in-time global supply chains of physical goods are the defining characteristic of early 21st-century globalisation. But advances in 3D printing will make it possible for production to become more localised, thus reducing the need to ship components and goods across borders.
When you trade data, geographic proximity becomes irrelevant. Regulation becomes an algorithm. The idea of the EU as the global regulator would depend on technology not advancing.
The combination of fear, protectionism and complacency also informs the EU's negotiating position on Brexit. This is driven by regret that Brexit is happening, fear of unfair competition and complacency about the UK's potential to carve out market niches the EU has left vacant — like AI.
The increase in research on mathematics may be an indication of a new AI-based industrial policy, the contours of which have yet to appear. I expect the UK government to extricate itself from EU data protection laws. Google said last week that it would move its UK customer data from Ireland to the US.
Maybe the company intends to exploit commercial opportunities that could arise from a more liberal data protection regime. I expect data protection to become one of the biggest issues in the bilateral EU-UK relationship.
The EU's unresolved challenge is to comprehend the deep implications of the digital age, what it means for economic policy, defence and security, and for how the bloc itself should work. This is no time for those who live in the past.
Written by: Wolfgang Münchau
© Financial Times