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This article was published on June 2, 2021

Here’s why the US continues to beat China in the AI race

Because big tech beats big academia even when a big government's backing it

Here’s why the US continues to beat China in the AI race

The global AI race was supposed to be a sprint. Back in 2017 when driverless cars and domestic robots were thought to be just around the corner, the promise of deep learning made it seem like we were mere months away from living in an AI-powered utopia.

As it turns out, the global AI race is more of a marathon. And the US has a huge lead that’ll be difficult to overcome for any country, but especially China.

The setup

It was easy to believe China would pull ahead a few years ago. US big tech companies such as Microsoft and Apple had always co-existed with eastern outfits. But, once deep learning exploded in 2014, many experts believed China would use its government influence to direct the flow of research in ways the EU and US’ respective leaders simply couldn’t.

And, for a while, it looked like that was going to be enough to propel the PRC to the top of the global AI leaderboards.

In the west, a lion’s share of AI research ends up patented by businesses who keep their algorithms in a walled-garden. But in the east things are different.

Per an article in the Harvard Business Review:

Unlike in Western developed economies where companies are the primary holders of AI patents, in China, the majority of AI patents are filed by universities and research institutes, most of which are government owned or sponsored.

China’s big problem

The biggest problem China has when it comes to AI is a lack of innovation. Consumer demand is at an all-time high for deep learning technologies in China, but this social trend isn’t translating into breakthroughs.

In essence, China is still playing catch up. The Chinese government may be pouring more money into research and producing more of it, but US tech companies are raising and spending more on research outside of academia.

The US government still spends more on defense AI than China, and US businesses spend more money on cutting-edge research than Chinese companies do.

Simply put, the biggest technology companies in the US can afford to invest in breakthrough research even when such research leads nowhere. The profit margins are much leaner at most Chinese firms so the incentive is typically on producing a profit.

Unfortunately for China, much of its AI position is rooted in developing Chinese-language versions of language recognition software and creating surveillance technology – neither of those are very marketable outside of places where Chinese is spoken or where privacy laws exist.

What it all means

Deep learning might not be the best path forward for artificial intelligence technologies. This is great news for big tech companies in the US. But it’s bad news for China.

In the US, where most of the AI breakthroughs tend to come from big tech companies with large enough coffers to afford supercomputers and high enough salaries to lure away academia’s brightest, scientists won’t miss a beat if we transition away from deep learning.

But China’s heavily-saturated market likely won’t extend beyond its own bubble, much less the deep learning bubble that could pop and leave AI-only companies behind. There’s a reason why there’s only one Chinese firm among the top five richest technology companies in the world.

It’ll be tough for academia in China to keep up with big tech in the US no matter how much data it can generate or acquire.

We’re more likely to see these kinds of catch-up cycles end in cooling-off cycles when heavy government investment doesn’t pay off. China could be headed for an AI winter.

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