October 2, 2019
The artificial intelligence race has kept the world watching in rapt attention. Will the People’s Republic of China beat the United States of America? If so, what are the implications? Kai-fu Lee, a former executive at Apple, SGI, Microsoft, and Google, argues in his novel AI Superpowers that China will outpace America in terms of AI development thanks to abundant data, eager entrepreneurs, well-educated and trained scientists, and a supportive policy landscape. However, the debate must be reframed: it’s not a battle between the United States and China, but it instead appears to be a tug-of-war between seven technology companies—Google, Amazon, Facebook, and Microsoft on the American team and Alibaba, Baidu, and Tencent on the Chinese side. Kai-fu Lee highlights these seven companies as ones spearheading the movement.
Dive into this game further and the key players become clearer: it’s not even between the seven companies listed above. It’s simply a race of two giants pioneering access to consumer goods: Amazon and Alibaba. Ultimately, these two companies’ combination of consumer data and extraordinarily precise supply chains have not only shaped retail, but they are also mastering the so-called third level of AI called perception. In AI Superpowers, Kai-fu Lee describes four layers of AI:
- Internet as a recommendation agent (e.g., Gmail providing suggestions when drafting emails)
- Business applications, especially with big data
- Perception, in particular facial recognition and speech recognition
- Autonomous hardware, such as self-driving cars
The third AI layer illustrates the increasing complexity of AI and its use. When thinking of how these two companies are improving “perception,” Alexa already comes to mind, but can Amazon take it further? How does Alibaba plan to catch up? Or is it already ahead?
Amazon has developed a cachet of products that seamlessly integrate AI. Through its omni-channel presence, the tech behemoth implements machine learning in ventures such as the Amazon Go store, its recommendation engine, Amazon Web Services (by offering solutions to large and small businesses), and most famously, its Amazon Alexa speaker. This gives Amazon a massive advantage over competitors, such as Facebook and Google, as Amazon is looking to take over these companies with regards to advertising. By having access to what customers purchase, instead of unclear data on whether customers are simply scrolling past ads or going through with the purchase, Amazon provides a competitive advantage to companies looking to optimize marketing. Amazon’s Basics generic brand also enhances consumer data collection. It is also exploring other ways to collect data, such as by sending free samples to see how consumers respond. Amazon has remained mindful of its data use. When it developed an AI algorithm to develop resumes, they scrapped the project because the dataset lacked women and discriminated against resumes with the word “women.”
However, as Amazon invests in projects, such as AI-powered doorbell cameras to prevent package theft and facial recognition technology to detect criminals, its own shareholders and activist groups stall Amazon’s progress by limiting the sale of AI facial recognition tech to law enforcement. San Franciscobecame the first major U.S. city to ban the use of facial recognition in the same field. While American citizens continue upholding standards of ethics and morals regarding AI, it may come at the expense of technological development. Then, how can the U.S. continue peeling the layers of AI, as Kai-fu Lee describes?
Meanwhile, due to China’s political and social structure, the government is doing exactly what the American government, particularly the White House, is not. By outwardly expressing approval for “Big Tech” and protecting major companies from competition, China has already seen a wave of innovation sweep over the country and beyond its borders. Alibaba is already the largest R&D spender in China. At its core, Alibaba has employed strategies similar to Amazon by leading the use of AI in improving customers’ shopping experience and developing smart speakers. China smart speaker adoption is poised to grow 166% in 2019 with Alibaba set to maintain its market share lead. China’s demographics help significantly; with a population nearly quadruple that of America’s, it’s easier to access more data points, strengthening Alibaba’s algorithms.
When looking beyond business models and products, stark differences appear. Alibaba operates in a completely different landscape. It is also collaborating with the Chinese government to implement the City Brain project, which is a cloud-based system where AI algorithms process data about a city and its citizens to improve overall living standards. Alibaba has already worked with Shanghai’s transportation system to build machines that provide routes on vocal requests and developing a facial recognition machine that checks ID. As American citizens critique AI innovation, China’s government is lauding it.
As the United States government has put AI development on the backburner, Chairman Xi Jinping has pledged to build a $1 trillion industry by 2030. The U.S. is cutting funding for research and education overall; this, along with stricter immigration policies, can be a detriment to the country. The current state of America raises many questions on how it should deal with this situation.
- Should the U.S. approach developing AI from the lens of the military? While the Department of Defense traditionally developed cutting-edge technology, it most likely cannot compete in the way it used to during the Cold War. There is already discussion that the U.S. is more likely to spend on maintaining and upgrading mature systems and underinvest in technological breakthroughs. Instead, the innovation hub is clearly Silicon Valley, with smaller hubs appearing in cities across the country.
- Should President Donald Trump sharply criticize Amazon? Most certainly not. Trump and Xi have opposite views with regards to dealing with these major technology companies. Already, we see the Chinese leader steering the technology sector to maintain a competitive position in the global arena. In contrast, Trump has lacked a clear direction when it comes to his approach to technology.
- Should American regulators discuss the breakup of “Big Tech”? A radical idea, but definitely the most harmful. These technology companies, especially Amazon, have amassed influence because of their talent and overwhelming presence. Splitting them up will lead to weaker and smaller companies. On the other hand, Chinese conglomerates will continue achieving scale and eventually overtake these smaller, broken-up companies.
- Have cities such as San Francisco established precedent on banning certain technologies due to ethical implications? Is this the right approach? Several cities have already adopted legislation banning facial recognition. This will certainly stall AI development. The strength of algorithms depends on the quality of the dataset. If cities deprive companies of information, then the AI will be trapped in a cycle of poor datasets leading to poor technology. Meanwhile, Chinese companies have installed (and are exporting) facial recognition technology.
- More broadly, how can local governments balance support of Amazon and the economic benefits it brings while also protecting constituents? As Chinese cities are embracing technology companies’ involvement into their day-to-day lives, American cities are doing the opposite. The best example is of Amazon and its plan to build its second headquarters in New York City. Amazon eventually scrapped the project, ultimately forcing Amazon to focus on expanding to Virginia. These types of political debates, while certainly healthy in democratic societies, eventually slow down progress in the long term. Amazon was unlocking a lot of potential in New York by tapping into a unique labor pool and accelerating expansion; however, its citizens prevented it from executing. Thus, if cities want to be competitive and support the overall effort to improve technology, they have to be much more supportive of the private companies and be willing to let them grow quickly.
The more regulation, whether from the government or society, America puts in place, the more its citizens effectively halt the progress of artificial intelligence. As Amazon attempts to take one step forward, current social and political forces it to take two steps back. Currently, Amazon and Alibaba have comparable levels of technology thanks to their access to consumer data, but that won’t be for long. Amazon will soon be left in the dust as Alibaba races to the AI finish line.
Joshita Varshney, an intern at the Foreign Policy Research Institute, is a current junior at the University of Pennsylvania’s Huntsman Program, a dual degree program through The Wharton School and the College of Arts and Sciences.