"We're feeling the pressure." In her statement at the World Economic Forum in Davos, Switzerland, German Chancellor Angela Merkel admitted that her country is in a much weaker position when it comes to the digital economy than the term Industry 4.0 would suggest.
Although German companies are big users of new digital technologies, major innovations tend to come mainly from the United States and Asia. The situation isn’t much better in other EU countries. "The fact that Europe is proceeding with caution when it comes to digitization is not a bad thing in principle. But we need to keep an eye on our speed," said Jan Mischke, a partner at think tank McKinsey Global Institute. "Otherwise, Europe risks falling behind."
That applies to the use of artificial intelligence, or AI. In a recent survey of 1,000 managers conducted by Indian IT service provider Infosys, three-quarters of top managers said AI had already changed their companies' business. The new technology has moved beyond the experimentation phase, the poll showed. "AI is becoming the centerpiece of business strategy," said Mohit Joshi, president of Infosys.
Salesforce, a US software company, is a good case in point. "I've reserved an empty chair for Einstein at my board table," said CEO Marc Benioff. No ghost of physicists past, Einstein is a virtual manager who takes part in board meetings and analyzes vast quantities of data from the company, whose annual sales run into tens of billions of dollars.
"I ask Einstein: What do you think about a particular proposal?" Mr. Benioff said. The computer can analyze many years' worth of data, does not withhold bad news for personal reasons and helps him to make better decisions. "It's the next technological leap that we're about to take," he added.
The Europeans, however, are looking hard before leaping. The Infosys study confirms Ms. Merkel's unease: In India, the United States and China, the use of AI is well advanced while Europe exhibits "greater cultural reticence." But people around the globe are worried about the impact of AI on their privacy and jobs, said James Smith, head of media and information group Thomson Reuters.
Germany wants to spearhead a European response to the digital challenge together with France. Last October, at the instigation of Ms. Merkel and French President Emmanuel Macron, EU heads of state and government instructed the European Commission to draw up an AI strategy. The Brussels-based authority plans to present a paper in late April.
The aim is to make Europe fit for international competition by investing more in development, creating the right framework for data use and launching joint lighthouse projects. Between 2014 and 2020, the commission has earmarked €1 billion ($1.24 billion) in research funding for robotics and AI — about the same amount the US government commits for research annually.
Mr. Ansip also praised Franco-German plans for a joint AI center and referred to the idea for a commonly funded "CERN for AI," based on the model of the nuclear research organization in Switzerland that is financed by 22 countries. To address society's concerns about surveillance and the loss of jobs, Mr. Ansip proposes an alliance for artificial intelligence, a forum for representatives of governments, businesses and civil society to discuss how the technology can be used for everyone's benefit.
Brigitte Zypries, Germany's economy minister, sees the possibilities but also challenges and concerns with artificial intelligence has caused. "One thing is certain: Either we shape this or it will shape us," she warned in an interview with Handelsblatt. "It's up to us now to agree on international regulations and standards, to ensure fair access to data and balanced data protection and to equip people with the necessary digital skills."
One thing is certain: Either we shape this or it will shape us. Brigitte Zypries, Germany's economic minister, on artificial intelligence
Mr. Benioff is also aware of the risks. He points to the example of giant robots equipped with artificial intelligence that are mining natural resources on the sea bed. It's no coincidence that Mr. Benioff is one of the few Silicon Valley tech icons who have openly advocated tougher regulation for the technology sector.
Neelie Kroes, the former European commissioner for competition and the digital agenda, shares this view. "Unless we want to leave the digital economy to monopolies, we need to regulate," she said in Davos, referring to the market dominance of giants such as Facebook, Google and Amazon. She warned that if governments do not manage to balance the opportunities and risks brought by new technologies, the market will have to regulate itself.
"There will be a natural braking effect in the digital economy," predicts Eckart Windhagen, a partner at McKinsey. "Like in other sectors, growth in the size of the technology sector will be limited by opposing factors." That means not only the increasing vigilance of supervisory bodies, but also more intense competition from the dominant companies.
Dana Heide and Till Hoppe are political correspondents for Handelsblatt. Torsten Riecke is Handelsblatt’s international correspondent. Claire Corlett and Jeremy Gray adapted this story for Handelsblatt Global. To contact the authors: [email protected], [email protected] and [email protected]