Artificial Intelligence and Europe

By IEVA MARTINKENAITE, CHAIRWOMAN, ETNO ARTIFICIAL INTELLIGENCE TASKFORCE, AND VP, TELENOR GROUP

What is Europe’s place in a world enabled by Artificial Intelligence (AI)? Are there opportunities to be seized and where do they lie? What is the role of 5G, the internet of things (IoT) and the new world of digital communications? At ETNO, the association representing Europe’s leading telecom operators, we have launched a fresh work stream to understand the consumer, industrial and policy implications of embedding AI into digital communications. Here, we summarize some early findings. To learn more, join us for an exclusive AI workshop on 12 December 2018, in Brussels.

The global AI game: A place for Europe

AI is a global race for excellence and industrial leadership. At present, if we survey top opinion editorials and academic work, we see that the United States (U.S.) is considered among the global leaders in AI. The levels of U.S. investment in this field is increasing, with tech giants performing very strongly on some of the fundamentals of this new technology: computing, big data, algorithms and attracting venture capital, among others.

Similarly, observers point to China as a superpower in the making. In perspective, China can count on two main strengths. First, heavy public funding: by 2030 the Chinese government plans to cultivate an AI industry worth $150 billion. Second, a huge amount of centrally located and managed data, coupled with a relatively high freedom to process it. For a data-hungry technology like AI, this is a really important asset, although controversial in terms of user rights.

Europe is currently seen by many as a leader in ethical AI, with the ambition to create a set of global standards worldwide. This approach is grounded in cultural factors and it goes beyond policy and regulatory aspects. A number of top European players such as Deutsche Telekom, SAP and Telefonica announced their AI principles, in which the ethical use of AI emerges also as a clear business differentiator. Europe must improve in areas such as innovation-ready laws and venture capital, as well as AI patents and research. In addition, there are “virgin” territories that offer promising avenues for European leadership and that should be explored.

AI, IoT and 5G: Opportunities for European leadership

If Europe is to scale and compete globally in AI, new sources of large streams of data need to be exploited and processed using European security and privacy standards. If we are to embrace recent projections, the next wave of data for AI will come from billions of cheap,  battery-powered sensors that will be connected over new generation networks — or 5G — offering great connectivity and high security. These sensor-enabled devices will report temperature, humidity, acceleration, position and other variables, on top of which AI will enable smart services.

European telcos are investing heavily in 5G and are working closely with “industry verticals” to activate digital transformation. We are interacting with transports and automotive, energy, agriculture, fisheries and many other fundamental industry ecosystems. The data generated in such interactions will create fresh resources for growing a unique AI space for Europe. It is at the intersection between the IoT and AI, empowered by 5G, that we can create a new promise for globally competitive European industries. In other words, 5G will drive IoT, and IoT will in turn fuel European AI. Together they can form a truly perfect “technology storm”, a huge opportunity for the Continent.

Policy: Enabler or obstacle?

When it comes to policy and regulation, the debate is currently diverse. Many in the tech policy community believe it may be far too early to regulate AI. This is the case of Pekka Ala-Pietilä, who leads the European Commission’s High-Level Expert Group on Artificial Intelligence. In a recent POLITICO interview, he stressed we should “make sure that we do regulate when it’s the right time but we don’t do it prematurely”. Others, especially in the academic world, have called for speeding up the debate on regulation.

via iStock

There are potentially many policy and regulatory areas to which the AI debate is relevant. However, two main areas appear to stand out:

Data and privacy: where we will be called upon to take tough decisions. On the one hand, Europe wants and needs to keep protections high for its citizens. On the other hand, we need to make sure we are able to develop and propose products and services based on European values. The alternative is to be outpaced by China and the U.S., and to become the importers of AI solutions developed elsewhere.

Security: where we see AI as a problem-solving technology. Already today, our companies are using AI to ensure high network security. This nicely fits in both corporate and government-led initiatives to improve cybersecurity. The main issue will remain to ensure that all parts of the ecosystem adopt high cybersecurity standards.

While there are many other regulatory or policy areas that are AI-sensitive, at ETNO we believe that the political debate should be primarily informed by values and by a shared understanding of the technological aspects.

Beyond just regulation, we think EU policies should encourage investment in AI technology, and leave more space for innovation, research and support for businesses that are speeding up the delivery of services based on European values.

Government Expenditure in Europe

Europe is the region of the world where government expenditure represents the largest share of GDP – roughly 46%. This is largely because Europe is home to the most comprehensive and developed social safety nets in the world. In fact, over 70% of government expenditure in the EU is linked to citizens’ wellbeing, whether in the form of social protection, health, housing or education. Thanks to these high levels of social protection, Europeans have generally been better sheltered from recent increases in inequality that have affected other developed and emerging economies, threatening their internal cohesion. Importantly, the EU and its Member States have managed to maintain these high levels of government spending, while at the same time significantly improving their fiscal sustainability. In 2017, the EU’s public deficit amounted to just one fifth of that of the US, and one quarter of that of Japan. Public debt in the EU is also considerably lower than in the US, standing at 83% of its GDP in 2017, compared to 108% in the US, and as much as 240% in Japan. Nonetheless, interest payments on public debt stock still represent a meaningful – albeit limited – share of EU governments’ expenditure. While accounting for a moderate 2.2% of GDP on average, they vary significantly, from 0.2% of GDP in Estonia to 4.3% in Portugal. And, even though no EU Member State currently faces short-term fiscal sustainability risks, the medium- to longer-term fiscal implications resulting from the end of accommodative monetary policies, and, more importantly, from an ageing population and a shrinking workforce, will present challenges for as many as half of the EU’s Member States.1 There is increasing consensus that, in a rapidly changing world, government expenditure – including social expenditure – needs to be oriented ever more towards investing in the future, to enable citizens and economies to better face the challenges ahead. In the EU, only a handful of Member States are really thinking long-term when setting their public investment priorities. Countries like Denmark and Sweden, for instance, currently allocate 6.9% and 6.6% of their GDP respectively on education, as well as 2.2% and 1.8% on R&D – far more than many of their counterparts. Naturally, government finances are not just a question of deficits and surpluses, or of where one spends ones money – but also one of quality. How governments spend their resources matters. Experience in the EU Member States shows that very different levels of social protection spending can in fact achieve similar outcomes. Vice versa, similar levels of spending can also result in very different outcomes. The following overview of government expenditure by function across Member States nevertheless suggests that there is a significant margin for improvement in the way that the EU and its Member States use their fiscal resources. Without compromising on the wellbeing and protection of citizens, more (and better) resources should be targeted towards future-oriented areas like innovation, research, education, training and defence.

European Political Strategy Centre
https://ec.europa.eu/epsc/sites/epsc/files/epsc_-_where_eu_governments_spend.pdf