4. A Digital Europe

4.1 Designing Europe’s AI-infused future

As a general-purpose technology, AI can play a big role in the economic, social and ecological transition. EU’s guiding principles of trustworthy, human-centric, and ethical AI are a strength of the EU AI innovation ecosystem that will also boost the ‘trust in tech” and safeguard privacy.

AI can play a big role in the economic, social and ecological transition that Europe is undergoing.

Artificial ιntelligence (AI) as a field of study is already 70 years old. Recent progress in terms of data availability, computational power, sophisticated algorithms and open source software has enabled significant developments in AI research and innovation.

As a general-purpose technology, AI can drive efficiency and productivity in virtually any sector. For this reason, it can also be a powerful tool to achieve the SDGs.

AI is increasingly blending with digital technologies, such as blockchain, and with the physical world in fields like advanced manufacturing and materials science.

Achieving the full potential of AI depends on having the right complementary skills, infrastructure, and management culture in place.

Currently, AI talent is relatively scarce worldwide. It appears more predominant in the United States, while the EU is facing a relative shortage in AI professionals.

Policies should focus on fostering talent creation, attraction from overseas, and retention in the EU, together with investments and capacity-building in related digital technologies, such as high-performance computing, European cloud and microelectronics, and research and digital infrastructure, notably 5G networks. Both the EC’s Horizon Europe and Digital Europe Programmes will be instrumental in achieving this.

The EU ranks among global leaders in AI science but trails in AI innovation.

AI is increasingly exploring the boundaries of scientific fields beyond computer science.

Although the number of EU publications in AI has been declining, the EU still ranks among the global leaders in AI scientific production. The EU’s AI research is more oriented towards humanities and to a lesser extent in medical sciences and social sciences.

The EU trails in AI innovation performance in terms of number of companies, patenting activity, and unicorns. However, its performance is in line with its share in global R&D investments. Advancing market integration in Europe with a complete Digital Single Market is vital for AI companies to flourish.

In recent years, international collaborations in AI have intensified.

Europe’s scientific and technological collaboration with international players has increased. The EU has also taken the lead in setting common principles governing AI. The European Commission’s Communication on ‘Artificial Intelligence for Europe’ (April 2018) identifies the need to develop an ethical approach to AI, in accordance with core European values.

With the unlocking of the potential of AI, private investments in AI startups are on the rise. Europe’s investments are still insufficient compared to international competitors.

The United States leads, followed by China. Although the EU has also made some progress in recent years to attract private capital, investments remain well below those of its main global competitors. Within the EU28, UK-based AI startups are the top recipients, of more than half of all private equity investments.

The acquisition of AI startups is increasingly regarded as a strategic move by acquirer companies to access data and absorb top AI knowledge and skills.

Between 2010 and mid-2019, there were 635 AI acquisitions. Most of the world’s top 10 acquirers of AI companies are US tech giants – together they account for 20 % of AI-related acquisitions. Around two thirds of acquisitions were in the United States.

Other strategies required to lead in AI development include investing heavily in R&D labs for AI, and programmes designed to attract top talent from overseas.

It is time for the public sector to embrace the opportunities created by AI.

While some EU Member States rank highly internationally in ‘government AI readiness’, in others a greater effort is needed to roll-out AI capabilities that lead to greater efficiency in the public sector, including better tools for policy evaluation. On the other hand, there are concerns about bias, privacy and the transparency of data.

Europe is positioning itself for a self-designed, AI-infused future.

Europe is currently carving out a position to lead in a more thoughtful, ethical approach to AI to build an AI ecosystem that spurs innovation. The ‘AI made in EU’ approach includes seeking out opportunities in the B2C market, investing in the development of privacy-preserving and transparent AI, rethinking existing paradigms, putting an emphasis on the environmental impact of information technologies, and introducing targeted regulation.

One of the most important considerations is to ensure that the economic and social benefits of AI are broadly shared across society – building ‘trust in tech’ and social acceptance around AI.

Source: Elsevier (2018)
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Source: De Prato et al. (2019)
Note: Percentage over total number of firms active in the AI domain.
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Source: OECD estimates based on Crunchbase (April 2018)
Note: AI startups are companies founded after the year 2000 and categorised in the ‘artificial intelligence’ technological area of Crunchbase, as well as companies that use AI keywords in the description of their activity.
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Source: CBInsights (2019), 'The Race For AI: Here Are The Tech Giants Rushing To Snap Up Artificial Intelligence Startups'
Note: Data as of 31/08/2019 hence not covering the whole year.
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4.2 The changing 'DNA' of innovation