The market for artificial intelligence also boasts impressively high growth rates in Europe. However, despite this, companies making investments in this field are still very reticent according to a recent study published by the European Information Technology Observatory (EITO).
The European market for artificial intelligence is expected to grow from approximately EUR 3 billion this year to EUR 10 billion in 2022. That equates to an average annual growth rate of 38%. Last year, the size of the market was no more than EUR 2 billion. This is according to Germany’s digital association, Bitkom, which based its assertion on the study entitled “AI in Europe – Ready for Take-off” published by the European Information Technology Observatory (EITO) at the start of the year. Investments in servers and storage rose by only 24% per annum, whilst investments in software and services grew much more sharply, at a rate of approx. 45% in each case.
Europe’s reticent approach
It may sound rather impressive at first, but in actual fact companies in Europe are still adopting a very cautious approach and biding their time when it comes to investing in artificial intelligence. A survey conducted by Germany’s digital association, Bitkom, revealed that only one in four German companies with 50 or more employees are receptive to AI technology. The same number of companies describe themselves as critical of or opposed to it – and 17% have still not ever even considered the topic.
Yet, around two thirds of German citizens are convinced that prosperity in their country will be jeopardized if Germany isn’t one of the leading AI nations. And they have good reason to think this as a study conducted by the McKinsey Global Institute (MGI) shows precisely how important it is for economic growth. According to the study, AI has the potential to increase global gross domestic product (GDP) by an average of 1.2% per annum between now and 2030. That equates to additional global economic output of USD 13 trillion by 2030. As such, the effect that the field of “artificial intelligence” would have on growth would exceed that of steam engines, industrial robots and information and communication technology.
China and the U.S. have the edge
Countries such as China and the U.S. recognized the potential early on and went in “big.” China, for example, wants to create an AI market worth USD 150 billion by 2020 and has set its sights on becoming the world leader in the field by 2030. As such, the government in Beijing has committed to investing at least USD 7 billion by 2030, USD 2.1 billion of which have been earmarked for the AI Research Park in Xinhua. The U.S. has been investing in AI research and development for many years already. In addition, there is a disproportionately high level of private investment in global IT hotspots in the U.S. and China.
As a result, the EUR 3 billion figure with which Germany aims to move up the ladder and become one of the “world leaders in the field of artificial intelligence” by 2025 does not seem all that huge. Furthermore, only EUR 50 million of that have initially been approved by the Budget Committee, EUR 450 million for subsequent years. However, Berlin is also banking on the idea that the funding will trigger subsequent investments from the worlds of business and science and from the regional state governments. According to Achim Berg, President of the digital association Bitkom, “we should, however, really be thinking in billions rather than millions.” And that is essential if you consider that only 3% of the world’s 7,500 AI companies are based in Germany. 40% are based in the U.S., followed by China and Israel which are practically neck and neck with approx. 11% each.
Europe also has its sights firmly set on becoming one of the “world’s leading AI regions” by 2020 by investing EUR 20 billion. As part of the “Horizon 2020 Research and Innovation” program, EUR 1.5 billion of funding is set to be invested by 2020. What’s more, more than EUR 500 million is expected to be invested in companies and start-ups through the European Fund for Strategic Investments (EFSI).
Cutting-edge research in Germany
When it comes to AI research, Germany’s universities and academic and scientific institutions still rank among the best in the world. Germany currently boasts 155 professors and 130 chair holders for AI. And a hundred new professorships are in the pipeline. In order to dissuade experts who have been educated and trained in Germany from migrating, attractive offers and working conditions will have to be proposed in the future to rival the tempting and appealing offers emanating from American and Chinese digital groups.
The Global Artificial Intelligence Landscape – by Asgard and Roland Berger | 2018