Basic technology and competitive factor of the 21st century

AI algorithms form the basis for the development of voice-based systems and chatbots, they help predict production failures or support doctors in the detection and treatment of diseases.

AI algorithms save costs and time. They often also make better decisions than humans. We are often asked whether AI is hype because methods like artificial neural networks have been around for decades.

That is fundamentally correct, but we are nevertheless convinced that AI is not just a buzzword, as is unfortunately often the case in the context of digital transformation.

In fact, the framework conditions for AI applications have only improved significantly in recent years: Data is now available in unprecedented quantities - for example, for training artificial neural networks.

Computing power and storage space are also cheaper than ever. In addition, for the first time there are many toolkits and software libraries available free of charge that have significantly simplified and improved the development and quality of applications. (We provide an overview of the best tools at www.ki-business.de.)

Artificial intelligence is thus more than a tool for automating existing processes. In the future, the creation of new data-based business models will come to the fore. A strong indicator of the growing importance is the investment in AI.

Investment in AI startups grew by a factor of 50 between 2011 and 2017 to more than $15 billion (CB Insights, 2018). It is even expected to increase to $70 billion by 2020 (OECD, 2017). This shows that AI is a steadily growing investment trend.

However, these investments are unevenly distributed: China accounted for 48 percent of investments in AI startups last year; another 38 percent went to the long-time leader, the USA. In the rest of the world, just 14 percent or the equivalent of a good two billion dollars flowed into young AI companies.

Germany, which is actually home to many outstanding AI researchers, is not enough to take the top spot, even in Europe. This is held by Great Britain, where startups such as Darktrace (cybersecurity) and Graphcore (AI chips) have now achieved unicorn status, i.e. are valued at more than one billion dollars.

The German government now wants to counteract this with a "Master Plan AI". But despite the very good AI education at universities, business has not really jumped on the topic so far.

"Germans fail to recognize the world-changing power of artificial intelligence"

AI professor Jürgen Schmidhuber warned years ago.

The money is there, but Google is investing half a billion dollars in an AI lab, but German companies are not. Little has changed in this regard to date.

While in the U.S., digital companies such as Amazon, Google, IBM and Nvidia are investing a lot of money in this area, in China the government is the driving force behind the investments. With a three-stage plan, China is to become the AI world market leader by 2030.

Right now, a lot of money is being pumped into building the AI companies that are expected to achieve the major technological breakthroughs in medicine, agriculture, industrial production, and infrastructure for the Chinese economy in the coming decade.

While the Americans spread their investments widely, the Chinese invest specifically in a few, but already mature start-ups. As a result, five of the seven most valuable start-ups today come from China: Sensetime is at the top with a valuation of $4.5 billion, followed by Cambricon ($2.5 billion) and Megvii/Face++, CloudWalk and Yitu ($2.5 billion each) in third to seventh place.

If anything, Germany's gap to the leading AI nations is widening. In our opinion, it is high time for a constructive debate on AI if we do not want to lose touch again with a future technology in which we are actually among the pioneers.