Dec 5, 2018

Axios Future

By Bryan Walsh
Bryan Walsh

Welcome back to Future. Thanks for subscribing.

Situational awareness: A top Huawei official has been arrested in Canada on charges of violating U.S. sanctions on Iran. An extradition hearing is scheduled Friday.

Consider inviting your friends and colleagues to sign up. And if you have any tips or thoughts on what we can do better, just hit reply to this email or shoot me a message at steve@axios.com.

Okay, let's start with ...

1 big thing: The AI monopoly

Illustration: Rebecca Zisser/Axios

Early in the race to dominate artificial intelligence, Big Tech — flush with cash, data, and name recognition — has seemed to have already captured AI's commanding heights and created an insurmountable advantage.

But new data suggests that the contest is not quite over, and that the field is much more crowded than was thought.

Axios' Kaveh Waddell writes: Tech companies, startups, legacy companies and academics around the world are fighting to attract a relatively small number of talented AI experts — a struggle in which the chief weapons are money, prestige and glory.

  • Until now, this story has been dominated by dramatic incidents like Uber raiding the entire driverless research unit of Carnegie Mellon University, and Big Tech buying up startups by the dozen.
  • The resulting impression has been that AI talent is highly concentrated in Google, Amazon, Baidu and a few other Big Tech companies.
  • But a study by Diffbot, a Silicon Valley machine learning startup, has found that even if Big Tech does employ a lot of AI experts, hundreds of thousands more are dispersed across companies throughout the world.

Realistically, Big Tech cannot simply vacuum up the talent everywhere, says Diffbot CEO Mike Tung. "There are many places in the world where these companies simply have no offices or open jobs," Tung tells Axios.

Why it matters: That there is at least somewhat dispersed talent means that folks outside of Big Tech have at least a fighting chance to make the big breakthrough.

By the numbers:

  • More than 720,000 people worldwide have AI skills, by Diffbot’s count.
  • Just 10 companies employ 10% of them.
  • But another 100 companies employ at least 1,000 people with AI skills. And more than 750 companies each employ at least 200 people with AI skills.

Even among the top rung, there are surprises, like Indian tech giants Infosys and Tata. These numbers come from Diffbot’s whole-web search for every person with apparent AI skills, demonstrated through published academic papers, their LinkedIn profile, or their personal website.

Yoshua Bengio, a pioneering AI researcher at the University of Montreal, told me he's not surprised by the number of companies who have hired AI workers. Interest in AI "is springing from all quarters," he says.

  • But Bengio cautions against reading too much into absolute numbers. If you take account of papers published for leading academic conferences, Big Tech again looks seriously formidable, he said.
  • "Anybody can say they have [machine learning] skills," said Oren Etzioni, CEO of the Allen Institute for Artificial Intelligence. Ranking companies by the quantity of AI practitioners on staff isn’t the same as asking which are best at it.
"There is a monopolistic tendency in the tech world, which might get worse with AI because of the winner-take-all advantage of having access to most data, talent, customers and cash (e.g. to buy competing start-ups). I'm not sure how to deal with all that but clearly this deserves a social and political discussion."
— Yoshua Bengio

Go deeper:

Early AI adopters may gain an "insurmountable advantage"

Academia and the tech industry feud over AI talent

2. Getting big cashierless wrong

Amazon Go. Photo: Stephen Brashear/Getty

A handful of American companies, from giants like Amazon and Walmart to upstarts like Standard Cognition and Zippin, are betting on a windfall for whoever works out the bugs in cashierless checkout — and makes it cheap. But like so much of tech, it's a global race, and the Chinese are surging ahead.

Axios' Erica Pandey writes: American retailers may be focused on the wrong thing. Their obsession is with totally hands-free checkout, which Amazon dubs "just walk out." But Chinese retailers have figured out that there are cheaper and easier ways to eliminate checkout lines.

Amazon's technology — through which cameras pick up what shoppers are buying so they can be automatically charged when they leave the store — has thus far only worked in small stores, like a 2,500-square-foot Amazon Go. With its Sam's Club Now, Walmart is going small, too, not having figured out as yet how cashierless can work at a large scale.

But, but, but: China's retail giants — Alibaba and JD.com — have tackled scale and lines without killing checkout altogether. Instead, they use the power of mobile payments. Rather than being monitored by ubiquitous cameras and sensors, Chinese shoppers pay for everything from street food to new laptops by scanning QR codes with their cellphones.

  • This approach works in any size store.
  • It also means that "the shift to cashier-free stores doesn't require as much of a change in consumer habits as it does in the U.S.," says Zoe Leavitt, a retail analyst at CB Insights.
  • For example, shoppers at Alibaba's Hema — its chain of full-size grocery stores — simply stroll the aisles, scanning their vegetables, meat and other goods.

The bottom line: Billions of dollars are being spent on perfecting cashierless checkout, but getting American consumers to switch to mobile payments may be an easier and cheaper way to streamline shopping in the long run.

3. U.S. attack on China's driverless cars

Illustration: Sarah Grillo/Axios

Proposed U.S. controls on exports, traditionally limited to sensitive weapons, are aimed, among other things, at hampering China’s ambitious autonomous vehicle push and giving U.S. companies the edge.

Writes Patrick Lozada, a contributor to Axios Expert Voices: The proposed controls would block the export of “emerging” and “foundational” technologies. They would limit partnerships with Chinese firms and possibly the employment of Chinese nationals.

Details: The restrictions include computer vision, artificial intelligence, geospatial positioning, computer chips and memory, and mobile electric power — technologies critical to the development of driverless cars.

  • Baidu, Xpeng Motors and other Chinese companies rely heavily on chips made by NVIDIA and sensors from Velodyne (at one industry showcase, 85% of Chinese companies used its lidar).
  • China’s strategy document for the AV industry instructs companies to buy foreign equipment to obtain key technologies — an approach that is now imperiled.

What to watch: Public comment is open until Dec. 19, and the industry is likely to push back, as these export controls would have an impact on broad swathes of the economy — from self-driving cars to biotech. Changes within the Treasury or Commerce departments, where leadership transitions have been rumored, could also shape the outcome.

Be smart: Even if the U.S. takes no action, the Chinese side is likely to close the walls around itself anyway. China’s plan for its auto industry calls for the entire supply chain to be “secure and controllable” (i.e., excluding foreign participation). And President Xi Jinping has made it clear that “core technologies” must be in Chinese hands. Multinational corporations, take note.

Go deeper: U.S. export controls could hinder a broad range of tech

4. Worthy of your time

Illustration: Lazaro Gamio/Axios

Taiwan, caught between two superpowers (Chris Horton, Lauly Li, Cheng Ting-Fang — Nikkei Asian Review)

The first self-driving taxis are here (Joann Muller — Axios)

Why abortions in the U.S. are at a historic low (The Economist)

China works to snag secret Boeing satellite tech (Brian Spegele, Kate O'Keeffe — WSJ)

What's really happening to retail? (Derek Thompson — CityLab)

5. 1 harbinger: The 7-year-old YouTube multimillionaire

Ryan reviews an astronaut play tent. Photo: YouTube

The rise of social media has ushered in new kinds of celebrities, like Instagram models and YouTube vlog stars, who use the platforms to develop fan bases of millions.

But some are more successful than others, Erica writes: YouTube's richest star is a 7-year-old boy who reviews toys. Ryan is worth about $22 million, and his channel, Ryan ToysReview, has over 17 million subscribers.

  • The videos, which began as toy reviews by a kid for other kids, have become moneymakers and attracted big-name partners. One is an ad for Target.
  • Ryan himself has become a brand. You can buy a Ryan’s World Mystery Surprise Egg — a big plastic oval filled with toys and other things.
Bryan Walsh