The impact of artificial intelligence (AI) on our world cannot be overstated. In just the past 2 years, the number of AI unicorns has more than doubled, a reflection of the rapid growth the industry is experiencing. Having outpaced technologies like the metaverse, blockchain, and VR, the United States and Europe now need to enact regulations. AI expert Ahmed Reza believes that the different approaches taken by these regions will shape the world for years to come.
The United States and Europe have long been at the forefront of technological innovation, with each region contributing significantly to the development of different industries. Silicon Valley, home to some of the world’s largest technology companies, is located in the US, while Europe has its own tech hubs in cities like London, Berlin, and Stockholm.
While both regions continue to be leaders in the tech industry, a 2022 report by Affinity found that Europe is surpassing the United States when it comes to producing tech unicorns. Not only is the EU producing tech unicorns almost twice as fast as the US but is also doing so in a less centralized manner across 65 cities.
“While this might make most people think that the EU is leading the charge, that is not necessarily the case. The United States is still the country with the most unicorns and the biggest startup scene,” says Reza, founder & CEO of AI startup Yobi. “This is also the case in the AI industry, as private investment is significantly higher in the United States than in regions like Asia and Europe.”
The “Artificial Intelligence Index Report 2022” by Stanford University supports Reza’s case for American superiority in the AI ecosystem. The report found that American private investment in AI was twice as high as that of Europe and China combined in 2021. With a total of 299 newly funded AI companies in 2021, the US also surpassed China (119) and Europe (106) in terms of supporting innovation.
AI startups are not choosing the United States over Europe due to economic opportunities but rather due to a lack of a regulatory stance. Whereas the United States is yet to develop a solid federal AI regulatory framework, Europe has been working fast to develop one. The region has done so mainly through its General Data Protection Regulation (GDPR) and Digital Services Act and Digital Markets Act, with new legislation and additions being considered.
“Those of us innovating in the AI industry agree that regulation is needed. Unfortunately, Europe is enacting regulations at a time of fast innovation, meaning that understanding its impact is virtually impossible,” explains Reza, whose own startup is based in the United States. “The message AI companies are receiving is ‘move elsewhere or become less competitive’… that is something most of us couldn’t afford to do even if we wanted.”
A recent survey found that 50% of European AI startups believe legislation like the EU AI Act will significantly slow innovation in the region, which could result in 16% of startups relocating outside the EU. While this is negative from an economic and innovation perspective, such legislation would also come with several benefits for the end users in terms of transparency, security, and privacy.
Lawmakers lack a deep understanding of AI technology. Reza, who is the founder of Yobi, which develops AI synthetic agents for customer experience communications, emphasizes the importance of protecting user data. However, different AI applications require tailored approaches that regulators are not considering. Reza believes that to make AI ethical and safe without hindering its potential, governments should collaborate with experts who truly understand AI.