Tim Gordon considers what it means to have powerful technology controlled by overseas companies.
It is easy to be cynical about endless promises surrounding the transformative potential of AI. However, even if the current break-neck pace of technological development were to slow down, we are already seeing the first stirrings of a productivity revolution, especially in the services industry.
This matters because the UK is the second biggest exporter of services in the world, and, at present, we face a conundrum. If we do not embrace the AI opportunity, then we risk falling behind and losing our competitive edge. But, if we do fully embrace AI, we risk handing the keys to our economy over to the US tech giants on whose AI platforms our technological future depends.
Stagnant output is a core UK economic challenge, but relief may be on its way. Generative AI looks set to transform personal productivity. Whether speeding up writing, enabling faster data analysis, video creation or helping democratise coding, it is rare to find a white-collar worker who, with the right coaching, would see no way to save time and better tackle gnarly tasks using generative AI tools.
For the UK service sector — consultants, accountants, lawyers and bankers — this will change their business calculus. They typically charge by the hour for work done – a high variable cost that reflects many years of staff training. For tasks performed by AI the cost is fixed – it is just the cost of creating the computer model. Each individual piece of work thereafter becomes trivially cheap. So, the value of such services will inevitably fall.
This is not necessarily disastrous – lower prices typically lead to more demand. The opportunity this creates is huge. Most professional service firms think in terms of hundreds of potential clients. Powered by AI they can, and should be, thinking in terms of tens, or even hundreds, of thousands of clients. What would it take for the Magic Circle, the UK’s leading law firms, to use their brand and platform to service the world’s top million companies rather than just the Fortune 500?
However, these opportunities do not come risk-free. Britain has a world-leading services industry partly because we speak English and can argue convincingly in it. In the era of Chat GPT, that ability is accessible on anyone’s laptop.
This potentially enables competitors to do to our services companies what was once done to the UK’s motorcycle industry. In the sixties, Japanese competitors offered a low-end, cheap product. Britain’s elite manufacturers were more focused on winning prestige races than providing scooters for deliverymen. Once established, the new players went upmarket, and it was curtains for storied brands such as Royal Enfield.
Industrial Revolutions ultimately make the whole world richer – but not necessarily in the same places as before. Resistance is rarely a wise strategy in the face of such change.
As such, we need to embrace this technology, even though it is ultimately controlled overseas. It is not by chance that the leading Generative AI models are either from the existing Big Tech platforms – Gemini from Google, OpenAI from Microsoft and Anthropic from Amazon. These US companies have the billions of dollars of capital to invest in the raw computing power required to build these models. They also have the means to monetise them, largely through selling access to the cloud computing server farms that underpin the complex AI models.
What does it mean when the technology that your key industries will come to rely on is controlled by the world’s most powerful foreign companies? Maybe nothing, but it would be naïve not to consider that the leading competitor to London is New York. Strategic priorities for the technology are going to be set in the US. Consequently, the regulators who will really worry the tech giants will be those who sit in Brussels and Washington, not in London.
The UK Government needs a two-pronged response. First, encouraging rapid embrace of this new technology across key sectors of the economy, to keep pace with the competitors. Currently, this is a problem area for the UK – one recent survey suggested that even Italian firms were more interested in deploying AI than British ones, well behind US or North European competitors. Moreover, research by Evident, the AI market research firm, suggests that US banks are investing heavily in the technology to bolster their global dominance.
At the same time, the UK Government must deploy an industrial strategy that diligently works through how the UK can play a role in a world where the technology stack – from chips through computers to software models – is ultimately controlled elsewhere. Currently, we lack the scale and the wealth to reverse this, but an agile state, ideally working across partisan boundaries, can chart a route to an independent and prosperous future.
Last year’s Bletchley Park Conference, hosted by the Prime Minister, focused on the existential risks to humanity from AI. We need to behave as if the existential risk is to the UK economy.
Tim Gordon is a Founding Partner at Best Practice AI.
This article was published in the latest edition of Centre Write. Views expressed in this article are those of the author, and not necessarily those of Bright Blue.
Read more from our June 2024 Centre Write magazine, ‘Generation AI?’ here.