Democratizing Artificial

Intelligence: Towards A
'Google Inside' Model Of
Competition?

The emerging artificial intelligence (AI) supply chain is

effervescent and unstable. Startups, digital platforms,
software suppliers, and hardware manufacturers are
struggling to offer products, solutions, and business models
to serve a growing demand from end users.

This is the beginning of a new industry, although it is unclear

how AI will reach the last customer mile and a mass market.
AI is composed of a series of sub-technologies capable of
interpreting external signals; extracting patterns; generating
outputs such as speech and text synthesis; evaluating
outcomes; and autonomously reprogramming its own logic to
learn from experience. A core set of AI technologies (machine
learning) enables machines to self-adjust their programmes
through experimentation in pursuit of a given objective.
A huge market is being created around this new technology.
PricewaterhouseCoopers (2017) estimated that AI will add
$15.7 trillion to global GDP by 2030. The impact of AI may be
comparable to the other digital waves that penetrated every
part of former business models and user appliances: PCs in
the 80s, the internet in the 90s, or smartphones in the 2000s.
However, it is not yet clear how AI supply chains will be
structured, what will be the dominant technological
standards, or which final business models will emerge. How
will AI reach the mass market? How, ultimately, will AI be
democratized?

The emergence of new industries due to disruptive

technologies is characterized by initial ‘effervescent’ phases,
during which entrepreneurs, former leaders, and new
entrants compete for market opportunities. Technological
discontinuities generate an initial messy moment of
experimentation and competition between different players
and their various technological approaches, products, and
market solutions. Finally, a ‘dominant design’ for the
configuration of a product or service appears that offers
optimal efficiency and convenience to the market. Examples
of dominant designs include the Ford Model T (automobiles),
the Remington typewriter, the IBM PC (personal computers),
or Google (search engine).

During the formation of the PC industry, a swarm of startups

competed to define the standards (Atari, Amiga, Commodore,
Sinclair, Next, and Apple), and it was the IBM design that
finally prevailed for two decades (with more than 90% of the
market). In the case of the automobile market, a small group
of big brands (including Ford, GM, Chrysler, Toyota,
Volkswagen, and Fiat) dominated the market for a whole
century in a classical example of an ‘oligopoly’.

If we assume the former models of industrial innovation, then

the AI industry is in its fermentation phase. Yet the theory
predicts the advent of some type of dominant design that will
enable the survival of a few players who achieve industry
leadership. Fine (2000) states that the creation of industrial
supply chains follows a cyclical process (a kind of
‘clockspeed’), between modular/horizontal and
vertical/integral architectures. Every modular and
disintegrated industry suffers competitive pressures towards
vertical integration while searching for efficiency and market
control. In contrast, every verticalized industry suffers
competitive pressures to disintegrate under the weight of its
own bureaucracy and core rigidities, and the lateral
expansion of competitors from adjacent market niches.
Assuming this model, we are likely to witness a verticalization
of the AI industry, with the appearance of one or several
integral, end-to-end AI supply chains (from computing
hardware to the customized end-user solution). In the same
way as any digital industry, AI follows a ‘winner-takes-it-all’
game. Only a few players will survive and dominate the
industry, which will probably be vertical and defined by a
dominant architecture.

Amazon has shown the path to the end user for AI (the
emerging dominant architecture). Years ago, Amazon’s
hyper-capacity in computer services and memory storage led
the company to offer computing power and memory storage
to third parties through the cloud. Amazon followed a ‘SaaS’
model (software as a service) with Amazon Web Services
(AWS). It was a huge success. AWS is now a 16 billion-dollar
business that is growing 42% annually (McCracken, 2017)
Microsoft and Google have followed Amazon’s footsteps. The
three firms are expected to capture 80% of all cloud platform
revenue by 2020 (Forrester, 2017). With this strategy,
businesses can connect to an AI ‘hose’, parameterize their
needs, train remote state-of-the-art processors, and access
the results through cloud services, while paying for the time
and computing capacity used. According to the Financial
Times, ‘AI in the cloud will be the next great disrupter’
(Waters, 2016).
 
 In the light of how previous industries
have been created, a few AI players may impose their
standards, gain market power, and expand across integrated
supply chains. But only huge players will be able to provide
the computational power, hardware, and R&D investments to
create global AI standards. The best positioned are the digital
leaders: platforms like Amazon, Google, Microsoft, or IBM.
Centripetal forces tend to concentrate resources and gain
critical mass backwards in their value chains, with huge R&D
investments and supercomputing power; while, at the same
time, AI suffers strong centrifugal forces forward, driven by
the growing demand for final user applications or products. If
concentration dynamics take off, it will enhance the natural
competitive advantages of digital platforms, such as Google or
Amazon, by absorbing even more massive data flows from
thousands of remote and small clients and applications – and
thereby gaining more specialized and segmented knowledge,
better algorithms, and unbeatable AI competences through
spillovers. The AI knowledge created by digital platforms for
a set of users in a given industry (such as retail) can be used
for other consumers in a type of cross-spillover effect in data
management. Digital platforms will be the engine of future AI
supply chains and act as global drivers of AI through the
cloud.

As in the 80s, when extraordinary computing power was

mass marketed and presented to the world in IBM PCs and
their clones (and became a commodity), so AI
supercomputing power may be mass marketed by digital
platforms through cloud services. It will be the final dominant
design of the industry. AI will be commoditized and
democratized. Like the internet, a standard AI connection will
be available for every business. True competitive advantage
will be provided by the quality and quantity of data (reflecting
the data strategy) and superior customer experience. And,
like years ago, when an ‘Intel Inside’ phenomenon emerged
(indicating that a PC was no more than the user’s interface for
an Intel processor inside), we may soon find a startup,
supermarket, hospital, hotel, bank, or car, labeled ‘Google
Inside’ or ‘Amazon Inside’. They will be powered by a Google
or Amazon AI brain, and will use the same AI hardware and
algorithms as the leaders.