Edison Investment Research

AI Partnership – Fluff and stuff

The ecosystem leaders have announced an artificial intelligence (AI) partnership aimed at benefiting society but the fact these players are also fierce competitors will ensure that real trust and co-operation will be difficult to achieve.

  The ecosystem leaders have announced an artificial intelligence (AI) partnership aimed at benefiting society but the fact these players are also fierce competitors will ensure that real trust and co-operation will be difficult to achieve.
  Google, Facebook, Amazon, Microsoft and IBM have jointly formed the Partnership on Artificial Intelligence to Benefit People and Society which aims to use AI to improve the quality of life in society.
  Apple, Baidu and Yandex are all notable omissions from this list but the partnership has made it clear that the door is open for anyone who wants to join and contribute.
  It looks very unlikely that the partnership will be sharing any actual algorithms but will work together to figure out best practice for developing AI as well as ensuring that a dystopian, man vs. machine world remains firmly in the realm of fiction.
  Aside from this, the partnership is extremely vague on what the practicalities will be and how these companies will be working together for the benefit of all.
  I suspect that this will be much harder to achieve than it sounds as these companies are all fierce competitors whose long term differentiation will, at least in part, hinge on their ability to make their machines better than the others.
  A good example of this is dieting.
  The biggest problem with dieting apps is telling the app what it is that you have eaten.
  This process can be so tedious that many users simply give up after a short period.
  However, this could be vastly improved with AI which could allow a device to use the camera to look at a plate and understand exactly what is there.
  I think that this would have such a huge impact on the user experience such that engagement with the service would improve substantially.
  Food app Lose It is already trying this but we think it remains very far away from something that would really satisfy Edison’s 7 Laws of Robotics and result in real adoption.
  Consequently, whoever it is that cracks the problem through AI is not about to donate this to the partnership to help everyone weight.
  Instead the algorithm will be used to create exclusive engagement that the app or ecosystem owner will be able to monetise with one of the three standard methods (see here).
  Furthermore, the creator of this algorithm will have a fiduciary duty to deliver a return on the money invested by its stakeholders before allowing it to be freely used for the greater good.
  Dieting is just one example but there are hundreds of others as AI looks certain to be one of the biggest differentiators in the ecosystem over the next 5-10 years.
  Hence, AI algorithms are likely to become the most valuable asset that any ecosystem has as they will be the foundation upon which profitable businesses are built and sustained.
  This is why we suspect that any AI the partnership offers to benefit society will not be particularly beneficial but if there can be agreements in other areas then there could be some benefit.
  The net result is that the announcement is full of great intentions but until there is some substance around the fluff, it will be very difficult to tell whether society will benefit at all.

Disclaimer - Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. This document may contain materials from third parties, which are supplied by companies that are not affiliated with Edison Investment Research. Edison Investment Research has not been involved in the preparation, adoption or editing of such third-party materials and does not explicitly or implicitly endorse or approve such content. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of publication and is subject to change without notice. While based on sources believed reliable, we do not represent this material as accurate or complete. Any views or opinions expressed may not reflect those of the firm as a whole. Edison Investment Research does not engage in investment banking, market making or asset management activities of any securities. The material has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.