Includes EU AI Act, Silo.ai from Finland and the Swedish AI Assistant.
Welcome back after the summer break! The AI world has continued to evolve, even though we took a few weeks off — apparently, it’s not just us putting in the work! As we transition back into our routines, it’s the perfect time to catch up on some some AI news. I’ll keep the updates concise, focusing on the key events, and then conclude with an assessment of what these developments might mean for our work within AI. Let’s dive in!
News:
The UK’s antitrust regulators are scrutinizing Alphabet’s (Google’s parent company) partnership with AI startup Anthropic, highlighting the total dominance of the cloud providers, consisting of Google, Microsoft, and AWS. The partnership between Alphabet and Anthropic is seen as the closest rival to Microsoft and OpenAI at the moment, challenging the giant in the race for AI dominance. The backstory is that Alphabet has invested $500 million in Anthropic, with a commitment for an additional $1.5 billion — an investment that could have significant implications for the AI landscape. Link
The construction of data centers in North America has surged by 70% compared to last year, underscoring the rapid expansion of infrastructure to meet the growing demands of AI and other computationally intensive applications. Link
The European AI Act, which took effect on August 1, 2024, establishes a risk-based framework to ensure responsible AI use across the EU. This legislation aims to balance reducing the burden on businesses while protecting health, safety, and rights. A consultation on a Code of Practice for general-purpose AI models is currently underway, with final provisions expected by April 2025. Link
AMD, one of the few competitors to Nvidia, has completed its $665 million acquisition of Silo AI, Europe’s largest private AI lab. This strategic acquisition enhances AMD’s AI capabilities and customer base, positioning the company to better compete in the AI market and potentially challenge Nvidia’s dominance. Link
Nvidia discussed the concept of “sovereign AI” during its Q2 earnings call, emphasizing the growing recognition by nations that their data is a critical national resource. As countries develop their own AI infrastructures, Nvidia is also seeing increased interest in its Enterprise AI solutions from leading IT companies. Link
The Swedish AI Assistant is an initiative to establish a sovereign generative AI solution for the Swedish public sector. Coordinated by AI Sweden, the aim is to foster collaboration between government agencies, municipalities, regions, and the private sector. The goal is to enhance public services using generative AI applications by freeing up time for employees to focus on more creative and interpersonal tasks. The project is still in its early stages but has established an early demo version of the solution (with an interface similar to ChatGPT). The plan is to scale the demo platform to be tested by approximately 30 public organizations in Sweden, with the ultimate goal of creating the first generative AI assistant capable of handling the Swedish language and the required governance and compliance roles demanded by public organizations. Link
Assessment:
The AI industry continues to expand, but there are indications that the initial hype is beginning to subside as the realities of implementation set in. As we see the landscape more clearly, it’s evident that some organizations lacking the necessary capabilities to leverage AI may face a longer and more challenging journey ahead.
Questions arise about whether current infrastructure investments align with actual demand. For example, Meta’s investment in Nvidia GPUs and plans to spend $37 billion on digital infrastructure in 2024 reflect a broader trend of companies investing heavily in AI-related infrastructure. James Harries, manager of the Trojan Global Income Fund, highlights that the CapEx boom related to AI might resemble a classic arms race, where companies (e.g., Microsoft, AWS, and Google) spend heavily to avoid being left behind rather than a race to yield returns from actual AI applications.
Oxford Analytics cautions that returns on AI investments may not materialize as quickly as some might hope. While AI promises productivity gains, these can be offset by operational costs, such as energy consumption. Additionally, the competitive nature of the AI market means that while some companies will see significant returns, others may struggle to keep up, leading to a potential widening of the gap between leaders and laggards.
Companies are still searching for transformative AI use cases, but like the internet’s evolution, these may take time to emerge. Quick returns on AI investments require not only cutting-edge technology but also operational excellence. Larger, less agile organizations may find it more difficult to realize these gains quickly.
In conclusion: Companies expecting rapid returns from AI investments may need to temper their expectations. The recent AI boom has unveiled new, likely larger opportunities, but the challenge with AI remains. Those who don’t have the capabilities in place can expect to see a longer and more uncertain road ahead toward utilizing the promised potential of AI.
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