AI Superpowers: China, Silicon Valley, and the New World Order

by Kai-Fu Lee

Deep-learning pioneer Andrew Ng has compared AI to Thomas Edison’s harnessing of electricity: a breakthrough technology on its own, and one that once harnessed can be applied to revolutionizing dozens of different industries. Just as nineteenth-century entrepreneurs soon began applying the electricity breakthrough to cooking food, lighting rooms, and powering industrial equipment, today’s AI entrepreneurs are doing the same with deep learning.

Today, successful AI algorithms need three things: big data, computing power, and the work of strong—but not necessarily elite—AI algorithm engineers.

China’s successful internet entrepreneurs have risen to where they are by conquering the most cutthroat competitive environment on the planet. They live in a world where speed is essential, copying is an accepted practice, and competitors will stop at nothing to win a new market.

The AI world order will combine winner-take-all economics with an unprecedented concentration of wealth in the hands of a few companies in China and the United States. This, I believe, is the real underlying threat posed by artificial intelligence: tremendous social disorder and political collapse stemming from widespread unemployment and gaping inequality.

In analyzing Wang’s success, Western observers make a fundamental mistake. They believe Meituan triumphed by taking a great American idea and simply copying it in the sheltered Chinese internet, a safe space where weak local companies can survive under far less intense competition. This kind of analysis, however, is the result of a deep misunderstanding of the dynamics at play in the Chinese market, and it reveals an egocentrism that defines all internet innovation in relation to Silicon Valley.

Silicon Valley’s and China’s internet ecosystems grew out of very different cultural soil. Entrepreneurs in the valley are often the children of successful professionals, such as computer scientists, dentists, engineers, and academics. Growing up they were constantly told that they—yes, they in particular—could change the world. Their undergraduate years were spent learning the art of coding from the world’s leading researchers but also basking in the philosophical debates of a liberal arts education. When they arrived in Silicon Valley, their commutes to and from work took them through the gently curving, tree-lined streets of suburban California. It’s an environment of abundance that lends itself to lofty thinking, to envisioning elegant technical solutions to abstract problems. Throw in the valley’s rich history of computer science breakthroughs, and you’ve set the stage for the geeky-hippie hybrid ideology that has long defined Silicon Valley. Central to that ideology is a wide-eyed techno-optimism, a belief that every person and company can truly change the world through innovative thinking. Copying ideas or product features is frowned upon as a betrayal of the zeitgeist and an act that is beneath the moral code of a true entrepreneur. It’s all about “pure” innovation, creating a totally original product that generates what Steve Jobs called a “dent in the universe.” Startups that grow up in this kind of environment tend to be mission-driven. They start with a novel i...

Combine these three currents—a cultural acceptance of copying, a scarcity mentality, and the willingness to dive into any promising new industry—and you have the psychological foundations of China’s internet ecosystem.

There was even a knockoff Disneyland, a creepy amusement park on the outskirts of Beijing where employees in replica Mickey and Minnie Mouse suits hugged Chinese children. At the park’s entrance hung a sign: “Disneyland is too far, please come to Shijingshan!”

Early Chinese tech entrepreneurs looking for mentors or model companies within their own country simply couldn’t find them. So instead they looked abroad and copied them as best they could.

Didi, the ride-hailing company that duked it out with Uber, dramatically expanded its product offerings and gives more rides each day in China than Uber does across the entire world.

Toutiao, a Chinese news platform often likened to BuzzFeed, uses advanced machine-learning algorithms to tailor its content for each user, boosting its valuation many multiples above the American website.

Qihoo first created a popular new “privacy protection” software that issued dire safety warnings every time a Tencent product was opened. The warnings were often not based on any real security vulnerability, but it was an effective smear campaign against the stronger company.

Kaixin001 was a solid product, but its founder was no gladiator. When he created the network, the URL that he wanted to use—kaixin.com—was already taken, and he didn’t want (or possibly couldn’t afford) to buy it from its owner. So instead he opted for kaixin001.com, which turned out to be a fatal mistake, equivalent to entering the coliseum without a helmet. The moment Kaixin001 became a threat, the owner of Renren simply bought the original www.kaixin.com URL from its owner. He then recreated an exact copy of Kaixin001’s user interface, changing only the color, and brazenly dubbed it “The Real Kaixin Net.” Suddenly, many users trying to sign up for the popular new social network found themselves unwittingly ensnared in Renren’s net. Few even knew the difference. Renren later announced it would merge Kaixin.com with Renren, effectively completing its kidnapping of Kaixin001 users. The move kneecapped Kaixin001’s user growth, killed its momentum, and neutralized a major threat to Renren’s dominance.

Silicon Valley juggernauts are amassing data from your activity on their platforms, but that data concentrates heavily in your online behavior, such as searches made, photos uploaded, YouTube videos watched, and posts “liked.” Chinese companies are instead gathering data from the real world: the what, when, and where of physical purchases, meals, makeovers, and transportation.