Reading the provocative book AI Superpowers, by Kai Fu Lee, is enjoyable, and at the same time, gives me a lot of room for thought and concerns.
The central theme of the book is that China is growing up to become an AI superpower, one that will soon rival and even surpass the USA.
In the book, the author recounts how the China Startup ecosystem change throughout the years. He goes from how China was once viewed as a backwater of Internet with virtually no startups in 1990s, to how the land was teeming with startups seen as copycats of the western counterparts– Weibo is the Twitter for China, Renren is the Facebook for China etc in 2000s, and how, after a period of imitation, the startups there then take a life of its own, travelling down a completely different paths than the western cousins– WeChat is the SuperApp of all, which we can find no parallel in western countries.
The news of China ecosystem doesn’t always register on our radar, partly due to language barriers, and partly due to the Chinese apps only live well within the great firewall of China. Take for example, everyone here knows about Groupon, but how many knows about meituan, the China analog to Groupon? Reading how meituan grows and grows is fascinating. Whereas Groupon is a shadow of its former self, meituan is now worth USD 30 billion. This is an example where the China copycats outlive or outgrow their originators. There are many more such examples, such as didi ( ride-sharing company) and Weibo .
But this is not all, while Groupon largely stays on course as a discount coupon buying website ( and slowly dying after the initial hype went down), meituan successfully pivoted into other industries, such as online and on-demand delivery platform, or even ride-hailing service. In Silicon Valley, the creators focus on doing something pure, with often disregard to the bottom line. But in China, everyone is fighting for survival. If this business no longer works, or it is not sustainable, let’s pivot away! It is precisely the pivoting strategies that help meituan to reach the USD 30 billion market capitalization.
China startups also tend to integrate the service vertically. Meituan does online food booking, and it also does food delivery, this is unlike a lot of western startups that tend to focus on one thing and one thing only. A typical food delivery company in US ( or even in Malaysia, such as DahMakan) will focus on the online booking part, and then leave the door-to-door delivery to other parties. Something also happens to short-term rental industries. Airbnb doesn’t directly own condos or apartments, it builds a platform for landlords to post their units online and let the renters to find those units themselves. But China-equivalent of Airbnb, in the form of ziroom (自如) actually owns a fleet of condos and units and provide room cleaning services. So whereas Airbnb has to find both the house units and renters, ziroom just has to find renters. One half problem solved.
The offline operation is often messy, less profitable, and less glamorous than the online equivalent, which is why Silicon Valley wouldn’t want to touch it. But not so in China. Offline operation also has the reputation of cannot scale, which is another reason why the computer geeks in Silicon Valley doesn’t like to do ( after all, the reason you write code is to impact as many people with as little efforts involved in, right?). But in China, doing things that cannot scale is precisely what gives them the advantage in this AI era.
Let me explain.
When you use the services of Amazon, or Google, or Airbnb, you are inadvertently also giving them the trace of your digital lifestyles. Ever wonder why Google can post the exact ads that you want to look at? It’s because it has your online browsing profile. With AI techniques such as deep learning, Google can know a lot about your habit. But Google can only go so far, it can’t know your offline activities. This is the limit of Western technology companies, they only know you as an online entity, not your offline life.
But not so in China, because all the online and offline activities are almost exclusively done via Mobile phones, and because a lot of the services are vertically integrated across online and offline divide, and because a lot of people use mobile wallets such as Alipay or Wechat Wallet, China technology companies can know more about you than Google and Facebook ever will. China technology giants such as Tencent, Alibaba and Baidu know where you are dining, which train ticket you are buying, which 7-11 stores you are frequening, in addition to your online activities.
AI algorithms can be easily replicated in today’s open source environment, it’s the data that counts as a competitive advantage because it is proprietary. So in this sense, the company that has the most data, will win.
So don’t be surprised if one day, it’s a China technology company that owns you, instead of the much hyped culprits such as Facebook or Google.
To me, a lot of privacy noises in the Western countries are fundamentally misplaced. People complain that Facebook or Google know too much about them, and in the event of US government subpoena, their data might fall into the government’s hand, which is a gross violation of privacy that so many westerners hold dear. Which is why we have General Data Protection Regulation in Europe, we just don’t want people to know about us.
But come to think about it, if more data–coupled with AI– really leads to better public services, better healthcare, less wastage, more efficient in government and better lives, do you not want to hand over your data? And if the China companies can really do more and better with more data, sooner or later China is going to become the AI superpower, and we will all irresistibly fallen in love with China-apps because they are just so good at upgrading our lives, and we will happily let them suck all of our data. By then, your data will be in the hands of those who are less concerned about privacy, and who will happily hand over your data when their government comes calling, the China government.
And what if you are an important government officer who is in an important negotiation with the China government, and the China government knows everything about you, including your unsavory taste? Will this compromise your integrity or even worse, national security?
So because we don’t want democratically elected government to own our data, we have to let an unelected authoritarian government owns us, what an irony!
This is the concern that keeps popping up in my mind as I read through the book. In the age of digitalization and AI, where more data is always better than less, is our privacy really still so sacrosanct? If one day you have to choose between having a benevolent AI Overlord supervising your life so that you might live a long, prosperous and happy one ( with the condition that you don’t challenge them, don’t overstep your boundary, don’t do things they don’t permit you), and having an unsupervised life that is filled with risks or maybe even shorter lifespan, which one would you choose? Which one would I want for my children?
This book gives us new urgency to think about this issue. The China government wants to become the undisputed AI superpower by 2030, by then if it really achieves the goal, will we be enslaved by the China government? I would rather handover my data to US government rather than the China, 100 times over ( I’m a Malaysian Chinese). But with all the privacy debates that are raging on in the western countries, it’s quite unlikely that the western technology companies can ever collect as much data as the China counterparts.
So I guess we are really left with no choice. Either we accept the China dominance, or we risked being a society outcast. A somber outcome, either way.