Baidu rolled out strong second-quarter numbers. Photo: Reuters / Aly Song
Baidu rolled out strong second-quarter numbers. Photo: Reuters / Aly Song

It is not an arms race, but it is expected to have a bigger impact than bombs or missiles on the future of global heavyweights such as the United States, China and Japan.

Asian and US companies are racing to develop artificial intelligence (AI) technology, which promises to revolutionize every aspect of humanity, from computing to lifestyles, from doing business to space exploration.

The manager of the T. Rowe Price Global Technology Fund, Josh Spencer, said US companies in Silicon Valley, California were slightly ahead of their Asian counterparts in funneling resources into developing AI.

But China’s internet players, such as Baidu, are close behind in developing products that think and do tasks better than humans. Spencer said Japanese and South Korean companies were also pushing into AI, though Indian enterprises are largely absent from the field.

“Baidu is Asia’s clear leader in AI,” said Spencer, alluding to the degree of concentration and amount of resources that the Beijing company is devoting to developing the technology.

Baidu dominates web services in China, making revenue of US$10.2 billion last year. Spencer said the company was looking for specific applications for AI in its business.

One example is applying the technology in self-driving cars, so they can use Baidu online maps. Baidu is building a network of laboratories that focus on research in fields such as speech recognition, in anticipation of internet searches being voice-activated, Spencer says.

The development of self-teaching, neural net technology is at the cutting edge of research into AI. The technology is intended to let machines analyze big data, or extremely large sets of data, and make decisions based on their analyses.

Spencer says AI is at the core of all of business endeavors Baidu will make in future. In contrast, big Chinese companies, such as Tencent and Alibaba, are developing AI mainly as an adjunct to their principal businesses, he says.

The new electricity

“We are now living and breathing the era of artificial intelligence,” Baidu chief executive Robin Li Yanhong said during a conference call with stock analysts in February.

“We believe that AI is the new electricity, which will transform industry after industry, new applications and products that we have yet to even imagine, and fundamentally, change how users interact with technology.”

In a message to Baidu employees on May 4, Li announced the company’s new mission was to become a global AI leader.

How do the efforts of Baidu in the field of AI measure up to those of its rivals in the United States?

Spencer said Baidu and Google, the biggest company in the US internet search market, were pretty much neck-and-neck. He said both were pouring similar amounts of resources into projects that would use AI, such as the development of self-driving cars, smart assistants for phones, language processing and internet search and map technologies.

“It’s almost like Baidu and Google are mirror images of each other,” he said. Baidu Research, a laboratory which draws elite scientists from all over the world, does its research and development into AI. The Baidu AI R&D network encompasses its Institute of Deep Learning, its Big Data Lab and its Augmented Reality Lab, and US laboratories.

A technology and investment analyst, David Garrity, who heads GVA Research in New York, says: “Baidu set up its first AI lab in the US way back in 2013.”

In January, Baidu tapped AI specialist Lu Qi, a former senior executive of Microsoft, to become its president and operating chief.

Baidu is pivoting toward AI as the business it does as its main fields slow and as its newer ventures, such as those into online video and group payments, lose money. The company did not respond to questions from the Asia Times.

Alibaba, Tencent in the running

Alibaba, the flagship company of Chinese internet tycoon Jack Ma, is moving into AI on two fronts. Spencer said Alibaba was using AI to make recommendations to consumers.

He said the company was offering AI services as part of its cloud-computing business, like Amazon did in the US.

Tencent, a Shenzhen company controlled by Pony Ma Huateng, is also using AI in its operations. Tencent runs the WeChat social media app, which is hugely popular in China. The company had revenue of US$16 billion in 2015.

Spencer said Tencent was using AI internally to support WeChat, its payment service and its video and product recommendation services.

“Tencent’s focus is on smart assistants that fit within their core product,” Spencer said. This showed that Tencent regarded AI mainly as a secondary technology for supporting its services, rather than a technology to be pursued for its own sake, he said.

Garrity said AI could be enormously useful to Tencent. WeChat has about 900 million users a month, giving the company a market where it can exploit AI by integrating the technology with text, speech and mapping software.

Tencent, like Baidu, is interested in self-driving cars. In March, it bought a 5% stake in Tesla, the US maker of electric cars, for US$1.78 billion.

Tesla is one of several Silicon Valley companies developing driverless motor vehicles. Tencent is also opening a big AI laboratory in Seattle, Washington, headed by Yu Dong, formerly a leading Microsoft researcher.

Japan’s industrial focus

The Japanese profile on the AI horizon was surprisingly low, Spencer said. He said Japanese companies, instead of using AI to improve products and services for consumers, were using it to make their factories run better.

FANUC Corp, a maker of industrial robots, recently introduced a platform that uses AI to coordinate more closely its robots and other automated systems in a factory. Other Japanese players are developing technology with similar purposes.

“Japan doesn’t have a strong consumer internet business. But they’re really strong with industrial allocations of tech, including AI,” Spencer said.

Japanese companies are also using AI in the services sector. Fukuoka Mutual Life laid off 30 employees in January and replaced them with an AI system based on the IBM Watson Explorer analytics platform. The technology is used calculate insurance payouts for thousands of policyholders.

In South Korea, companies are working on using AI in smart assistants. Call center agents are given AI smart assistants, which can be instructed to do specific tasks such as dispatching a truck, ordering parts from a supplier or sorting out queries about bills.

Spencer said Indian companies were looking into ways to use AI, but none had yet come up with a noteworthy product or service.

A  study by PriceWaterhouseCoopers and the Associated Chambers of Commerce of India found that several Indian startups were considering developing AI-based conversational bots, speech recognition tools and other social media applications.