By: Michael Feldman

The British government and the private sector are investing close to £1 billion pounds to boost the country’s artificial intelligence sector. The investment, which was announced on Thursday, is part of a wide-ranging strategy to make the UK a global leader in AI and big data.

Under the investment, known as the “AI Sector Deal,” government, industry, and academia will contribute £603 million in new funding, adding to the £342 million already allocated in existing budgets. That brings the grand total to £945 million, or about $1.3 billion at the current exchange rate. The UK government is also looking to increase R&D spending across all disciplines by 2.4 percent, while also raising the R&D tax credit from 11 to 12 percent. This is part of a broader commitment to raise government spending in this area from around £9.5 billion in 2016 to £12.5 billion in 2021.

The UK government policy paper that describes the sector deal meanders quite a bit, describing a lot of programs and initiatives that intersect with the AI investments, but are otherwise free-standing. In some cases, the text appears to be contradictory: In one passage the authors stress the need to be “strategic and focused: recognising the increasing convergence of technologies and focusing on the areas where we can compete globally,” while just a few paragraphs before in a discussion of the AI/big data opportunity, the paper states the “the UK can lead the world for years to come.”

The latter sentiment is at least partly based on the fact that a number of well-regarded AI businesses are already based in the UK, with Deepmind, Swiftkey, and Babylon offered as the most prominent examples. However, it’s worth noting that Deepmind is owned by Google, while Swiftkey is part of Microsoft. And even though Babylon is still operating independently, some of its investors are based in Sweden (Vostok New Ventures and KinnevikAB) and the US (NNC Holdings).

More to the point though, from a commercial perspective, the UK is not a major force in AI and is unlikely to be anytime soon. The biggest players are hyperscale companies based in the US (Google, Amazon, Microsoft, IBM, Facebook, and a few others) and China (Tencent, Baidu, and Alibaba). And that points to a larger challenge for the UK, namely, it has a relatively small population from which to draw the kind of data that drives most of the deep learning models that currently underlie AI. To develop a larger presence, it will have to establish at least one big multinational that can tap into foreign markets – a Barclays of AI, if you will.

Having said that, the overall rationale for a targeted investment in this area is well-justified, especially considering that the AI sector – something that barely existed five years ago – is projected to add more than £630 billion to Britain’s economy by 2035. And given the R&D investments in artificial intelligence taking place in China, the US, Europe, Japan, and elsewhere, it behooves the UK to keep pace.

The growing importance of the AI sector also means government policies, and agencies implementing those policies, will have to be established to develop and manage this market. For example, the government plans to establish a new Office of Artificial Intelligence, as well as a Center for Data Ethics and Innovation. Working with those entities will be a new AI Council, an advisory group of business and academic leaders in the field. The government will also initiate public-private programs to attract AI talent, businesses, and investments to the UK.

Some of this investment is already happening organically. Google and Amazon have a substantial AI presence in the UK; Google has three offices in London and another one planned for King’s Cross, while Amazon has a total workforce of 24,000 in the country and plans to open two new robotics-enabled fulfilment centers in the near future. Meanwhile, Hewlett Packard Enterprise (HPE) recently partnered with ARM, and SUSE, and the universities of Bristol, Edinburgh and Leicester to deploy three ARM-powered supercomputers to be used for AI and big data work.

A number of international companies are also making AI-related investments in the country, either by partnering with UK organizations or by opening offices in the country. These include Elemental AI (Canadian AI research lab), Beyond Limits (American autonomous software developer), Ironfly Technologies (Hong Kong advanced financial analytics company), Astroscale (Japanese space debris removal tech company), Chrysalix (Canadian venture capital firm targeting AI and robotics), and Global Brain (Japanese venture capital firm with a focus on AI, blockchain, and robotics). In addition, Bloomberg is reporting that Microsoft, IBM and Facebook are “making undisclosed commitments, along with consulting firm PwC and pharmaceutical company Pfizer Inc.”

On the academic side, the University of Cambridge Research Computing Service is making its latest £10 million supercomputer available to AI technology companies. This is almost certainly the Wilkes2, a 1.2-petaflop (Linpack) P100 GPU-accelerated cluster that is the UK’s most powerful academic supercomputer. It’s supported by a consultancy team at the university.

Can this strategy propel the UK into global AI dominance? Unlikely, given the current drivers of the AI market, the dominance of the US and China, and the size of the investment Britain can justify. But the country can certainly leverage its home-grown AI intellectual property and boost imports and exports of the technology. And that can form the basis of a vibrant industry that propels local businesses and increases productivity across all sectors of the economy.