My Lords, I join other noble Lords in thanking the noble Lord, Lord Clement-Jones, for securing this debate and chairing so well the Select Committee, the report of which, on artificial intelligence, we are debating today.
I believe the report is a strong demonstration of the effectiveness of the ad hoc committees—to be renamed, possibly with the aid of some artificial intelligence, special inquiry committees—in addressing cutting-edge technological issues in the fast-changing society and economy in which we live. I draw the attention of the House to my entry in the register of interests, in particular as a trustee and chair of the investment committee of the Esmée Fairbairn Foundation—an investor in venture capital funds worldwide with significant holdings in AI companies—and as a director and shareholder of an AI-powered music company.
In referring to AI companies, I am reminded of an interview in the mid-1990s given by Andy Grove, the Hungarian-born co-founder and chief executive of Intel Corporation and author of the bestselling business book, Only the Paranoid Survive, a well-thumbed copy of which is doubtless in the library of 10 Downing Street. “Soon,” Mr Grove said,
“people will stop talking about investing in internet companies. They will invest in companies, almost all of which will use the internet”.
Similarly, I suspect, we will not think about AI companies for long but about companies generally, which almost universally will use AI. Indeed, in the evidence given by MMC Ventures to the committee, it was suggested that, already, only 10% of companies that it considered funding were pure AI developers while the remaining 90% were applications of AI.
At this stage of the debate, I shall concentrate on just one of the many questions arising from the committee’s report: how well placed is the UK in developing and applying AI? I have no hesitation in expressing my admiration for the excellence of research, expertise and work in the UK’s universities—Cambridge is singled out in the report, but is by no means the only leader in the field. It is a huge challenge to maintain, let alone strengthen, this position, even without the uncertainties and difficulties posed by Brexit. In the US, for instance, there is a virtuous circle of successful technology entrepreneurs acknowledging their debts to their alma maters with generous donations to their endowments. As long ago as 2001, Gordon Moore, another co-founder of Intel, and the author of Moore’s law, gave $600 million to Caltech, the California Institute of Technology which, I believe, is still the largest gift to an academic institution.
While British entrepreneurs are increasingly generous in supporting our leading universities, there is still a gulf between the resources available to them and their peers in the US. Not only is it essential, as my noble friend Lord Hollick has said, for EU funding in this area to be fully replaced, but significant real increases must be provided if the UK’s position is not to slip. In the Government’s response to the report, paragraph 53 scatters numbers like confetti but does not make it clear whether this challenge will be met. Will the Minister clarify the position?
The US, with its academic excellence and resource, the power of its technology clusters and the scale and expertise of its venture capital industry, presents massive competition, but China may be an even more formidable competitor, as my noble friend Lord Giddens and the noble Baroness, Lady Rock, have already suggested. Dr Kei-Fu Lee—arguably the leading technology entrepreneur in the country, whose PhD at Carnegie Mellon University in the 1980s was on AI—has calculated that 43% of all academic papers worldwide on AI have had at least one Chinese co-author.
Data privacy in China is substantially less well regulated, allowing data-driven, AI-powered businesses to operate highly effectively in areas such as banking and fintech. I do not advocate a regulatory race to the bottom—I leave that to the malfunctioning artificial intelligence of the European Research Group—but I draw these comparisons to emphasise that if we choose, rightly, to ensure that privacy, integrity and trust are prioritised in our approach to AI, we have to ensure all the more that we do not miss a single trick in providing the highest level of human and financial capital to companies developing and applying AI in this country.
The noble Baroness, Lady Rock, said, “We have the capital”, and the venture capitalist Eileen Burbidge, in her evidence to the committee, argued that there was no shortage of financial capital at any stage, whether seed, early or growth. Maybe, my Lords. In the last year for which comprehensive data is available, $6 billion of venture capital funds were raised in the EU, $26 billion in the US and over $30 billion in China. Of course, money is not everything but it sure as hell helps. Even more important than the quantity of money is the quality of money—the expertise and support of the venture capitalists who direct the funding to entrepreneurs. The scale of the VC funds raised in the US and China contributes critically to the depth of resource that the venture capitalists can devote to their investee companies. Once more, we face a formidable challenge in the UK in matching—let alone exceeding—that with the patient capital fund that is being established, painfully slowly, under the British Business Bank, doing little more than replacing the funding the UK has been receiving from the European Investment Fund.
I believe in the capability of the AI community in the UK. To return to the words of Andy Grove:
“Success breeds complacency. Complacency breeds failure. Only the paranoid survive”.