Europe is too worried about protecting old metal-bashing industries and not nearly enough about the exodus of deep-tech startups to the U.S.
American VC firm Playground, set up by Android’s founder Andy Rubin,
has invested in the new company. Judging by Playground’s track record –
two of its most notable successes were sold to Amazon.com Inc. – PsiQ
may very well end up becoming part of Big Tech’s trophy collection one
It wouldn’t be the first time that Europe’s smartest and most
promising tech startups have been gobbled up by the behemoths of Silicon
Valley and Seattle. Britain’s DeepMind (an artificial intelligence
specialist), France’s Moodstocks (a machine learning developer for image
recognition) and Germany’s Fayteq (which lets you remove objects from
videos) were all bought by Alphabet Inc.’s Google.
With every one of these sales, Europe loses ground in the
global race for talent. Some 562 European startups were bought by U.S.
firms between 2012 and 2016, or 44% of the total, according to the
advisory firm Mind the Bridge. As the Google economist Hal Varian says, a
big reason for buying these companies is being able to poach all of
their engineers in one go.
get a sense of how scarce these resources are, consider that the
international talent pool for AI – the “defining technology of our
times,” according to Microsoft’s CEO – is alarmingly shallow at about
205,000 people. Germany and Britain are among the top-five hubs for AI
talent because of the excellence of their universities. But it’s a
bitter struggle to keep such highly prized workers at home.
The primary concern about this brain drain isn’t national
pride or flag-waving; it is power. It’s about who controls the huge and
politically sensitive data sets on which AI relies.
takeover of DeepMind is a fascinating example. While the startup said it
would defend its autonomy and stick to its ethical principles after
being acquired, the promise didn’t survive its meeting with reality.
DeepMind’s reputation took a serious dive when its partnership with
Britain’s National Health Service was found to have broken data privacy
law in 2017. Google’s subsequent move to fold DeepMind’s health unit
into its own business has troubled privacy campaigners, created internal
tensions, and led reportedly to staff walkouts.
seem complacent in confronting these issues. They see the cash flowing
in from Silicon Valley as an unalloyed economic good and talk up
investment as a stamp of approval. In France, ministers speak proudly of
Google’s and Facebook Inc.’s research labs in Paris, which attract
everyone from distinguished professors to PhD students. The French
minister for digital affairs, Cedric O, said last week that American takeovers of French startups were “no problem” as long as the technology wasn’t critical.
This is shortsighted, and shows Europe’s industrial
policymakers are still looking at last century’s manufacturers when
they’re thinking about sectors they want to protect (no doubt because of
the large numbers of jobs involved). Instead of obsessing over
mechanical engineering firms such as Alstom SA and Siemens AG, France
and Germany would be wiser to think more about DeepMind, Moodstocks and
Fayteq – or about the German robotics firm Kuka that was sold to China.
public money to improve the pay of researchers would help, as would
more hybrid public-private partnerships. Tougher antitrust scrutiny in
technology is also needed – even if it edges toward protecting the
national interest. Finally, there’s the dream of a European version of
DARPA, the Pentagon agency that fosters emerging technologies for the
Europe’s AI and deep tech exodus will continue until its
political leaders take the issue as seriously as they do jobs in the
metal-bashing industries. Unless they wake up soon, the race is lost.
***This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
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James Boxell at firstname.lastname@example.org