'Competitive Convergence' Looks Like This
Leaders Would Lead Longer With a Different Perspective
J.D. Vance has described artificial intelligence as an “arms race” with China. If America paused out of concerns over AI safety, he said, it might find itself “enslaved to PRC-mediated AI”. He said the US was ripping out the brakes, putting the proverbial pedal to the metal to develop AI, to shift the dynamics of competition and the quest for economic advantage.
Gone is the Biden administration’s rhetoric on existential risk and the need for AI safety guardrails. Instead, the new White House approach prioritizes speed, power, and control over the global AI landscape. More specifically, Vance stressed the administration’s AI policy would turn on four points: first, perpetuation of America’s AI offerings serving as the “gold standard worldwide”; second, adoption of a deregulatory agenda at home and abroad; third, prevention of AI being “co-opted into a tool for authoritarian censorship”; and, fourth, development of a “pro-worker growth path for AI.”
It'a technology-led narrative the promises a Golden Opportunity for America and American AI, at least from the perspective of the Big Technology market, a vision of strategic success bounded, based and built on investing in the technical potential of technology. Shortly before Trump took officer, Microsoft vice chair and President Brad Smith published a blog:
As we usher in a New Year, we will welcome a new president into the White House as well as a golden opportunity for American technology and economic competitiveness. Not since the invention of electricity has the United States had the opportunity it has today to harness new technology to invigorate the nation’s economy. In many ways, artificial intelligence is the electricity of our age, and the next four years can build a foundation for America’s economic success for the next quarter century.
At Microsoft, we see a three-part vision for America’s technology success. This starts with advances and investments in world-leading American AI technology and infrastructure. Second, the country needs to champion skilling programs that will enable widespread AI adoption and enhanced career opportunities across the economy. Finally, the United States must focus on exporting American AI to our allies and friends, bolstering our domestic economy and ensuring that other countries benefit from AI advancements.
The country has a unique opportunity to pursue this vision and build on the foundational ideas set for AI policy during President Trump’s first term. Achieving this vision will require a partnership that unites leaders from government, the private sector, and the country’s educational and non-profit institutions. At Microsoft, we are excited to take part in this journey.
You certainly can't argue with the aspiration, the War Cry to rally big budget for "transformation" for self, for friends and for allies, ideally all at the same time. There's a flow of AI-enabled bombastic slop "flooding the zone" with sales fog, from which you emerge, somehow, with a purchase. But I'm not sure how much reality we're dealing with these days, to say nothing of The Exciting New Journey upon which the world has embarked, everyone on a mission to a galaxy far, far away. For a giggle, the San Francisco Standard did a brilliant and hilarious job of breaking down in detail that weird 9-minute Sam Altman and Joney Ive video published last week on the OpenAIYoutube channel:
Call it “When Jony Met Sammy”
OpenAI’s $6.5 billion acquisition of Jony Ive’s AI-device startup io was accompanied by what could best be described as an engagement-party sizzle reel starring the iPhone designer and Sam Altman. The nine-minute love fest detailed their meet-cute, their growing relationship, and their plan to redesign how humans interact with technology.
Well, “plan” might be a generous word. While the clip was full of fawning descriptions of each other — and a suspicious number of “ordinary San Franciscans” with the apparent gift of time travel — it was light on details about what Ive and Altman are cooking up. But since the trailer for the Seth Rogen flick filming in San Francisco has yet to drop, The Standard’s staff had nothing better to do than break down the video in excruciating detail.
My favorite parts:
2:00: Altman: “Jony was running a design firm called LoveFrom that had established itself as really the, I think, densest collection of talent that I’ve ever heard of in one place — and probably that’s ever existed in the world.”
Even for a guy known for hyperbolic pronouncements, this seems a bit much. LoveFrom is a denser collection of talent than the Manhattan Project? Xerox PARC? The 2016 Warriors? For the record, here is Wikipedia’s summation of LoveFrom’s achievements to date: “[producing] the official emblem for King Charles III’s coronation, redesigning the review system for Airbnb, and designing a new typeface called LoveFrom Serif.” —Jeff Bercovici, managing editor
3:23: Altman: “Jony recently gave me one of the prototypes of the device for the first time to take home, and I’ve been able to live with it, and I think it is the coolest piece of technology that the world will have ever seen.”
We have more than five minutes left. Spoiler alert: That’s the only detail about the device that’s in the entire video. —KT
Abundance breeds boredom. Urban light is now so cheap and so abundant that many consider it to be a pollutant. The same could be said about AI. We are overloaded. We are bored. We are putting the new operating model ahead of the new thinking model (see above video). We are confusing science fiction and fantasy for practical applications and reality. We are letting means conquer ends, which is expensive. It's also where the real trouble starts.
For many companies, excitement over the promise of generative artificial intelligence has given way to vexation over the difficulty of making productive use of the technology. According to S&P Global Market Intelligence, the share of companies abandoning most of their generative-AI pilot projects has risen to 42 percent, up from 17 percent last year. Faced with sluggish progress, many bosses are sliding into the “trough of disillusionment”, says John Lovelock, Chief Forecaster of Gartner, referring to the stage in Gartner's famed “hype cycle” that comes after the euphoria generated by a new technology.
Put another way, there's a lot of bullshit in the bubble machine.
Low-quality, artificial intelligence-generated studies are flooding the scientific literature, AI-enabled research is suggesting. A team from the University of Surrey found an "explosion of formulaic research articles" since since 2021, which appear to have been created by AI scraping open-access datasets from the US National Health and Nutrition Examination Survey (NHANES) database. The AI produces a correlation between some variable and a health outcome, and reporting them as fact. The papers “look scientific but don’t hold up under scrutiny,” a researcher said. Pressure on scientists to publish research may be behind such “paper mills,” one of a number of examples of how AI can be misused, deliberately or naively: A California judge recently fined two law firms for filing a brief full of “false, inaccurate, and misleading legal citations and quotations,” apparently hallucinated by generative AI.
This matters deeply, at the foundational level. Just ask the pharmaceutical industry.
[In related news of strategic collapse, Robert F. Kennedy Jr. said yesterday that government scientists may shortly be foreclosed from publishing their work in leading medical journals (medical publishing is a $12 billion market). On the Ultimate Human Podcast with Gary Brecka, Kennedy said, “We’re probably going to stop publishing in the Lancet, New England Journal of Medicine, JAMA and those other journals because they’re all corrupt.” The journals, he said, publish studies that are funded by the pharmaceutical industry. As a substitute for them, he continued, the NIH will establish medical journals for its various institutes and centers — unless current journals change “radically.”]
Speaking of Radical Change
It's interesting reading Smith's blog post now almost six months into Trump's leadership of the United States. There isn't much "unity" ground around, but certainly a lot of mushrooming chaos around and head-snapping collapse of the country's "educational and non-profit institutions" (for more Blue Spoon thinking on this, see How to Ride Chaos). And that whole "exporting American AI to our allies and friends" thing, China seems to be way ahead.
China’s greatly expanded influence in Latin America puts at risk decades of bilateral relations with the US — the region’s long-time largest trading partner. While China’s interest has been a boon for many smaller Latin economies — two-way trade jumped from $18 billion in 2002 to $450 billion in 2022 — nations risk becoming overly reliant on Beijing. “China is trying to create a situation in which it shapes the external environment in Latin America according to its interests,” an analyst from US-based think tank Inter-American Dialogue said.
China approaches competition (i..e., "strategy") very differently than the United States -- where the West plays the player, China plays the board.
The “DeepSeek moment” in January, when the Chinese firm unveiled a large-language model matching the capabilities of an OpenAI model, confirmed that China is snapping at the heels of America. Yet a recent meeting of the Communist Party’s leadership suggests it is preparing for a different kind of strategic race, The Economist wrote this week. “American firms focus on the model, but Chinese players emphasize practically applying AI” says Zhang Yaqin, a former President of Baidu, now at Tsinghua University. This focus on practical applications –- in factories and for consumers -– is how China stole a lead in e-commerce and e-payments. On May 19th Jensen Huang, CEO of Nvidia, warned America could be left behind again. If American firms do not compete in China as it builds a “rich ecosystem”, Chinese technology and leadership “will diffuse all around the world”, he told Stratechery.
An excerpt:
Ben Thompson: And by international competitors, you mean other models?
JH: China’s doing fantastic, 50% of the world’s AI researchers are Chinese and you’re not going to hold them back, you’re not going to stop them from advancing AI. Let’s face it, DeepSeek is deeply excellent work. To give them anything short of that is a lack of confidence so deep that I just can’t even tolerate it.
Ben Thompson: Did we spur that work to be even better by virtue of the restrictions that were placed on them, particularly in terms of memory management and bandwidth?
JH: Everybody loves competition. Companies need competition to inspire themselves, nations need that, and there’s no question we spur them. However, I fully expected China to be there every step of the way. Huawei is a formidable company, they’re a world-class technology company. The researchers, the AI scientists in China, they’re world-class. These are not Chinese AI researchers, they’re world-class AI researchers. You walk up and down the aisles of Anthropic or OpenAI or DeepMind, there’s a whole bunch of AI researchers there, and they’re from China. Of course it’s sensible, and they’re extraordinary and so the fact that they do extraordinary work is not surprising to me.
The idea of AI diffusion limiting other countries access American technology is a mission expressed exactly wrong, it should be about accelerating the adoption of American technology everywhere before it’s too late. If the goal is for America to lead, then AI diffusion did exactly the opposite of that. (For related Blue Spoon thinking, see How to Save UnitedHealthcare from Strategic Collapse.)
The Problem With Exit 9
Exit 9 of the New Jersey Turnpike is located in New Brunswick. At the exit is a mixed-use office complex called Tower Center, specifically, One Tower Center and Two Tower Center. HCLTech opened in One Tower Center last June; Wipro, one of its competitors in the $282 billion Indian IT services market, has been there much longer (disclaimer, I held a senior leadership role at Wipro).
These are not similar companies. They're identical.
They sell the same operating model, essentially labor arbitrage, supplying low-cost, outsourced software and support services (HCLTech has 220,000 employees; Wipro has 234,000). They sell the same operating model around the same technical potential ("empowering organizations across industries to identify and seize opportunities to leverage AI and GenAI to automate and accelerate business processes"). And they sell the same operating model selling the same technical potential the same way ("transformation in the age of disruption").
The "me too" brand positioning at the top of Tower Center is a metaphor.
Exit 9 speaks to the larger problem of the thing that needs "fixing" the most: the narrative layer. When everyone has access to the same amazing technology, and everyone deploys the same amazing technology the same amazing way, you get a sea of sameness at an amazing scale. When it comes to understanding and approaching competition, either at the geopolitical level (the United States vs. China), the industry level (Big PBM vs. Big Pharma), or the market level (Wipro vs. HCL), there is a Big Gap In What Technology Calls Strategic Thinking.
Strategic atrophy is a thing — look no further than CVS Health offering pizza parties to boost vaccine sales, all the while the $33 billion ‘vaccine market’ evaporates (look no further than RFK Jr. announcing yesterday that Covid-19 shots will no longer be recommended for healthy children and pregnant women). And it can be very dangerous, and expensive, confusing technology for strategy.
“While American tech leaders often frame AI with utopian aspirations, China’s government appears more focused on using it to solve concrete problems like economic growth and industrial upgrading,” says Karson Elmgren of RAND. The government’s annual work report in March mentions a new campaign called “AI+”, which prioritizes firms adopting AI in their existing operations. This mimics the “Internet+” campaign a decade ago to create a more sophisticated digital consumer economy than the West.
China understands strategy at a system level, which is to say through the lens of ecosystems, not ther constituent parts. It's a completely different, bigger frame to approach competition, and to sustain competitive advantage.
"We had to work really hard in the last several years to build a presence in DC," explained Huang in his Stratechery interview. "We have a handful of people, most companies our size have hundreds of people, we have a handful. Our handful of people are amazing, they’re telling our story. They’re helping people explain, understand not just how chips work, but how ecosystems work, and how AI ecosystems work, and what are some of the unintended consequences of the policies."
The skill in short supply is not technical, but visionary.
The thing needed across the board is different kind of creative leadership, able to articulate and propagate a new direction, teams that can manage the 'transition space' to market innovation by positioning better strategy stories. Because simply hanging loose at the crap tables and hoping for the best from "the world's deepest thinkers" is the low-probability path to strategic (and professional) success.
Like driving in New Jersey, you can't get there from here.
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John G. Singer is the Executive Director of Blue Spoon, the global leader in positioning strategy at a system level. Blue Spoon specializes in constructing new industry ecosystems.