Transform 2021

Live now: AI/ML Automation Technology Summit

July 12-16

This week, TikTok parent company ByteDance began licensing parts of its AI technologies to third parties through a new division called BytePlus. The Financial Times reports that customers can pay fees to use recommendation algorithms, real-time filters and effects, automated translations, and computer vision tech akin to what’s found in TikTok, which has over 65.9 million users in the U.S. and is expected to see double-digit growth this year.

Readers will recall that in August 2020, when the Trump Administration said it would prohibit transactions with ByteDance, the Chinese government implemented restrictions to prevent companies from selling their algorithms without obtaining approval from officials. The jury’s out on whether ByteDance’s move runs afoul of those policies, but it comes amid Chinese regulators’ renewed clampdown on big tech. Companies like Alibaba and Tencent face fines and rules aimed at reining in specific business practices, including the listing of stock on overseas exchanges — even if the unit selling shares is incorporated outside China.

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China’s crackdown on national tech giants has wiped a combined $823 billion off their value since February, with Tencent, Alibaba, and Kuaishou emerging as the biggest losers, according to Bloomberg. But as evidenced by ByteDance, China-based firms — particularly those focused on AI — are looking defiantly beyond the country’s borders for growth opportunities. For example, video surveillance company Hikvision, which is owned by the Chinese state, claims it now receives nearly 30% of its 50 billion yuan ($7 billion) in revenue from overseas. Facial recognition giant Megvii says 4.9% of its revenue came from outside China in the first six months of 2019. And in 2017, ByteDance said it expected to earn over half of its revenue from international users within five years.

While blacklisting by the U.S. Commerce Department cut off one potential avenue for Chinese AI companies, the sector continues to grow at a rapid clip in China. As of March 2019, the number of AI firms in the country reached 1,189, second only to the U.S. at 2,000. Investments in Chinese AI startups topped investments in American AI startups in 2018, the same year China filed 2.5 times more patents in AI technologies than the U.S. And China overtook the U.S. in 2019 for the number of most-cited AI research papers, according to the Allen Institute for AI.

The Biden Administration has clearly expressed an intention to reinvigorate the U.S. industry, in part through the National Artificial Intelligence Research Resource Task Force, which will be responsible for developing a roadmap to democratize access to AI research tools. In the coming weeks, President Joe Biden aims to establish the National AI Advisory Committee to provide recommendations and advice on a range of AI topics. And in February, the White House said it would bump non-defense-related AI investment to $2 billion annually by 2022, while President Biden has proposed increasing the amount of federal R&D spending to $300 billion over four years.

But with Chinese AI companies eyeing international markets, U.S. firms are likely to find it increasingly difficult to compete. China graduates as many as 3 times the number of computer scientists as the U.S., and the country’s AI Innovation Action Plan for Colleges and Universities called for the establishment of 50 new AI institutions in 2020. Moreover, China continues to invest heavily in the hardware needed to train AI models, particularly supercomputers, and now has over 200 of the world’s fastest supercomputers.

For competitors, the results have been stark. At a recent Stanford University-led international challenge for machine reading comprehension, Chinese teams won three of the top five spots, including first place. And researchers at the government-funded Beijing Academy of Artificial Intelligence (BAAI) in June announced the release of a multimodal AI model 10 times larger than San Francisco-based OpenAI’s 175-billion-parameter GPT- 3.

So how might the U.S. make up lost ground? Last July, the President’s Council of Advisors on Science and Technology (PCAST) released a report outlining what it believes must happen for the U.S. to advance “industries of the future,” including AI. PCAST recommended driving opportunities for AI education and training, creating incentive programs at universities, and increasing investments in AI educators, scientists, and technologists at all levels. Former Google CEO Eric Schmidt has also urged lawmakers to ramp up funding in the AI space while incentivizing public-private partnerships to develop AI applications across government agencies.

With a number of China’s largest AI companies pursuing what some would consider ethically questionable technologies, like facial recognition, it’s not clear whether the U.S. will ever corner every AI market — nor that it would wish to. But there’s clearly much to be done to promote the development of AI in the U.S., which the government seems — possibly — poised to do.

For AI coverage, send news tips to Kyle Wiggers — and be sure to subscribe to the AI Weekly newsletter and bookmark our AI channel, The Machine.

Thanks for reading,

Kyle Wiggers

AI Staff Writer

Transform 2021

Live now: AI/ML Automation Technology Summit

July 12-16

Presented by Amazon Business

Digital transformation has spurred a significant trend in the procurement landscape for years. New technological solutions have pushed the boundaries of what’s possible, and what’s affordable, for organizations of every size to evolve their operations and unlock areas of growth. But the pandemic has accelerated this shift online, explains Rob Green, General Manager, Amazon Business Public Sector at Amazon Business.

The new Amazon Business “B2B E-Commerce in Evolution” report dives deep into the trends reshaping B2B ecommerce for midsize to enterprise businesses, as necessitated by the shift to remote work and the demand for cost containment. The goal: to capture the insights buyers and sellers need to know to evolve their operations and achieve success in the rapidly shifting landscape of procurement.

“This shift towards eprocurement is important because it will accelerate lasting changes across the entire organization that will positively impact growth, efficiency, and more,” Green says. “When B2B buyers incorporate more digital solutions into the purchasing process, operational efficiencies are felt across the entire organization.”

The eprocurement trends to watch

“Our data shows that the B2B purchasing experience is showing customer demand for more selection and shipping options that are eco-friendly and sustainable; organizations are increasingly setting goals to support buying from local businesses; and, there is a greater emphasis on sourcing from diverse sellers,” Green says. “All of these trends play a larger role in B2B procurement.”

For sellers, one of the largest trends was the role eprocurement has played in opening new channels and opportunities to have a global reach. The survey found that 59% of sellers reported expanding their customer base is a top priority in 2021, and selling products globally is a top priority for 40%. A global audience offered by online channels means that sellers have unprecedented ability to expand their business significantly.

In ranking the most valuable features of the purchasing process, buyers overwhelmingly indicated that online features are more valuable than traditional ones, like phone calls or viewing products in person. This means sellers can lean on online procurement features to make their selection stand out, such as improving their product detail pages and images. These efforts will give their items a virtual shelf that has no geographical boundaries and can reach a wider customer base outside their historical reach.

“This ability to scale is spurred by more global visibility, but also by increasing desire from B2B buyers for a more consumer-like experience where self-service is the expectation,” Green points out. “Buyers value convenience, and sellers that can offer this benefit along with robust product detail will be well-equipped to grow.”

For buyers, social and environmental considerations are playing a larger role in the procurement process, particularly for mid-sized and enterprise businesses. Research revealed a few key trends reflecting industry shifts towards value-based buying and selling decisions: 83% of buyers surveyed said their companies plan to increase spending reserved for Black and minority-owned businesses in 2021 and of those, almost half (48%) plan to increase their budgets for spending with diverse sellers by 20% or more. While increasing efficiency was the top buyer procurement priority for 2021 at 40%, improving sustainability was of almost equal importance at 39%. Amazon Business provides the tools for buyers to easily identify and connect with brands and products that align with those values.

“As the line separating consumer and B2B purchasing blurs, procurement teams and professionals can support meaningful causes through their business purchasing decisions,” Green says. “Sustainability is top-of-mind as buyers look to reduce their carbon footprint.”

Facilitating diversity in the procurement world

“One of the most positive shifts we’re seeing in the business world right now is towards more equitable work practices, and as an extension, a greater emphasis on supporting small, local, minority, women, veteran, and LGBTQ-owned businesses,” Green says. “By supporting these diverse businesses, buyers can help spur economic development in their communities.”

According to the survey, 39% of buyers consider increasing diversity among suppliers a top priority this year. However, matchmaking or finding a small or diverse business to purchase from is not always simple, Green adds. Amazon Business connects a wide audience of buyers with small, diverse, and local sellers through advanced search and filtration features, as well as tools for diverse sellers to upload their national or state-recognized credentials and increase visibility with those businesses looking to purchase from them.

Transition and growth in a digital procurement world

One of the biggest benefits of a digitalized procurement world is that sellers and buyers are realizing brand-new opportunities that weren’t possible via traditional commerce channels. For instance, digitization opens the door for small sellers to connect with large buyers who they may have trouble reaching.

“For example, certified Black- and veteran-owned small business Aldevra increased its sales by more than 300% since 2016 on Amazon Business,” Green says. “The company now works with customers across the nation, signaling the long-term positive effect of ecommerce on the success of smaller sellers.” To achieve the same growth, small businesses should take note of buyer preferences and align their online presence accordingly. The survey found that more than 80% of buyers highly value detailed product descriptions. Sellers can leverage online tools, such as pricing comparisons, listing optimizations, and customer reviews to meet the expectations of larger buyers.

On the other hand, larger sellers can focus on reaching buyers of any size online and improving operational efficiency to drive down costs and focus business improvements elsewhere.

The future of procurement

The biggest trend might simply be that procurement is moving online. The survey found 85% of business buyers’ organizations were propelled to move more of their procurement online and 96% said they anticipate their organizations will continue doing more purchasing online, even after pre-pandemic business functions resume. And more than a third (36%) of buyers said they anticipate their organizations will make 50% or more of their purchases online this year.

The momentum towards online purchasing is likely to have major implications on the future of business buying, Green adds. The vast majority (91%) of buyers prefer eprocurement over traditional methods, citing product range, competitive prices, and order speed as the top benefits. Additionally, the adoption of more consumer-like purchasing capabilities is spurring the adoption of additional B2C trends in the B2B world.

“Expectations between consumer and business purchasing experiences have blurred as buyers expect the same fast, convenient, and personalized digital buying capabilities they’ve grown accustomed to at home,” Green explains.

With procurement shifting online, sellers can prepare by leaning into digital features like enhanced product content, business pricing, and quantity discounts as well as advanced fulfillment that will provide customers with the experience they seek as expectations continue to shift.

“For seller organizations, adapting to meet buyer demands will allow them to remain relevant with their B2B customers, to make the most of the huge opportunity to engage more deeply with customers via digital channels,” he says.

For a closer look at the most important digital procurement trends impacting buyers and sellers, download the free “B2B E-Commerce” in Evolution” report from Amazon Business.

Amazon Business B2B E-commerce in Evolution Report methodology

Amazon Business surveyed 250 B2B buyers and 250 B2B sellers across the U.S. in 2021. Buyer respondents included full- and part-time employees across a range of job levels who worked at organizations of various sizes in the following sectors: government, education, healthcare, and commercial industries. All buyers’ organizations made an annual revenue of more than $25 million. All buyer respondents played an influential role in their organization’s procurement process. Seller respondents included full- and part-time employees across a range of job levels who worked at organizations of various sizes that sold products across a variety of categories.

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