Digital Transformation

The splinternet – How China and the US could divide the internet for the rest of the world

by Strategic Solutions Editor · Published February 4, 2019 · Updated March 22, 2019

Editor’s Note: AI is certainly a game changer–and winner, but not necessarily the center of creating a splinternet or some equivalent. Cryptocurrency and blockchain are also game changers in the revolution of the internet for the future. China has kicked crypto out–due to some major failures–setting them behind. US lawmakers, regulators, and financial leaders need to act quickly to incorporate crypto into currency and security channels and seize the initiative during this lapse by China. From an AI perspective it must be recognized that in addition to many AI product focused companies, you have the big three of Amazon (AWS) Microsoft (Azure) and Google (Cloud) that have been offering Machine Learning for years. The greatest danger I see in competing with AI is again with laws and regulations that are sure to be formed, but likely to come too late and thus be inadequate at best and destructive at worst. In fact, there is some danger to a splinternet being created due to inconsistent global regulations and divisive oversight by governments.

The article below was published on CNBC February 3, 2019 by Arjun Kharpal

Two internets could emerge in the next five years — one led by Chinaand one led by the United States — a top venture capitalist has predicted, adding to a growing chorus of voices suggesting such a development could take place.

The concept has been dubbed the splinternet and it refers to a future in which the internet is fragmented, governed by separate regulations and run by different services.

A unified definition is still unclear, but one suggestion is that the future could see Chinese and American apps and services each dominate half of the internet. That concept was the topic of much discussion at the World Economic Forum in Davos, Switzerland, last month.

And while there may be two internets coming, “it will not be China and the rest of the world. It will be China and countries that adopt Chinese apps, and countries that adopt American apps,” Kaifu Lee, the CEO of China-based venture capital firm Sinovation Ventures, told CNBC at Davos.

“While Chinese apps will have a hard time getting adopted in U.S. and Europe and English-speaking countries, I think they’re proving their rapid acceptance in India, Southeast Asia, South America, Middle East and even a little bit in Africa. So I think in five years, if you look at all the people in the world that took their phone and counted how many Chinese apps and American apps, I’d say it would be fifty-fifty,” added Lee, who prior to his current job was the head of China for Google.

Indeed, companies like Alibaba and Tencent are already expanding their services abroad and acquiring or investing in companies across Asia. For example, Alibaba owns a majority stake in Southeast Asian e-commerce firm Lazada, while Tencent has an investment in Indonesian ride-hailing firm Go-Jek. Chinese technology giants are continually looking to spread their tentacles abroad.

Lee is among a number of voices predicting that a so-called splinternet will come into being. Last year, former Google CEO Eric Schmidt said he foresaw a “bifurcation into a Chinese-led internet, and a non-Chinese internet led by America.”

Is China taking the lead on AI?

The United States and China are battling for dominance not just when it comes to the internet, but other, interrelated technologies including 5G and artificial intelligence.

AI in particular is a technology that is seen as crucial to supporting future industries and one that will partly shape the way the internet looks in the future. AI is a broad term that encompasses the development of algorithms that are able to adapt and learn, which could boost the automation of many tasks. AI can be applied to many industries globally.

A number of commentators have suggested the U.S. could be behind China in the AI race. That includes Fred Kempe, CEO of U.S. think tank the Atlantic Council, who said in a CNBC op-ed that “China was on track to take the commanding heights of AI and that the consequences could be historic in nature.”

Lee said that right now, the U.S. is stronger in AI research, while China is moving forward with the actual implementation of artificial intelligence technology. But that could change very soon.

“It’s (China) arguably ahead of U.S. in some areas behind in others, maybe neck and neck. But at the current trajectory, China will probably be ahead of U.S. in five years,” Lee said.

“China has more data, more users, more usage per data. And there’s very pro-AI government policies. So these things cause China to be ahead in AI implementation, despite not being ahead in AI research,” he added.

The government of the world’s second-largest economy emphasized the development of AI in its “Made in China 2025” plan — the country’s official blueprint for dominating various areas of technology in the future. And in 2017, China laid out plans which it hopes will make it the world leader in AI by 2030.

Both the U.S. and China have been aggressive in developing AI, and recent findings show a split between the U.S and China when it comes to patent filings.

A study from the U.N. World Intellectual Property Organization (WIPO) published last week found that American firms IBM and Microsoft are the two organizations in the world with the most AI-related patent filings. But among research groups and universities, Chinese organizations hold 17 of the top 20 spots in terms of total patent filings.