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n 2016, Microsoft made one of the most significant tech deals ever when it acquired LinkedIn for roughly 7.2 times the social network’s annual revenue. At the time, it was the biggest deal in Microsoft’s history. Many analysts considered the deal too expensive and a waste of money.

Microsoft’s acquisition of LinkedIn puts into perspective the magnitude of its latest purchase. Github was recently acquired for nearly 30 times its annual recurring revenue by Microsoft. The reason behind the astronomical number is simple: developers.

Microsoft is keenly aware of the importance of talented developers. With $7.5 Billion, Microsoft has bought access to the millions of developers who use GitHub’s code repository products. It is a strategic move aimed at eventually guiding those users into the Microsoft developer environment.

Predictably, many prominent members of the open source community were not too keen about the acquisition. They felt deceived and betrayed by a network which had accrued value due to the labor of the open source community. Andre Staltz, an influential open source developer, wrote:

“If you're still optimistic about the Microsoft-GitHub acquisition, consider this: they didn't ask your opinion not even a single bit, even though it was primarily your commits, stars, and repositories which made GH become a valuable platform."

Like Andre, many other developers publicly announced their decision to migrate away from Github to other platforms built on open source software. However, the exodus of developers away from Github barely registered as a dent to its massive user base.

Microsoft wanted access to developers. They got it.

Over the previous decades, the importance of developers has only increased. They have been aggressively recruited, offered extremely lucrative positions and generally been the most highly sought-after human resource in Silicon Valley. They are the builders of this new digital era and have helped the tech companies become a crucial aspect of our everyday lives.  

But not all developers are created equal. Some developers are considered more valuable, and they are more sought after, given more perks and privileges. Over the past few years, the AI developers have achieved a level of importance never seen before.

Wanted: The New Kingmakers

For the past two years, Chinese companies have won an AI competition to detect objects. China’s emerging dominance in AI, due to its massive implications in nearly every field, is creating immense anxiety in the US. In economic terms, a study released by PwC highlights just how big of a game changer AI is going to be and how much value will be created by this one technology. According to PwC, AI could contribute up to $15.7 Trillion to the global economy by 2030. That is more than the current GDP of China and India combined.

It is not surprising, therefore, that nation-states and corporations are actively competing to attract a talent that is extremely rare and valuable.

Just how rare is AI talent? Element AI, an AI solutions provider, estimates that there are 20,000 PhD-level computer scientists around the world capable of building AI systems. Furthermore, a recent study by Bloomberg pointed out that less than 10,000 developers worldwide possess the required machine learning skills.

According to a report written by KPMG, (as of 2016) only 28 companies had more than ten deep learning specialists on staff. An article in Business Insider highlighted the fact that only six technology companies employed 54% of all deep learning specialists. A 2017 poll by Ernest & Young found that according to 56% of senior AI professionals, a lack of talent was the greatest barrier to AI implementation within business operations.

Recently, the World Economic Forum reported that the top 20 companies in tech are all either American or Chinese. Perhaps a time might come when AIs are invented, designed, and programmed by other AIs, but for now, the backbone of AI is its developers and researchers. As such, the tech titans are working strategically to monopolize AI talent. These giants are actively involved in the war for AI talent, leaving no stone unturned in their quest to recruit the most valuable soldiers in the world.

Tech oligopoly owns 45% of global AI Talent.

Tech oligopoly owns 45% of global AI Talent.

They offer the best perks and privileges.

According to a Bloomberg article, “newly minted PhDs in machine learning and data science can make more than $300,000.” The New York Times estimated that the salaries of fresh PhDs and others with limited or no experience range “from $300,000 to $500,000 a year or more in salary and company stock.” Similarly, it was calculated that Google’s DeepMind paid an average of $345,000 per employee in 2016.

As the experience and the responsibilities of the AI developers increase, so does their salary. According to the CNBC, “Anthony Levandowski collected $120 million from Google,” before he joined Uber. Even at nonprofits like Elon Musk’s OpenAI, the top AI researcher had a salary of $1.9 million while another senior AI researcher received $800,000 in 2016.  

Apart from the sky-high salaries, the AI talent is offered all other possible amenities and privileges that a corporation has to offer. For instance, rather than inconvenience the AI talent by asking them to relocate, the tech companies are building entirely new offices and research labs to move closer to them.  

They acquire the promising AI startups.

These “acquihires” are being made not for the value that the startup has to offer but to absorb the AI talent that comes along with the acquisition. According to an analysis, artificial intelligence teams are being acquired for roughly $2.5 million per employee, even if the company has little or no revenue, meaning that at least in the AI sector of the tech industry, pure team value significantly exceeds business value.    

In July 2016, General Motors purchased Cruise Automation for nearly $1 billion. In August 2016, Uber acquired Otto, a self-driving startup, for $680 million. Ford has agreed to invest $1 billion in Argo AI. Since 2010, according to the data provided by CB Insights, Google has acquired 14 AI startups while Apple is close behind with 13 acquisitions of its own. In 2017, there was a 44% increase in the AI startup acquisitions.

The graph shows the acquisition of AI startups over the years.

The graph shows the acquisition of AI startups over the years.

The dominance of acquisition as an exit strategy for tech startups means that the key role of software and hardware startups is increasingly to serve as recruiting mechanisms for tech giants. Young, idealistic developers who begin their careers wanting to change the world via contributing to an exciting, cutting-edge start-up, rapidly find themselves as employees of a mega-corporation once their employer is acquired. Rewards are put in place to incent acqui-hired employees to stay on board, and idealistic early careers give way to more establishment mid-careers—serving both to feed the major tech corporations with the trained talent they need, and to sap the rest of the tech ecosystem of the people most likely to create projects threatening these corporations' dominance.

They poach AI talent from the Academia.

The tech giants offer lucrative salaries, access to a massive database and immense computational powers for the AI researchers to do their experiments. In 2015, Uber gutted the Carnegie Melon University’s National Robotics Engineering Center (NREC) when it poached 50 of its staff members.  The famous deep learning expert, Andrew Ng, left Stanford to become Baidu’s chief scientist in 2014. Universities are struggling to retain AI talent as their employees move on to work for the tech giants.

They upskill their employees in AI.

The tech companies are aware of the fact that most of their employees are already well educated and motivated to learn the necessary skills to utilize or develop AI. Many employers in such companies have started to offer courses to create AI talent within their already existing workforce. This trend to upskill existing employees in AI was researched in a recent study by Accenture. According to the study, 40% of the executives are planning to increase training and education on the business applications of AI, while 26% of the executives plan to increase training on the technical aspects of the technology.

They actively recruit fresh talent.

While the tech giants retain their existing AI talent with great perks and privileges, research shows that they are actively recruiting. The graduates of most machine learning programs have multiple job offers before they even graduate. A study by Paysa, a recruitment platform, indicated that U.S. companies across all industries are investing $1.35 billion in AI talent. The study highlighted that Amazon's average annual investment in AI and machine learning hiring was $227.8 million, with the next major competitor being Google with an annual investment of roughly $130 million. It was found that the top 20 AI recruiters spend $650 million annually to hire AI talent.

The companies that are investing the most in AI talent across all industries.

The companies that are investing the most in AI talent across all industries.

What’s Next?

There is no doubt that AI talent is the most precious human resource of our time. AI researchers have already given the gifts of sight, speech, hearing, and mobility to the machines. The gift of general intelligence and the power that comes with it is their ultimate goal. They truly are the new kingmakers. However, they should ask themselves: do they want to create a world with kings?

The immense potential of AI means that it can either increase the inequalities of our societies or liberate us from numerous sufferings. The AI developers, as workers of major tech corporations, only serve to advance the agendas and goals of the corporations that have hired them.

It is a sobering thought that the AI being developed by the world’s largest and most powerful entities will have the end goal of increasing shareholder values and not benevolence towards sentient beings. In the second part of this series, we will discuss how the Tech Oligopoly is empowered through the monopolization of AI talent.

About
Arif Khan
:
Arif Khan is the Chief Marketing Officer of SingularityNET in Washington, DC and a Diplomatic Courier tech correspondent.
The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.