Author: Peter Liljenberg
There were around 5,776 players in the European AI industry in 2020, with a majority of them categorised as small and medium-sized enterprises (SME’s) and startups. This seems to be counter to what is happening in other regions of the world, where prominent players in AI include many large companies.
Small is beautiful, as long as it can be scaled-up when needed
One possible reason for this could be that as AI technologies and services are emerging, they are often developed by start-ups who subsequently find it difficult to scale-up with their deep-tech edge. Another possible reason could be the continents’ historical aversion to risk when investing in deep-tech, including AI, start-ups. Therefore, it can be expected that many supply companies will stay relatively small.
Overall, companies as a whole play a key role on the AI scene, with authorities and governments only playing a minor role, and research institutions represent only some 6%. Geographical distribution of AI players in Europe shows that Germany and France are the countries in which there are more AI-related actors, followed by Spain and Italy, and the Netherlands and Sweden.
Studies highlight two thematic areas in which the EU is especially strong: AI Services, i.e. services between firms (B2B) or to the end-consumers (B2C), and Autonomous Robotics, with a high impact in health, logistics or manufacturing, among others. Robotic start-ups are a growing market, with new companies being founded every year.
Challenges for smart city AI innovators in Europe's dynamic AI landscape
While Europe's AI sector is buzzing with activity, it's not without its challenges. For starters, there's a noticeable gap in cross-domain integration. Innovators often find it tough to combine data and technologies from different sectors effectively. Another big hurdle is the complex regulatory framework. Navigating these regulations to ensure safety, privacy, and ethical compliance is no small feat. This is where expert guidance becomes essential, helping AI companies to not only comply with laws but also gain trust from citizens and stakeholders.
CitCom.ai plays an important role in assisting AI innovators, particularly in the smart city space, offering a wide range of services to bridge these gaps and tackle other challenges. For example, in the area of energy management and sustainability, AI innovators often bump into regulatory barriers and fragmented energy markets. Integrating renewable energy and managing resources efficiently depends on accessing data and collaborating with government bodies. But, complex regulations, inconsistent incentives, and the absence of standardised protocols for AI systems can make it tricky to get started and collaborate. Plus, the long-term nature of sustainability projects might scare off private investments without government backing or clear policies.
Testing before investing
There is also the consideration of the public safety and security sector in smart cities, where innovators face unique challenges due to the sensitive nature of the data. Accessing crucial public safety data, like crime stats or emergency response info, comes with strict privacy and security strings attached. AI systems need to handle this data while sticking to legal and ethical norms. Here, building B2G (business-to-government) collaborations is key, and it requires robust privacy-preserving technologies and agreements to mitigate concerns over surveillance and data misuse.
There is a need for simulations, experimentation spaces, joint experimentation allowing several industrial actors to participate, including the SMEs who are driving the AI-revolution. As the mantra goes – test before you invest has never been truer than in our digital decade. This is why CitCom.ai TEF has been launched - and is now open for testing AI solutions.
You can explore the topics in this article further, as well as more aspects of the European AI industry, in our upcoming market report, published on CitCom.ai’s media on 21 February.