The I1 – AI firms’ profiles indicator characterises the AI industry in a geographical area by means of the distribution of AI firms according to their business type.
The AI business type is defined based on the core business activity of the firm (i.e., the core business either is or is not related to AI) and its innovative activity (i.e., the firm files or does not file AI patent applications).
The combination of these two elements of analysis allows us to differentiate three types of AI firms: AI firms with AI patents, AI firms without AI patents, and Other firms with AI patents. This is useful for uncovering the presence of different kinds of involvement in the AI landscape. The I1 indicator is presented in combination with the total number of AI firms, for a better contextualisation.
The largest number of AI firms is found in the US, followed by China, the EU and the UK. In all these countries except China, most firms have a core AI business but they do not file patent applications in the field. Therefore while for the US, the EU and the UK most firms sell goods and services based on AI, just a small portion of them are actively involved in the development of the technology. It should be noted that the number of AI firms in the UK alone is almost half the number of AI firms in the entire EU.
In China, a very large proportion of firms (more than 80%) are involved in AI patenting activity. This situation is influenced by two important factors. First, the approach followed in China for the development of patents leads to lower standards of quality for the same Second, in recent years a series of governmental subsidies and proactive support for the development of AI patents has attracted a multitude of firms, and the number of AI-related patent applications filed has increased substantially, without necessarily reflecting true innovative capacity. More recently, the Chinese government has introduced changes in the guidelines for patent examination with a view to keep protecting and facilitating the generation of AI intellectual property (Jianchen and Ming, 2021).
South Korea and, to a lesser extent, Japan also have a high number of firms with AI-related patent activity. Additionally, these two countries present the largest percentages of AI firms with AI patents. These firms, which typically can be identified as the big-tech companies, can have a very relevant role in leading the expansion of their national AI landscape, as they have a core business centred on AI while at the same time contributing to the technological advancements of the field by filing patent applications (e.g., Samsung, Softbank Robotics).
Although in percentage terms this is not easily observable, the largest number of AI firms with AI patents are found in the US and China (233 and 226, respectively, corresponding to 1.7% and 2.2% of all AI firms). This insight underlines the leading position of these two countries in the AI domain. In this respect, the position of the EU is more modest, as just 43 firms (0.7%) are found to have a core business in AI and to file AI-related patents.
The European Union
The distribution by type of firm in EU Member States is quite uniform, as in all countries at least 75% of the firms have a core business in AI but no AI-related patents, and in most cases this percentage is close to 90%. This indicates that only a few firms are actively involved in the technological development of AI, which may cause some future loss of economic competitiveness and technological advantage. Nevertheless, a technology such as AI, which has a very strong and relevant algorithmic component, challenges patent eligibility criteria (Hashiguchi, 2017). This is leading to the amendment of examination guidelines in most countries, which are being solved with different approaches to protect intellectual property in the field. This is a new aspect brought by the Fourth Industrial Revolution. Indeed, in the second half of the 20th century the disruptive technologies brought by the Third Industrial Revolution were mostly tangible inventions related to the use of semiconductors.
In absolute terms, Germany and France lead by number of firms, followed by Spain, the Netherlands, Italy and Sweden, all having more than 300 AI firms. Then comes a second set of countries, namely Finland, Belgium, Poland, Ireland and Denmark, which have around 200 firms each.