Telenor does AI deal with Google despite its big-tech fears Posted on : Nov 16 - 2021

Five years ago, one of Telenor's top boffins feared that Google, Amazon and Facebook were set to become an unstoppable force in artificial intelligence (AI). "There is a real risk that the most fundamental technology of the 21st century will be dominated by a few large companies, unless we take the necessary steps," said Bjørn Taale Sandberg, the Norwegian telco's head of research.

For Telenor, the necessary steps meant investing in its own AI lab and backing the right startups. Conversely, it is hard to see how a strategic partnership with one of the AI bogeymen would produce alternatives to them. But that is what Telenor did five years after Sandberg first warned of an AI oligopoly, announcing a Google Cloud tie-up today. Among other things, it will be "exploring how to leverage" Google's AI expertise.

The partnership does not mean Telenor has abandoned AI research, but it does smack of capitulation to a higher technology power. Telenor would not be the first to succumb. "We cannot pretend, because we don't have the scale to rebuild what they have been able to build with worldwide scale," said Michael Trabbia, the chief technology officer of France's Orange, during a conversation with reporters earlier this year.

The "hyperscalers," as they are commonly called, have advanced deep into telco territory since Sandberg raised the AI alarm in August 2016. Nearly all Europe's major operators have formed partnerships with AWS, Google Cloud or Microsoft Azure. Some have teamed up with more than one of the hyperscalers. And AI is often at the heart of these plans.

Vodafone, notably, is relying on a Google-built platform called Neuron to manage and analyze network data. Orange is doing something similar across several European countries, where Google's AI experts and programmable tools are used as a crystal ball for resolving network problems (so-called preventive maintenance). Telenor now thinks Google's data, analytics and AI technologies could help to improve the customer experience.

With these tie-ups comes the recognition that operators simply do not have the brainpower or resources to compete directly in AI. Alphabet, Google's parent company, spent $27.8 billion on research and development last year. Telenor's investment was a measly $27.5 million (at today's exchange rate) and its entire capital expenditure came to less than $1.9 billion. Its staff numbers have dropped from 37,000 to just 18,000 since 2016, while Google's have soared from 72,000 to more than 135,000 over the same period. Today, Alphabet is worth 90 times as much.

That big tech will dominate AI – in the absence of governmental intervention – is now a given. In the telecom sector, the only uncertainties are where big-tech partnerships will ultimately leave operators and whether they are mutually beneficial. One troubling possibility is that AI technologies developed by just three US firms will eventually underpin telcos outside China and a few other countries.View more