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Can the Liberal government fix its sorry innovation record with a new agency?

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François-Philippe Champagne, Minister of Innovation, Science and Industry, acknowledged Monday that challenges related to productivity and innovation policy have been an issue in Canada ‘for decades.’Heywood Yu/The Globe and Mail

After years of disappointing innovation programs that haven’t fixed Canada’s chronic economic underperformance, the Liberal government is still trying to get it right.

Its latest attempt is the Canadian Innovation and Investment Agency, announced in the 2022 budget as a surprise replacement for a program the party had promised in the 2021 election campaign, but pulled: a Canadian version of the U.S. Defense Advanced Research Projects Agency, which spearheaded the creation of technologies such as the internet.

Like other federal innovation programs, the CIIA, which will help underwrite business expenditures on research and development, is inspired by success elsewhere. The Finnish Funding Agency for Innovation helped transform the Nordic country’s low-tech sectors, such as forestry, into innovative, competitive industries.

Ottawa’s idea won plaudits from longtime government innovation critic Dan Breznitz, co-director of the Innovation Policy Lab with the University of Toronto’s Munk School of Global Affairs and Public Policy. He praised the idea when the CIIA was announced.

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“There is finally a realization that the problem in innovation and engagement with new technology is not the lack of new ideas or human capital but the private market … this is a systemic problem,” said Mr. Breznitz at the time, when he was a visiting economist with the Finance Department.

He added that the CIIA could succeed if it is nimble, independent, engaged with business and free to experiment.

Canada has leading AI experts. But does Ottawa have the right plan to support an AI industry?

A backgrounder prepared by the Canadian government last fall shows it has been listening to critics: Funding proposals will be assessed based on whether projects have potential to create and retain intellectual property in Canada and commercialize resulting products globally.

Industry groups consulted by Ottawa said the program must be easy to navigate, reach entities that have not traditionally done R&D, get companies to commercialization and scale and keep the economic value of investments here.

The government did not deliver details about the agency in its fall economic update, as it initially promised. Innovation policy watchers are now waiting to see if Ottawa selects the right leaders and governance structures to deliver on the agency’s mandate.

What also isn’t clear is how much the CIIA can change chronically uninventive Canadian companies or whether an agency modelled on a small country in the European Union will work here.

And while the agency’s focus on business investment in R&D, IP and commercialization is promising, Benjamin Bergen, president of the Canadian Council of Innovators (CCI), said “if the CIAA winds up being another funding agency, rather than a focused organization to steer policy structures and improve innovation policy outcomes across Canada’s economy, it will fail to move the needle.”

Another question is how much innovation funded companies can patent and claim as their own after a long head start by global competitors. Waterloo patent lawyer Jim Hinton said the CIIA “won’t work unless it recognizes the existing technology foundation that any new company would necessarily be building on is currently not owned by Canadian companies.”

He worries companies may have to pay holders of existing patents, which would “simply be another wealth transfer of Canadian funds” abroad.

Where do we go from here?

To make innovation work, the Canadian government might need something that has been lacking in an advanced country blessed with national resources, relative geopolitical stability and a big trading partner to the south: a sense of urgency.

Robert Asselin, who was budget director for then finance minister Bill Morneau and is now senior vice-president of policy with the Business Council of Canada, says that urgency has been a common thread in government-led creation of innovative clusters in several other countries.

In the Netherlands, he said, postwar food security concerns sparked creation of a huge agri-food exporting sector. For South Korea, a successful electronics industry gave a small country in a geopolitically tense region economic might. When the Soviet Union got to space first, it jolted the United States into action; the space race had major spinoff benefits for U.S. companies.

“These three didn’t succeed because of market forces; they were designed as public-private partnerships,” Mr. Asselin said. “This is where industrial policy needs to go, as opposed to subsidies we throw everywhere.”

Asked about Ottawa’s continuing struggle to turn its innovation investment into real productivity growth, which The Globe and Mail has been reporting on in a story series, Innovation Minister François-Philippe Champagne said Monday, “Innovation is a journey, it’s not a destination.” He acknowledged challenges related to productivity and innovation policy have been an issue in Canada “for decades, but we’re really serious in terms of focusing on that and bringing perhaps novel solutions.”

Perhaps it will take a crisis to focus minds in Ottawa – maybe resulting from an inward-looking U.S. leaving Canada vulnerable in a mercantilist world. But the government doesn’t have to wait; there are plenty of suggestions for what to do.

Mr. Bergen says government must build capacity in the public service for navigating the knowledge economy and setting clear evaluation metrics for policies. Some observers feel the government has relied too much on consultants for ideas.

Diverting procurement dollars to startups has helped expand the U.S. economy. Our government has a similar program, Innovative Solutions Canada, that has been underused. The program can do more and needs a champion in government, Mr. Bergen says.

There are also many proponents for an overhaul of the Scientific Research and Experimental Development tax credit, Ottawa’s largest expenditure on innovation. The tool provides $3-billion-plus in credits to companies that perform R&D here.

But it doesn’t cover expenses related to commercialization, which would reward companies that take their innovations to market and deliver economic returns. That should change, the CCI says. The government promised last year to reform the program.

Focusing innovation initiatives on helping promising startups grow into global giants should be the top priority. That has been the clear call from many observers, and was the first recommendation in fall 2018 from Canada’s Economic Strategy Tables, made up of advisers in six sectors and commissioned by Ottawa to propose economic growth ideas.

Ottawa could also incentivize domestic pension funds to direct more investment dollars to Canadian tech, Mr. Asselin says.

Meanwhile, said Angela Mondou, CEO of technology lobby group Technation, “Canada’s global competitiveness depends on bringing Canada’s technology adoption rate to par with our global counterparts. A clearly defined digital strategy is non-negotiable.”

With files from Temur Durrani

 

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Amazon completes $4B Anthropic investment to advance generative AI – About Amazon

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Amazon concludes $4 billion investment in Anthropic.

Customers of all sizes and industries are using Claude on Amazon Bedrock to reimagine user experiences, reinvent their businesses, and accelerate their generative AI journeys.

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The work Amazon and Anthropic are doing together to bring the most advanced generative artificial intelligence (generative AI) technologies to customers worldwide is only beginning. As part of a strategic collaborative agreement, we and Anthropic announced that Anthropic is using Amazon Web Services (AWS) as its primary cloud provider for mission critical workloads, including safety research and future foundation model development. Anthropic will use AWS Trainium and Inferentia chips to build, train, and deploy its future models and has made a long-term commitment to provide AWS customers around the world with access to future generations of its foundation models on Amazon Bedrock, AWS’s fully managed service that provides secure, easy access to the industry’s widest choice of high-performing, fully managed foundation models (FMs), along with the most compelling set of features (including best-in-class retrieval augmented generation, guardrails, model evaluation, and AI-powered agents) that help customers build highly-capable, cost-effective, low latency generative AI applications.

Earlier this month, we announced access to the most powerful Anthropic AI models on Amazon Bedrock. The Claude 3 family of models demonstrate advanced intelligence, near-human levels of responsiveness, improved steerability and accuracy, and new vision capabilities. Industry benchmarks show that Claude 3 Opus, the most intelligent of the model family, has set a new standard, outperforming other models available today—including OpenAI’s GPT-4—in the areas of reasoning, math, and coding.

“We have a notable history with Anthropic, together helping organizations of all sizes around the world to deploy advanced generative artificial intelligence applications across their organizations,” said Dr. Swami Sivasubramanian, vice president of Data and AI at AWS. “Anthropic’s visionary work with generative AI, most recently the introduction of its state-of-the art Claude 3 family of models, combined with Amazon’s best-in-class infrastructure like AWS Tranium and managed services like Amazon Bedrock further unlocks exciting opportunities for customers to quickly, securely, and responsibly innovate with generative AI. Generative AI is poised to be the most transformational technology of our time, and we believe our strategic collaboration with Anthropic will further improve our customers’ experiences, and look forward to what’s next.”

Global organizations of all sizes, across virtually every industry, are already using Amazon Bedrock to build their generative AI applications with Anthropic’s Claude AI. They include ADP, Amdocs, Bridgewater Associates, Broadridge, CelcomDigi, Clariant, Cloudera, Dana-Farber Cancer Institute, Degas Ltd., Delta Air Lines, Druva, Enverus, Genesys, Genomics England, GoDaddy, Happy Fox, Intuit, KT, LivTech, Lonely Planet, LexisNexis Legal & Professional, M1 Finance, Netsmart, Nexxiot, Parsyl, Perplexity AI, Pfizer, the PGA TOUR, Proto Hologram, Ricoh USA, Rocket Companies, and Siemens.

To further help speed the adoption of advanced generative AI technologies, AWS, Anthropic, and Accenture recently announced that they are coming together to help organizations—especially those in highly-regulated industries including healthcare, public sector, banking, and insurance—responsibly adopt and scale generative AI solutions. Through this collaboration, organizations will gain access to best-in-class models from Anthropic, a broad set of capabilities only available on Amazon Bedrock, and industry expertise from Accenture, Anthropic, and AWS to help them build and scale generative AI applications that are customized for their specific use cases.

Deepening our commitment to advancing generative AI, today we have an update on the announcement we made to invest up to $4 billion in Anthropic for a minority ownership position in the company. Last September, we made an initial investment of $1.25 billion. Today, we made our additional $2.75 billion investment, bringing our total investment in Anthropic to $4 billion. To learn more about the broader strategic collaboration between Amazon and Anthropic, of which this investment is one part, check out the stories below:

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Amazon doubles down on Anthropic, completing its planned $4B investment – TechCrunch

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Amazon invested a further $2.75 billion in growing AI power Anthropic on Wednesday, following through on the option it left open last September. The $1.25 billion it invested at the time must be producing results, or perhaps they’ve realized that there are no other horses available to back.

The September deal put $1.25 billion into the company in exchange for a minority stake, and certain tit-for-tat agreements like Anthropic continuing to use AWS for its extensive computation needs.

Amazon reportedly had until the end of the first quarter to decide whether to increase its investment to a maximum of $4 billion, and here we are just before the deadline, and the company has decided to throw in the maximum amount.

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Anthropic’s AI models are one of very few that compete at the highest levels of capability (however you define it) yet are available at scale for enterprises to deploy internally or in user-facing applications. OpenAI’s GPT series and Google’s Gemini are the others up there, but upstarts like Mistral may soon threaten that fragile triumvirate.

Lacking the capability to develop adequate models on their own for whatever reason, companies like Amazon and Microsoft have had to act vicariously through others, primarily OpenAI and Anthropic. The two have reaped immense benefits by allying with one or the other of these moneyed rivals, and as yet have not seen many downsides.

What we can take from Amazon’s decision to invest the maximum after (one must assume) getting a pretty close look at how they make the AI sausage over there is, really, pretty scant.

It makes too much strategic sense for these companies, which possess enormous war chests saved up for exactly this purpose (outspending rivals when they can’t out-innovate them), to pour cash into the AI sector. Right now the AI world is a bit like a roulette table, with OpenAI and Anthropic representing black and red. No one really knows where the ball will land, least of all the companies that couldn’t predict or create this technology themselves. But if your bitter enemy puts their chips down on red, it only makes sense for you to bet on black.

Especially if you can bet on black at a discount — which is what Amazon got here, since it could invest at Anthropic’s September valuation, which is most certainly lower than it is today.

That said, if things were looking sketchy over there — the way they must have looked at Inflection before Microsoft pounced on it — Amazon could have backed out or just invested less than the full supplemental $2.75 billion. But that might have sent a confusing signal no one wants getting out there, least of all existing multibillion-dollar investors.

We know Anthropic has a plan, and this year we’ll find out what Amazon, Apple, Microsoft and other multinational interests think they can do to monetize this supposedly revolutionary technology.

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Canada to tighten foreign investment rules for AI, other sectors

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Canada will require foreign companies to warn the government in advance before making investments or acquisitions in artificial intelligence, quantum computing and space technology, Bloomberg News reported on Tuesday, citing an interview with Innovation Minister Francois-Philippe Champagne.

The move will aid the government in conducting a national-security review before transactions get too far advanced and would-be investors may be restricted in their access to target companies’ user data or other property while the inquiry is taking place, the report said.


Click to play video: 'Canadians concerned about risk of AI generated fraud'
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Canadians concerned about risk of AI generated fraud

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The tougher rules will also apply to investments in critical minerals and potentially other sectors, Champagne said to Bloomberg.

Earlier this month, Champagne said Canada will crack down on foreign investment in the interactive digital media sector to stop state-sponsored actors from endangering national security.

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