Some industry leaders argue that focusing on tariffs instead of artificial intelligence (AI) could be a misstep. As Nikolaus Lang, the global leader of the BCG Henderson Institute, notes, “While many are fixated on tariffs, the real game-changer in geopolitics is AI.” He suggests that AI is not just a technology, but a key driver of the new global order we are navigating today.
Currently, the United States and China dominate the AI landscape, both in terms of development, investment, and ownership. According to the BCG Henderson Institute, the U.S. tech giants collectively account for a whopping $24.7 trillion of the total value of the 1,000 largest public tech companies globally, a figure five times higher than the Asia-Pacific market and 18 times greater than Europe’s. Between 2019 and 2024, generative AI startups alone secured $65 billion in private investment. The U.S. also boasts the largest data center capacity and the most reliable access to semiconductor chips, key to powering AI systems.
China, however, is rapidly closing the gap. While still trailing in AI researchers, accounting for 18% of the global total compared to the U.S.’s 60%, China’s government has invested around $110 billion in AI since 2019. Their investments and strategic initiatives have propelled Chinese models to match the most advanced AI alternatives, which is a significant leap.
While the U.S. and China continue to lead, the race for AI leadership isn’t just about technology development. According to experts, adoption is equally critical. Most nations are unlikely to achieve full self-sufficiency in AI production. Therefore, corporate and governmental leaders should focus on harnessing AI’s potential within their own markets, positioning themselves as early adopters.
Sylvain Duranton, global leader of BCG X, highlights that “consumption will ultimately determine the global leaders in AI.” Early AI adopters in industries such as sales, R&D, coding, customer service, and factory design will gain a competitive edge, securing their place as leaders in their respective sectors. However, successful adoption requires significant investment in understanding AI and its applications, especially from company leadership and IT departments.
Interestingly, even smaller countries can wield significant influence through strategic investment, partnerships, and policy-making. Vaishali Rastogi of BCG’s Technology, Media, and Telecommunications division notes, “A new dynamic is emerging where smaller nations can gain substantial influence by carefully investing in AI and developing strong international relationships.”
New Regulatory Realities in AI
As AI adoption accelerates, regulations are playing an increasingly vital role. According to BCG, there was a 21.3% rise in legislative mentions of AI across 75 countries from 2023 onward. Regulatory landscapes are evolving quickly, influencing enterprise AI adoption and impacting international business operations. Policy decisions can either enable or restrict the use of AI technologies.
Global companies are now facing the challenge of navigating a fragmented regulatory environment, especially as certain countries place restrictions on specific AI technologies. For instance, Italy has banned Chinese AI products, while countries like the U.S., Russia, China, and Iran have limited access to advanced semiconductors. This leads companies to adapt their technologies to satisfy different regional regulations, increasing the complexity of managing AI operations worldwide.
Lang emphasizes the importance of adaptability in the new geopolitical landscape. For instance, companies operating in multiple regions may need to deploy distinct tech stacks depending on local regulations, which could include differing cloud storage solutions or data compliance measures.
The Future of AI: A Shift in Business Strategy
Just a year ago, businesses were questioning whether AI would be a sustainable force. Today, it’s clear that AI is here to stay, and companies are now grappling with how to incorporate AI into their strategies. Many are hesitant, unsure of where to begin. However, experts like Duranton argue that now is the time to take action, even if companies aren’t fully sure of how AI will evolve in the coming months.
Duranton advises, “You have to start now. The heavy lifting in AI integration is the first challenge, but once that’s done, upgrading to newer technologies will be far simpler.” He stresses that the effort to integrate AI within organizations should be viewed as a long-term investment in modular systems, capable of evolving alongside technological advancements.
AI adoption isn’t just about using technology—it’s about understanding and leveraging it in an evolving regulatory and competitive environment. Leaders must embrace AI’s potential while ensuring that governance frameworks keep innovation responsible and aligned with economic and societal goals.
