In this week’s podcast, “AI development in Russia, Part 1,” Walter Bradley Center director Robert J. Marks talks with Samuel Bendett about Russia’s struggles to develop AI for entrepreneurship and free enterprise, rather than military uses. It turns out to be mainly a cultural struggle, as historic institutions must adapt to an environment where market dominance is more important than military dominance.

Mr. Bendett, who is fluent in Russian and English, is an advisor to the Russia Studies Program and the Center for Autonomy and Artificial Intelligence of the CNA Adversary Analysis Group.

And how is Russia faring?

From the transcript: (Show Notes, Resources, and a link to the complete transcript follow.)

Robert J. Marks (pictured): What I want to talk about today is the civilian Russian artificial intelligence development. What is going on in Russia in terms of development of artificial intelligence in, I can’t say the private sector. I don’t know if Russia has a private sector. But in things which are not military. What is the emerging AI ecosystem in Russia right now?

Bendett pointed out that that there is no functional equivalent of Silicon Valley in Russia. The Russian government is currently the biggest investor in high tech development for both military and civilian uses. So what happens with aspiring young techies?

Samuel Bendett: A lot of young entrepreneurs, a lot of bright young people chose to immigrate or at least work overseas for some time because they couldn’t really bring their projects to fruition in Russia. They couldn’t get the same level of funding, investment, they couldn’t get the same level of support. In other words, they couldn’t get what the Silicon Valley’s providing or what, for example, the Israeli high tech community’s providing or what high tech communities can acquire from their funders and sponsors in the West.

The response in Russia has been to launch government institutions that attempt to replicate a Silicon Valley-type ecosystem:

Samuel Bendett: Essentially, they’re trying to create what Silicon Valley investors, and angel investors and venture capital firms have been offering to the willing parties for decades… And now their organization is the Russian direct investment corporation and its subsidiary, the Russian venture capital firm, the RVK. RVK also funds artificial intelligence support and so on and so forth. So there are multiple projects and multiple organizations that are now supposed to convince a lot of Russians that they can in fact, get the same level of support and backing in Russia proper, that they could potentially get overseas if they chose to leave.

Robert J. Marks: I don’t see in the United States, a lot of [government] financial backing of private businesses. There are certain programs called SBIRs, for example, that are given to small businesses, but most of the US backing is through grants to universities and such…

Samuel Bendett (pictured): That’s because in the United States, the private sector backing is very developed and very mature…

In Russia until recently, that infrastructure really was at the very nascent level or was absent altogether. In other words, for many entrepreneurs, for many ideas, especially when it comes to artificial intelligence and machine learning, there weren’t that many outlets that they could go to in order to get their idea funded and supported. And that is what the government has recognized and that is what it is trying to mitigate right now. To develop an ecosystem almost from scratch.

He offered, as an example, a successful Russian program for mass AI facial recognition for surveillance:

Samuel Bendett: One of the most famous Russian artificial intelligence companies is NTechLab. They develop facial recognition software and they are a globally recognized brand. And their solutions are actually some of the best in the world. So the NtechLab founder basically argued against the concern over the brain drain by saying, “Give people the money, give them the support.” So his company received backing and for three months, the founder and his colleagues were basically just locked away in their basement, tinkering away with a program and they were left alone. But they were given money and support. And once they had the product, that product was taken sort of to the market. Russia until recently wasn’t quite the market for facial recognition that it has become now with the COVID and other restrictions that were imposed on the population. But this high tech entrepreneur, this private sector success story basically said, look, government has to act like a Silicon Valley venture capital firm, support the ideas. And most importantly, take risks.

Note: At Forbes: “Next year, in cities across the world, expect to have your face scanned for levels of aggression. NtechLab, a Russian facial recognition company best known for the FindFace app once labelled the harbinger for the end of online privacy, says it’s currently testing ‘aggression detection’ tech with plans for a full rollout to its surveillance partners and customers in 2021.” – Thomas Brewster, “This Russian Facial Recognition Startup Plans To Take Its ‘Aggression Detection’ Tech Global With $15 Million Backing From Sovereign Wealth Funds.”

Also: “A Russian court ruled Tuesday that facial recognition technology does not violate the privacy rights of its citizens.” (March 2, 2020) but “In the case of Roman Zakharov v. Russia, the European Court ruled that Russia’s legislation on surveillance ‘does not provide for adequate and effective guarantees against arbitrariness and the risk of abuse.’” (October 2, 2020)

Robert J. Marks: Do I get the sense from you, Sam, that Russia is turning the corner and starting to embrace free enterprise and capitalism, at least in an indirect sense?

Samuel Bendett: Well, I wouldn’t take it that far. But they are actually turning the corner when it comes to certain parts of private sector or even government sector development, and specifically talking about high tech development. And so the National Technologies Initiative that I mentioned earlier is one such institution, one such initiative that is national in scope, and is supposed to provide support to the Russian high tech community… Of course, on paper, everything looks very positive. Reality would be very different as more and more NTI efforts are rolled out across the country. Again, private sector in Russia is still very small. A lot of private sector is state dependent. And so I would label it as state and non-state efforts.

Robert J. Marks: You mentioned Ntech. Who are some of the other major players that have been successful in Russian development of artificial intelligence?

Samuel Bendett: But at the same time, MIPT and another big organization, kind of a state defense contractor, a state defense enterprise called Rostec or Russian Technologies, a massive umbrella organization that has several hundred subsidiaries working on all kinds of industrial and high tech development. Rostec is also engaged in artificial intelligence development for the military and for the civilian. What the government has recognized is that there are a lot of interesting ideas in the civilian sector that are not necessarily used by the state. And so it has called for the private entrepreneurs and the private sector to work with the state. How that turns out still remains to be seen.

Note: RosTec has been in the international political news in recent years: “Russia’s Rostec, a state-owned conglomerate hit by Western sanctions over Ukraine, will sell a small arms factory to a businessman who is not blacklisted to allow further sales to Europe and the United States, officials and sources said. The European Union and the United States targeted Rostec and its head Sergei Chemezov in sanctions over Russia’s role in Ukraine where the West accuses Moscow of fanning separatist unrest and arming rebels. Moscow denies the accusations and has hit back with its own trade curbs.” – “Russian state arms maker to sell plant to bypass Western sanctions” Reuters (September 25, 2014)

Robert J. Marks: So what are some of the other products? You mentioned facial recognition. Where are some other shining examples of Russian entrepreneurship?

Samuel Bendett: Image recognition, speech recognition are some of the shining examples of Russian entrepreneurship. In fact, my CNA Russia team is compiling news and information on Russian AI development every two weeks. And we actually put out a newsletter on our CNA website, where you can read about the major developments in the civilian and the military sectors of Russian AI. Again, a lot of them are coming out of universities and a lot of them are also coming from state bank entities… But speech and image recognition is something that the Russians are getting better and better at.

Robert J. Marks: Is there ever going to be a case where, and is this allowable, where a company becomes so successful that they’re allowed to seed other businesses?

Samuel Bendett: I think so. I think that’s where a lot of these efforts are actually heading. Russia doesn’t want people to leave the country and basically use their talent to the benefit of let’s say, United States and the Silicon Valley or other countries. It wants those young people to stay in Russia. And in order for the high tech community to thrive, which in many ways is a very different goal than allowing for example, industries or agriculture to thrive, it must allow for their people’s creative elements to flourish and function unimpeded. It may be a difficult mental sort of challenge right now for a lot of Russian government officials and institutions because of the overwhelming role of the state in country’s life for the past several decades, and obviously stretching all the way back to The Cold War…

In Russia, all of this is less than five years old in total. And so a lot of the projects were launched, and we don’t quite know how they are going to succeed, but the fact remains that they have been launched. Now, some of the private sector are skeptical and some of the government may be skeptical as well. And so everyone is kind of feeling through as they go along.

Note: The Russians have made clear in recent years that they do want to compete in high tech: “Rogozin, the deputy prime minister, boasted that the technological gap between Russia and the United States ‘has been sharply reduced and will be completely eliminated in the near future.’” Russian hackers hunt hi-tech secrets, exploiting US weakness, CNBC (February 7, 2018)

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and

Tech investment analysts strategize how to deal with China today. China’s assertions of power in recent years have left many uncertain about the future of business relationships.

Show Notes

• 00:46 | Introducing Samuel Bendett, advisor with the CNA Adversary Analysis Group
• 01:37 | Samuel Bendett’s background
• 02:14 | Russian non-military development of AI
• 09:28 | Taking risks in development
• 10:53 | Is Russia starting to embrace free enterprise?
• 12:11 | Incentives for entrepreneurs in Russia
• 13:42 | Major playors in Russian AI development
• 15:30 | Examples of Russian entrepreneurship
• 16:38 | Companies creating other companies
• 18:43 | Russian academia and AI development

Additional Resources

• Samuel Bendett at the Center for a New American Security
• CNA website
• CNA’s Center for Autonomy and Artificial Intelligence (CAAI)
• CNA Russia Studies Program
• Articles by Samuel Bendett at Defense One
• NTech Lab
• ABBYY
• Moscow Institute of Physics and Technology (MIPT)
• Rostec
• Artificial Intelligence In Russia Newsletter (on the left side of the page near the bottom)

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