Good morning.
There are all sorts of AI races underway, but Svenja Gudell, chief economist at jobs site Indeed is focused on a less flashy one: Whether AI can catch up to aging populations.
It’s a fresh way to look at AI and one that’s especially applicable to Europe. The median age in Europe is set to increase to 48 by 2050, almost five years older than today and a signal that the region will have more elderly and fewer working age people than ever.
To see what the future might hold, European countries need only look to Japan, the country with the oldest population (bar the microstate of Monaco); a full 30% of people there now are age 65 or older. Two European countries, Italy and Finland, have the second and third oldest populations. Germany is not far behind, with its share of 65+ population expected to reach Japan’s levels by 2050.
But unlike its European peers, Japan has been an early adopter of AI. There, [the] use of AI is seen as unequivocally good, Deko Idekoba, the CEO of Recruit Holdings (the Japanese parent company of Indeed and Glassdoor), told me. “In Japan, 100% of people agree we need more AI,” he said. “There’s no argument. We just need it.”
The nation is running out of workers to fill vacancies in its industrial, service, and care economies. “The real problem is having enough people fill in jobs,” Gudell said. “Without immigrants, almost no developed country is going to fill their demand for jobs.” Japanese restaurants are already routinely deploying server robots, for example, and AI-powered robots are increasingly common in elder care.
Germany’s government plans to robotize and digitize its workforce to address an aging population. Italy, by contrast, has emphasized policies that counter the threat of AI stealing jobs rather than embracing technology as an opportunity to address declining demographics. At one point, it even banned ChatGPT.
For Europe to adopt Japan’s outlook in earnest, European governments and companies may need to change tack. So far, most AI attention has gone to companies trying to create a leading generative AI model that can compete with OpenAI’s ChatGPT, Alphabet’s Bard, or other American Big Tech models. The emphasis on these companies became clear in the last-minute lobbying on the EU AI Act, which EU governments adopted late last week.
“France and Germany argued hard to protect their own AI champions, specifically Paris-based startup Mistral AI (founded by former Meta and Google scientists) and Aleph Alpha in Germany,” my colleague Vivienne Walt wrote in a feature for Fortune’s February/March issue. Mistral, barely one year old, was valued at almost €2 billion last December based on the promise of replicating OpenAI’s success.
But with U.S. companies already far ahead in building large language models, and no European company having gotten anywhere near the Silicon Valley giants in the past few decades, the more viable AI option for European companies may be hiding in plain sight: develop applications to augment the abilities of an aging population or master the skills currently carried out by a shrinking workforce.
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
TOP NEWS
Yandex pulls out of Russia
Yandex, the tech company sometimes dubbed “Russia’s Google,” is pulling out of the country. Yandex’s Netherlands-based parent company will sell all its Russian assets–which makes up 95% of its total revenue–to a group of local managers and investors for about $5 billion. The now Russia-free Yandex will pivot to AI. The Wall Street Journal
Even faster fashion
New H&M CEO Daniel Ervér wants the fast fashion retailer to react to trends even faster to keep up with competitors like Inditex and low-cost fashion platforms like Shein and Temu. “We are developing nearshoring capabilities—being quicker to react to new trends,” he said. Shares in the fashion retailer are down 17% since the surprise resignation of Ervér’s predecessor, Helena Helmersson, last week. Financial Times
Europeans want anti-obesity drugs too
Lars Fruergaard, CEO of Novo Nordisk, is surprised that Europeans are flocking to the company’s anti-obesity drugs even though such treatments aren’t covered by public health systems. Eighty percent of Wegovy sales in Europe are paid out-of-pocket, in contrast to the U.S., where 90% of sales are at least partially covered by insurance. Novo Nordisk passed $500 billion in market value last week. Fortune
AROUND THE WATERCOOLER
Warren Buffett said Ferrari was ‘in a special place’ 8 months ago. Now it’s nearing a $100B market value by Steve Mollman
Everyone in Europe supports the farmers, but it’s often just too expensive to buy French-grown food by the Associated Press
Unemployed Gen Zers are having to turn down work because they can’t afford the commute and uniform, report shows by Orianna Rosa Royle
German chancellor warns that right-wing AfD party’s plan to ‘Dexit’ from the EU would be ‘the biggest destroyer of wealth that could ever happen’ by Prarthana Prakash
AI will not be a mass destroyer of jobs, says U.K. central bank chief: ‘I’m an economic historian. Economies adapt’ by Ryan Hogg
This edition of CEO Weekly Europe was curated by Nicholas Gordon.
This is the web version of Fortune CEO Weekly Europe, a newsletter on the companies and industry leaders shaping every facet of business in Europe. Sign up for free.
