The AI Governance Market is estimated to be valued at US$ 193.37 Mn in 2023 and is expected to exhibit a CAGR of 46% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The AI Governance Market is fragmented with presence of large number of players. Growth strategies such as collaborations, partnerships, mergers and acquisitions are adopted by key players to expand their global presence. For instance, in February 2023, Anthropic, a San Francisco based AI safety startup raised $135 million in Series B funding round led by Lux Capital and General Catalyst. The funding will help Anthropic further develop its Constitutional AI techniques to ensure that advanced AI systems are helpful, harmless, and honest.
AI governance refers to the development and enforcement of policies and procedures to ensure the safe and beneficial development and application of AI technologies. AI governance helps organizations address potential issues related to algorithmic bias, fairness, transparency, safety, security, privacy and control when developing and deploying AI systems. The increasing need for responsible and ethical development and use of AI is driving demand for AI governance solutions.
Market key trends:
One of the key trends fueling growth of the AI governance market is the increasing regulatory pressure on organizations for developing ethical and responsible AI systems. Regulators across different regions and countries are coming up with new regulations and guidelines to address issues related to AI bias, safety, transparency and accountability. For instance, in 2021, the European Union introduced the Artificial Intelligence Act (AIA) which proposes legal requirements for high-risk AI applications. Non-compliance can result in fines up to 6% of the global annual turnover or €30 million. Such stringent regulations are encouraging organizations develop strong internal AI governance practices and invest in relevant platforms and solutions.
Threat of new entrants: Low capital requirements and government support encourages new companies to enter the AI governance market. However, large players have economies of scale and brand recognition which makes it difficult for new entrants.
Bargaining power of buyers: Buyers have high bargaining power as there are many solution providers in the market. Buyers can negotiate on price and demand additional services.
Bargaining power of suppliers: Majority of solution providers develop their own algorithms and tools. Therefore, suppliers have low bargaining power.
Threat of new substitutes: Blockchain, privacy technologies, and regulatory technologies are potential substitutes but currently cannot entirely replace AI governance solutions.
Competitive rivalry: Intense as major players compete based on product differentiation, pricing, and customer support.
Strengths: Growing data volumes and focus on ethics in AI development provide opportunities. Emerging technologies like machine learning aid governance.
Weaknesses: Lack of standards and unclear regulatory frameworks. Difficulty in assessing long term societal impact of AI systems.
Opportunities: Increasing spending on AI risk management by governments and enterprises. Developing markets offer high growth potential.
Threats: Model bias and safety issues raise public concern. Data privacy laws increase compliance costs.
The Global AI Governance Market Size is expected to witness high growth, exhibiting CAGR of 46% over the forecast period, due to increasing spending by companies to minimize risks of AI systems. North America dominates the market currently due to stringent regulations and presence of major players. Asia Pacific is expected to be the fastest growing region owing to government initiatives and growing technology adoption.
Key players operating in the AI Governance market are Facebook, Inc. (Meta Platforms Inc), IBM Corporation, Integrate.ai Inc., Google LLC (Alphabet Inc.), H2O.ai, Inc., SAP SE, SAS Institute Inc., Microsoft Corporation, Pymetrics Inc., and FICO Inc. Major players are focused on R&D to develop advanced governance solutions and acquire smaller companies to expand their product portfolio.