AI Governance Market Share Reach $2.7 Billion by 2031 Growing with CAGR of 42.1%

According to the report, the global AI governance industry generated $80.8 million in 2021, and is estimated to reach $2.7 billion by 2031, witnessing a CAGR of 42.1% from 2022 to 2031. The report analyzes changing market trends, top segments, key investment pockets, value chains, regional landscapes, and competitive scenarios.

AI governance plays a crucial role in ensuring that machine learning (ML) technologies are responsibly researched and developed to help humanity navigate AI systems fairly. It aims to bridge the accountability-ethics gap emerging from technological advancements by addressing concerns related to information rights and potential violations.

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The significance of AI governance continues to grow as artificial intelligence (AI) becomes increasingly integrated into key sectors such as economics, transportation, business, healthcare, and public safety. In these industries, AI governance supports the advancement of online and offline capabilities, including real-time offer management, self-checkout systems, and advanced behavior analytics.

Furthermore, the rise in government initiatives to adopt AI technology serves as a major factor driving the growth of the global AI governance market. With the growing advantages of AI, enterprises and governments worldwide are undertaking numerous projects to leverage AI and ML technologies, fostering the need for effective governance frameworks.

The growth of the AI governance industry is primarily driven by increased government initiatives promoting AI technology adoption, along with the ease of accessing historical datasets and the convenience of modern data storage. However, market expansion may face challenges due to the need for robust ethical standards and a shortage of AI expertise. Despite these hurdles, AI's potential to reduce gender-based discrimination and enhance regulatory compliance presents lucrative opportunities for future market growth.

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The AI Act in Europe, set for 2024, categorizes AI use into risk levels: unacceptable (e.g., social scoring, harmful behavior modification), high-risk (e.g., access to work, education, law enforcement), limited-risk (e.g., deepfakes, chatbots), and minimal risk, with varying compliance requirements. In the U.S., AI regulation remains non-mandatory, guided by the NIST's risk management framework and the White House's AI Bill of Rights, emphasizing privacy and human decision-making over automated systems.

By component, the solution segment held the major share in 2021, garnering around half of the global AI governance market revenue. The services segment would also showcase the fastest CAGR of 45.2% during the forecast period. Increase in the adoption of services to help analysts identify useful insights, and aid natural language processing to automatically extract relevant data from intelligence sources and establish links drives the growth of service segment in the market.

In terms of deployment, the on-premises segment led the AI governance market in 2021 and is projected to maintain its dominance in the coming years. This trend is attributed to the significant benefits offered by on-premise AI platforms, particularly in managing the costs and complexities of specialized AI servers, despite a growing industry shift toward public cloud applications. Conversely, the cloud segment is anticipated to experience the fastest growth, driven by the ability of cloud-based AI governance solutions to enhance competitive advantages, build customer trust, and improve operational efficiencies.

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By industry vertical, the BFSI segment accounted for nearly two-fifth of the global AI governance market share in 2021, and is expected to rule the roost by 2031. The healthcare and life science segment would also display the fastest CAGR of 46.0% throughout the forecast period, owing to financial institutions are increasingly relying on artificial intelligence (AI) as one of their key instruments for automating procedures, increasing the precision of forecasts and projections, and enhancing customer service.

Regionally, North America held the largest share of the AI governance market in 2021 and is expected to continue leading the market throughout the forecast period. This dominance is fueled by a robust industrial base in the United States, government-backed innovation initiatives, and high purchasing power. Organizations in the region increasingly leverage AI governance to reduce costs, enhance user experiences, and boost employee productivity, further propelling market growth. Meanwhile, the Asia-Pacific region is expected to witness substantial growth, spurred by rising demand for intelligent virtual assistants and the rapid expansion of 5G infrastructure, which are key factors driving the market in this region.

The key players profiled in the AI governance market analysis are Amazon Web Services, Inc., QlikTech International AB, TIBCO Software Inc., Meta, SAP SE, International Business Machines Corporation, SAS Institute Inc., Salesforce, Inc., Microsoft Corporation and Alphabet Inc.

The report analyzes these key players in the global AI governance market. These players have adopted various strategies such as expansion, new product launches, partnerships, and others to increase their market penetration and strengthen their position in the industry. The report helps determine the business performance, operating segments, developments, and product portfolios of every market player.

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Covid-19 Impact Analysis

1. The COVID-19 pandemic significantly impacted various industries worldwide, leading to widespread challenges.

2. Remote work during the pandemic posed major security threats and productivity issues.

3. Industries such as healthcare and automotive require advanced technologies to manage and predict challenges caused by the crisis.

4. Technologies like the Internet of Things (IoT), Artificial Intelligence (AI), Big Data, and Analytics played a vital role in mitigating the pandemic's effects.

5. The healthcare sector urgently needed decision-making technologies to respond to the crisis and provide real-time recommendations to control the virus spread.

6. AI was instrumental in tracking the COVID-19 virus's progress, identifying high-risk patients, and enabling real-time infection control.

7. The increasing adoption of AI in healthcare during the pandemic set a new standard for its use.

8. As a result, the AI governance market is expected to experience significant growth driven by the surge in post-pandemic demand.

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