A rapid expansion into London by US tech companies has not stopped a UK government push to “reduce over-dependency” by encouraging Britain's domestic industry to invest and grow at home.
With Google's “landscraper” London headquarters set to open in the summer at the Knowledge Hub district of King's Cross, all eyes are on Jeff Bezos’s AI venture Project Prometheus, which is reported to be discussing its own beachhead.
This follows announcements from Anthropic that it will open offices in the area for 800 employees, and from OpenAI that it would be doubling its staff in the capital from 200 people.
Labour MP
But as the UK engages in a form of AI diplomacy to attract these companies, its digital regulations have sparked conflict with the US administration of President Donald Trump.
The UK is sitting between the US’s libertarian inclination and the EU’s clearly defined regulation set out in its 2024 AI Act, experts told The National. While some described this as a “sweet spot”, others viewed it as indecision that hampers growth.
AI Sovereignty
The government’s latest response to the dilemma on Tuesday was that it would grow the UK’s own tech industry and be less dependent on the software and infrastructure available in the US by turning towards other countries.
The UK’s Science, Innovation and Technology Secretary Liz Kendall called for excessive reliance on overseas tech companies to be avoided.
“For Britain, AI sovereignty is about reducing over-dependencies and increasing resilience in key national strategic priorities … so we secure greater control and greater leverage over the issues that matter most,” she told the London defence think tank Royal United Services Institute.
The UK would start backing “more British AI companies” and collaborating with “so-called middle powers” on the regulation of AI. She insisted that the move was not “isolationism” or an “attempt to do it alone”.
The announcement comes after months of frustrated attempts to respond to public concerns about how digital services – including AI and social media platforms – will be regulated.
US Vice President JD Vance told Prime Minister Keir Starmer last year that the UK's attempts to police incitements to violence on social media was a “backslide” on freedom of speech that also affected US companies. OpenAI shelved plans to build a data centre in the UK this month because of uncertainty over copyright laws and high energy costs.
Children's safety on social media has played a key role in shaping public scepticism and the demand for more regulation. This month, Mr Starmer and Ms Kendall summoned senior executives of American social media companies, warning them to “take responsibility” for harmful content that children could see on their platforms. Britain is also considering social media restrictions for under-16s, after unsuccessful attempts to pass a ban.
This demand for tighter regulation has been compounded by Anthropic's soft launch of Mythos, which finds security flaws in software, and which the company has considered too powerful for public release.
“Today's speech was a moment for the UK to go on record to say: the geopolitical landscape as we know it has changed, and we as a government now have to be much more pragmatic rather than ideological in terms of how we seek those technology partnerships,” said James Sullivan, director of Rusi's Cyber and Tech programme.
Diminished US
A strong alliance with the US and its tech industry is needed – not just for its computing capacity and infrastructure, but also to counter security threats from hostile states including Iran.
“AI does not know boundaries, nor does compute really. Where you have safety around data, you need to be confident in that,” said Saqib Bhatti, a former Conservative technology minister.
“We should work together rather than trying to reduce dependencies,” he told The National.
“We have a very strong, principles-based approach, and I think we have to be confident in those principles. I understand the US position on that but I'm very confident, especially around online safety, that we've taken the right approach."
But Mr Sullivan believes the UK has the option to position itself amid three growing AI blocs – the US, China and Europe. “The US cannot be the only partnership it has. There's a strong push towards embracing the partnership with those European countries whilst following your own pathway to regulation,” he said.
China is the “elephant in the room” owing to its enormous investments in AI technology and the surveillance and security risks it poses to the UK.
The UK could also be the global “standard setter” for AI ethics and regulation, Mr Sullivan said. Anthropic announced its expansion to the UK weeks after it was designated as a “supply chain risk” by the Pentagon for refusing to license its products for domestic surveillance and autonomous weapons.
Former AI minister Feryal Clarke told The National an AI diplomacy is often at work behind the scenes, with the government regularly speaking to US companies to help them expand in the UK.
The UK’s existing knowledge and skills base is the key draw for these companies, Ms Clarke said. “The UK has an amazing talent pool. We have some of the best minds in AI. It isn’t new to the UK. Our universities, our institutions have been working in this area for decades,” she said.
The UK had also made investments in computing infrastructure “across the country”. “We’ve invested huge amounts into infrastructure to make sure that if companies wanted to move here, they've got access to the compute,” she said.
The government was also working on new visa regimes for US tech companies to bring overseas employees over, Ms Clarke added.
“I'm sure if [the companies] were interested, the government will be talking to them, trying to work with them to make them more welcome in this country,” she said.
UK start-ups
AI minister Kanishka Narayan praised an investment with industry veteran David Silver in Ineffable Intelligence to create a $5.1 billion British challenger this week.
The calls to grow the UK’s own industry have been echoed in the opposition, but politicians say that British start-ups face hurdles imposed by the government. “We need to be an innovation and technology super power and not a vassal state,” said Ben Spencer, shadow technology secretary.
“The key message I get from [UK companies] all the time is that the government doesn’t give us [recognition]. Their focus is on the big three,” he told a tech conference hosted by Bright Blue and the Fabian Society on Tuesday.
“We are rendering ourselves uncompetitive because we are not focusing on home-grown industry and vulnerable to technology from foreign powers."
Mr Spencer urged the government to reverse employment tax increases and other regulations on employers to allow smaller tech companies to grow. “The policies of this government are making it more difficult to recruit people than machines.
“From EU regulations to employment tax rises … the barriers are pushing people more and more to use AI and to recruit less people."
Companies were quietly leaving the UK due to the challenges they faced from regulators, according to Ben Greenstone, a tech policy adviser and fellow at the centre-right think tank Onward.
He told of a space start-up that had to speak to 11 regulators to be launched. “That’s fine if you’re a very large technology business. It’s not if you’re a small business that has to spend a very large amount of capital just to do anything at all,” Mr Greenstone said at an event by Onward on Tuesday.
He said there was a “total lack of any clarity for what the plan is or what we're shooting at”, leaving companies with a “lack of faith, I think, that the government is going to make any decisions outside of knee-jerk decisions”.
