Peter Kyle, until two weeks ago the technology secretary, once warned that tech companies such as Meta, Google and Microsoft were so powerful that the UK needed to approach them with “a sense of statecraft” and “humility”, and treat negotiations with them similarly to diplomacy between nations. That vision endures in the form of the UK-US tech prosperity agreement struck this week. While officially a new bilateral partnership, this seems to be a deal aimed at facilitating investment from US technology companies rather than advancing collaboration on goals such as AI safety, copyright protections for British rights holders or a digital services tax.
The rationale is clear: US firms stand alone atop the global AI value chain, making the country an obvious partner for a UK government seeking to “turbocharge” its AI sector. Against a challenging economic backdrop, the promise of “a combined £31bn” in support for UK AI infrastructure such as datacentres offers welcome headlines.
The potential challenges are nonetheless also pronounced. We know that the public harbours concerns about the motivation of these companies and their increasing entanglement with the British state. And they may reasonably have questions about this deal, too: in particular the quid pro quo that comes with investment from big tech. The firms making these pledges are not charities, and it remains unclear what local communities in areas such as Blyth, in Northumberland, will see in exchange for offering up their land and grid capacity.
In the US itself, datacentre developments have led to rising energy bills and disrupted water supplies while supporting remarkably few jobs. It is unsurprising, then, that existing plans for a new “hyperscale” datacentre in Buckinghamshire have encountered local opposition and legal pushback. To ensure its new “AI growth zones” are not beset by similar controversy, government will need to provide assurances that energy resources and other assets staked for private investment will produce returns for local economies – and to the public purse – rather than just powering profits abroad.
Then there is the opportunity cost associated with prioritising US tech over domestic alternatives. Liz Kendall, Kyle’s successor as technology secretary, has described the new partnership as a “vote of confidence in Britain’s booming AI sector”, although few of the companies involved are based – let alone owned – in Britain. Investment from US companies does not need to be zero-sum, but without deft management it risks crowding out any green shoots of growth in the UK’s own tech sector. Entrenching reliance on US technologies at the most lucrative parts of the AI value chain would leave UK firms to fight over the leftovers.
It’s true that the UK lacks the scale and resource advantages of the US, and therefore the ability to participate in cutting-edge AI development on its own: from this perspective, US investment is…
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