The UK’s AI Strategy Risks Entrenching the Power of Big Tech

Megan Kirkwood is a fellow at Tech Policy Press.

It is no secret that nations around the world are interested in boosting AI output, often cited as a global “AI race.” While often viewed as a battle between the US and China for technological supremacy, other nations are increasingly investing in data centers and computing power to stay in the game.

Data centers are popping up like daisies around the world—largely owned by Amazon, Microsoft, and Google. The Guardian recently reported that, between them, the three companies plan to increase data centers by 78%, “with construction planned in North America, South America, Europe, Asia, Africa, and Australia.”

The European Union has made it its mission to build AI factories, dedicating a budget of €10 billion from 2021 to 2027, alongside another €20 billion of investment by the InvestAI public-private fund to build AI Gigafactories. The goal of this investment is to create access to computing for businesses and academic research to build European-made and deployed AI applications across sectors such as health, manufacturing, climate, finance, space, robotics, health, biotech, mobility, and virtual worlds. The first AI factories have already been announced as the EU wants to scale up its efforts drastically.

Similarly, the UK has been particularly keen on data center construction, launching an AI Growth Zones initiative that invites regional and local authorities and data center providers to submit expressions of interest in building new infrastructure. The initiative aims to encourage areas that have been deindustrialized and already have “land and infrastructure suitable for redevelopment,” or areas with tech hotspots that could benefit from close proximity to a data center.

In general, the UK has tried to portray the nation as open for business and attract as much investment as possible to boost the UK’s tech sector, seeing AI as the key to boosting productivity and fixing the economy. Earlier in 2025, the UK government released a provocative press release detailing its intention to “mainline AI into the veins of this enterprising nation” and remove the “blockers” which have been controlling “the public discourse and getting in the way of growth in this sector.” Joe Mayes and Alex Wickham reported for Bloomberg that the UK is “drawing up plans for a special visa for foreigners who invest significant sums in Britain,” with a focus on AI investors.

The hope in both EU and UK initiatives is that massive investment in AI will equal economic growth. But, the EU’s AI Continent plan’s ultimate goal is not only to foster a booming AI industry but also to ensure that it is European-funded and that the economic benefits will remain in Europe, recognizing the bloc’s overreliance on US tech. Leaving aside the AI hype contained in the EU’s action plan, where AI is touted as a one-size-fits-all technology, there at least appears to be some ambition in reducing American dependency on cloud computing or American-made generative AI models.

While becoming entirely self-sufficient may be very difficult, if not impossible, given the complexity of current supply chains, there is still a strong will to try. Although there may be some disagreement within the bloc about how open Europe should remain to outside investment, digital sovereignty and the related idea of building a Eurostack are gaining increasing importance.

UK Doubles Down on US Investment

Unlike in the EU, this tension between striving for sovereignty and recognizing the challenge of competing with Big Tech’s technological maturity and deep pockets—particularly in key infrastructure like computing—is less apparent in the UK. The UK and the US have recently signed the US-UK Economic Prosperity Deal, which promises the two nations will ensure increased digital trade and investment. Rather than considering the volatility of relying on US market players during an intense period of geopolitical uncertainty, the UK government is doubling down on securing investment dollars from US firms.

• In 2023, Microsoft committed to spending “£2.5 billion over the next three years to expand its next-generation AI data centre infrastructure.”
• In October 2024, the government announced an investment of £6.3 billion in data center infrastructure by US firms CyrusOne, ServiceNow, Cloud HQ, and CoreWeave.
• When announcing the UK’s AI Opportunities Action Plan, Amazon, CoreWeave, Oracle, Salesforce, Cohere, Anthropic, and Microsoft announced investment commitments or support for the initiative.
• Amazon is investing £8 billion over the next five years to build data centers.
• Oracle committed $5 billion of investment in the UK over the next five years to build AI infrastructure.

Public Contracts

Microsoft is heavily invested in the UK’s industrial strategy. On top of its investment commitments, in October 2024, Clare Barclay, the chief executive of Microsoft UK, was appointed chair of “the Industrial Strategy Advisory Council, which will provide advice to the government in partnership with businesses, unions and other stakeholders.” In the same month, Microsoft and UK Crown Commercial Service agreed to a five-year contract to secure discounted access to Microsoft’s portfolio of cloud software and services. This gives public organizations access to Microsoft 365, the Azure cloud platform, Business Applications, and 365 Copilot, tightening the partnership between Microsoft and the UK government.

Beyond Microsoft, Anthropic—which develops large language models and is funded by Google and Amazon— has signed a Memorandum of Understanding with the UK's Department for Science, Innovation and Technology “to explore how we can bring the transformative potential of advanced AI technologies to enhance public services for UK citizens.” Specifically, the memorandum states that Anthropic's chatbot, Claude, will be deployed “to enhance how people in the UK access and interact with government information and services online.” Oracle, the cloud computing and software giant, also provides the UK government with access to its services, specifically for the Department for Work and Pensions, the Department for Environment, Food and Rural Affairs, the Ministry of Justice, and the Home Office.

Deregulation risk

The outsized role that the industry, particularly wealthy US corporations, plays in the UK’s approach to implementing AI is leading the UK down the path of deregulation. The independence of the UK’s competition regulator, the Competition and Markets Authority (CMA), is continually threatened, as the government urges the authority to enforce competition law to prioritize only “pro-growth and pro-investment interventions.” This could undermine its newly enforced Digital Markets, Competition and Consumers Act, which will impose competition interventions in the digital economy by targeting the biggest players. As many of those same players have a huge impact on the UK’s industrial policy, the CMA’s interventions could be restrained if they conflict with the government's pro-investment agenda. This is despite the evidence that strong competition policy is good for economic growth and the protection of democracy. In addition, there is a huge threat that the UK government will scale back copyright protections for creative work, ushering in a “‘wholesale’ transfer of wealth from creative industries to tech sector.”

Outsized Voices

There are a handful of outsized voices promoting the Big Tech agenda and shaping the UK’s approach to AI. The think tank, Tony Blair Institute for Global Change (TBI), has long been promoting the use of AI in public services. At a conference held shortly after the new Labor government came into power, the TBI “claimed that integrating AI into the heart of government could save up to £40 billion annually and shed one million civil servants,” and automate “more than 40 percent of the tasks performed by public sector workers.” It was later reported that those figures were generated by OpenAI’s GPT-4, rather than based on original research.

The TBI has since released additional suggestions for the UK government, highlighting the cost and time savings that automating jobs could bring, and campaigning for the relaxation of UK copyright laws to make scraping copyrighted work for AI training easier, a topic currently under debate in the incoming UK Data Use and Access Bill. However, the TBI has faced criticism due to its funding sources. While it maintains editorial independence, its funders include Microsoft, Amazon Web Services, and the Larry Ellison Foundation, the billionaire founder of Oracle. Kiran Stacey reported for the Guardian that “filings in the US show the [Larry Ellison] foundation gave the TBI more than £52m in 2023 and had promised another $218m (£163m).” That TBI’s funders have committed significant investment in UK AI infrastructure and provide government services likely represents a conflict of interest in TBI’s editorial independence.

Meanwhile, Peter Kyle, the Secretary of State for Science, Innovation and Technology, has also been accused of having close ties with Big Tech, at the expense of smaller industry voices. According to analysis by the Guardian, Peter Kyle met people close to or representing Google, Amazon, Apple, and Meta “28 times in a six-month period. That was more than one meeting every week on average, and nearly 70% more often than his predecessor.” Kiran Stacey and Dan Milmo add that this has “renewed criticism from those who believe Kyle has used his position to push the sector’s agenda,” particularly in copyright and online safety.

The other significant voice in the AI push is Matt Clifford, the Prime Minister’s AI Opportunities Adviser, who authored the AI Opportunities Action Plan, of which all 50 recommendations have been adopted. Patricia Clarke wrote for the Observer that Clifford has “almost ­single-handedly shaped Downing Street’s thinking on artificial ­intelligence” and that multiple sources have expressed concern that Clifford is the Prime Minister's “sole trusted external adviser on AI.” Clifford is from the tech sector as a co-founder of Entrepreneur First, a startup accelerator founded in 2011, and has declared a long list of tech investments. Due to conflict-of-interest criticisms, he was forced to divest from Faculty AI, a UK-based AI company. The creative sector has also criticized him for his stake in the AI industry, shaping his recommendations to relax copyright law in favor of AI firms' access to data.

Maintaining Monopoly Power

Because incumbents are setting the agenda, they are able to secure monopoly power—both through public procurement agreements, such as those obtained by Microsoft, Oracle, and Anthropic, and through their funding and ownership of computing infrastructure. The UK’s heavy reliance on Big Tech to fund its AI infrastructure risks further entrenching the dominance of these firms.

Because once the data centers are up and running, who is actually going to benefit? In the short term, the Labor government can tout its victory in securing significant investments to fund the construction of data centers, getting “shovels in the ground,” and delivering on the party’s promise to expedite planning permission approval for major economic infrastructure projects. But if the goal is to put more money in Brits' pockets, presumably by creating more job opportunities, beyond construction work, what will be left? Data centers do not create jobs, strain the energy grid and have even blocked the ability to build new homes. Additionally, considering that the push for AI is often synonymous with automating away jobs, workers will be left with fewer options. Meanwhile, the Prime Minister is insisting that cutting thousands of civil service jobs and adopting “AI” in public services will somehow boost efficiency (by having civil servants write emails faster and create summaries of documents), despite the lack of evidence to support this claim. The main beneficiaries will be Microsoft, Anthropic, and Oracle, who will be pocketing the subscription fees for their services.

National Champions?

With more data centers available, will UK AI champions emerge, grow, and challenge incumbents, or be acquired or otherwise controlled through investment or cloud contracts? The Competition and Markets Authority (CMA) has already conducted studies on the competitive landscape of AI foundation models, finding that the biggest tech firms own all the infrastructure and control downstream markets due to that leverage. CMA CEO Sarah Cardell has previously flagged concerns that incumbents have the ability and incentive to shape AI markets for their own interests, using partnerships and investments to counter competitive threats and leverage their already strong positions in providing the necessary compute. AI firms often enter into partnerships and investment schemes that give the firm access to compute in exchange for the incumbent to control the firm’s IP and further distribution. The ability to compete is continually hampered. Meanwhile, Cade Metz, Nico Grant, and David McCabe report for The New York Times that the money AI start-ups raise is “pumped back into its investors.”

Will the UK’s rush for AI investment benefit the country or just cement the power of US-dominant firms? Will it grow the economy or increase incumbent profits? While the EU pushes for digital sovereignty, it seems the UK is further entrenching its nation in Silicon Valley dependency.