Unequal partnerships: who's really gaining from US-UK tech deal?
Hello and welcome to the latest edition of The Counterbalance. This week, we’re taking a look at the UK and US’s mammoth tech deal.
Earlier this month, the United Kingdom signed a wide-ranging tech deal with the United States promising over £100 billion of US Big Tech investment into British data centres, AI, and other tech infrastructure.
The deal is being sold by the UK government as a jobs and growth story, but in reality, it represents the latest entrenchment of a few giant US tech firms and their influence over the UK’s economic and political future. In addition, the deal risks weakening the UK’s ability to regulate the digital economy.
Microsoft, Google, OpenAI, Nvidia and others have announced investments tied to the agreement, including massive data centres and the largest-ever supercomputer in the UK. Accompanying these projects are promises of regulatory alignment, cooperation in evolving sectors like AI and quantum computing, as well as thousands of newly created jobs.
The outcome, however, is something potentially far more dangerous: the handover of strategic sectors to a handful of firms whose power already rivals that of governments.
“What this deal makes clear is just how much the tech broligarchy is dictating the state of play,” said the Tech Policy Press. “Vague promises of productivity gains have so far been unfounded, job creation has often been a broken promise, and the environmental toll of data centres is disastrous. What the UK actually stands to gain remains unclear.”
The core problem of course, is not investment. It is who controls said investment, who benefits from it, and who does not. The UK-US tech deal grants US giants like Amazon, Google and Microsoft — which has pledged to spend over £20 billion in the UK over the next four years — even deeper influence over how the UK develops its digital infrastructure.
The deal also reportedly may include a future roll back of the Online Safety Act, as well as digital services taxes which the UK introduced in 2020. Polling last summer found that the majority of Britons support tighter tech regulation, revealing two thirds believed social media companies should be held responsible for posts inciting riots, and 70% believed there is “much too little” regulation on tech firms.
In addition, this deal has huge ramifications for the UK’s artificial intelligence sector. The agreement between both nations includes billions of pounds worth of private investment specifically into AI infrastructure that is spearheaded by a newly dubbed “AI growth zone” in the Northeast of England. See our previous Counterbalance edition for more on The Balanced Economy Project’s concerns.
Google in particular gains a green light through the deal to invest £5 billion in the next two years to expand an existing data centre in England. A reminder from last week’s Counterbalance that another Google data centre in the UK is expected to emit over half a million tonnes of carbon dioxide per year, equivalent to roughly 500 flights from Heathrow to Malaga per week.
By partnering so closely with US Big Tech, the UK is essentially outsourcing its vision of digital infrastructure to the interests of private capital.
As economist Marianna Mazzucato — quoted in the New Economy Brief — warned, the UK’s promise of healthcare innovation, low energy bills and more growth will translate “to outsourcing more AI capacity across public institutions and the wider economy to US tech firms.”
In previous weeks The Counterbalance has looked at how Europe has wrestled with the monopolistic threat of Google and the consequences that arise for a functional EU-US relationship going forward.
A central question for European regulators has been whether they will allow Big Tech actors like Google to control the future of the sector through artificial intelligence. Given that the importance of AI will only grow in the coming years, reigning in the powers of companies like Google is more important now than it ever has been before.
Like Europe, the UK is now at the same crossroads. We saw the growing concentration of tech firms in the previous decade and failed to act.
If British lawmakers fail to regulate AI effectively today, they may never get the chance to again. If control over AI remains in the hands of a few firms, then the possibility of a fair economy — a genuinely open digital market — disappears with it both in the UK and elsewhere.
There are alternatives to this reality. The UK could mandate standards that reduce dependence on Big Tech companies. It could insist upon enforceable competition principles as part of any tech trade agreement. It could align itself with domestic innovators over the already-entrenched power of Silicon Valley.
However, doing so would require a break with the dominant (and false) assumption that deregulation drives growth, and growth can only come from getting out of Big Tech’s way. In reality, the path to a fair digital economy runs through regulation, not around it.
The Balanced Economy Project calls on the UK government to build a digital strategy that prioritises the public interest and common good over the commercial interests of foreign based monopolies, supporting UK-based tech startups to enter markets, making sure that no company can dictate the terms of the UK’s digital and financial future.
Soundbite of the week: Time to break up Google
Earlier this week representatives from civil society protested outside the European Commission’s headquarters in Brussels to demand Commissioner Teresa Ribera break up Google, as the next step to its fine on the Big Tech giant.
Among the group were representatives of LobbyControl, who posted on social media platform Bluesky following the protest:
“Yesterday, we went to the EU Commission’s headquarters in Brussels to protest for a Google break up. Commissioner Ribera did the right thing with her ad-tech decision. Now, she has to stay firm and resist pressure from inside the Commission and from the other side of the Atlantic. Time to break up Google!”
Weekly highlights:
An EU hearing will be held in Luxembourg in late October in relation to Apple’s appeal against the European Commission’s set of decisions that found the tech giant to be operating outside of the remit of the EU’s Digital Markets Act (DMA). Earlier this week, Apple executive Greg Joswiak said European regulators were “creating a worse experience for their citizens…undermining innovation [and] infringing on our intellectual property and they’re damaging privacy and security.”
Elsewhere in the Big Tech world, Nvidia has announced plans to invest up to $100 billion in OpenAI, the tech firm behind the world’s most popular AI language model ChatGPT. Should the deal materialise, it will represent the largest-ever investment in a private company.
Data mining: Early tech deals on the rise again
New figures released by analytics platform PitchBook reveal that emerging tech deals totalled a whopping $8 billion in Q2 of this year, marking a second-consecutive QonQ increase since the end of 2024.
While a rise in early-stage tech deals is often presented as a sign of strength in the start-up ecosystem, it is important to point out that this narrative can be misleading.
When a small group of private capital actors pour massive sums into early-stage deals, they inevitably shape innovation and align it with existing — entrenched — dominant actors. What essentially becomes a form of financial gatekeeping means fewer pathways for real, substantial competition down the road.
The Counterbalance is published every Thursday. Please send any thoughts and feedback to scott@balancedeconomy.org.
Spot on. We need tighter regulation, public control, breaking up of monopolies and ensuring profits remain in the UK. This agreement results in the exact opposite. Unfortunately, our government has been bought and sold.
It’s time we had a real democracy where ordinary citizens make the decisions rather than professional politicians who put Part and power first.
The group of immature, Ayn-Randian 'bros' and their sycophantic followers are, by my observation, floating the most all-encompassing fraud since the railroads stock scams of the prior TWO centuries. Siphoning billions and hundreds of billions into a thing which, over here, will continue to pump the prehistoric waters of the Jordan Aquifer here to below existing wellheads, push aging electric generation plants and distribution systems into and past capacity maximums, and all for some overheated 'notions' of a transhumanist 'future'? I'll 'believe' when the growing number of our un-housed on the doorsteps of those armies of salvation get their aero-transports and a garage in which to park them.
Curiously, one export from England, Paul Kingsnorth, via the west coast of Ireland, calls out this growing 'transformation' for what it is, and picks up the voice of a cranky Anglican cleric from Wales a hundred years back, R S Thomas:
"The Machine appeared in the distance, singing to itself of Money. Its songs were the webs they were caught in, men and women together. The villages were as flies to be sucked empty. God secreted a tear. Enough, enough he commanded. But the machine looked at him and went on singing."
So, just stop. Please just stop feeding this thing at the personal level. One can reduce personal consumption by a fourth, and half of all of us do that, and this thing collapses. I have, and more, and I'm the better for it. Winter's coming.
Tim Long, Just Up the Hill from Lock 15.