Big Tech is pouring billions into British AI investments—but the U.K. risks becoming a sidekick to U.S. tech giants

Published:



Microsoft’s plan to open a new AI hub in London is a huge endorsement for the U.K. as a world leader in AI. But I do question whether it is wholly good news for the long-term.

The U.K. has shown time and again that some of the very best AI expertise in the world lies here. The pool of talent we have available in this country, the standard of research and development present in our academic institutions, and the U.K.’s (generally) stable economic conditions have, for decades, made our island nation a highly attractive place for tech’s big hitters to lay down roots. 

That’s why American businesses come here, as well as companies from Japan, China, South Korea, Germany, and Singapore. And recent history highlights the real pedigree we have in software process and design. 

When Britain built its own behemoths

In a recent interview, Chancellor of the Exchequer Jeremy Hunt declared his wishes for building a “British Microsoft,” warning that such an endeavor would take a decade to materialize. But it wouldn’t be the first time the U.K. has produced a tech titan of its own.

I previously spent more than 20 years working at Arm, starting in the 1990s. During this time, the company grew from a small spinout (named Acorn Computers) in Cambridge, to a global tech behemoth. It became, arguably, the largest processor company in the world. This was made possible by talent from the likes of Cambridge, Oxford, UCL, Southampton, Manchester, and many other British academic institutions. We were the world leaders. 

Another breakthrough moment for U.K. AI was the founding of DeepMind in 2010. It was one of the most exciting AI companies in the world. But DeepMind was then acquired by Google in 2014 for a $400 million (a massive figure at the time).

So why is it that with all this talent, our attention seems to constantly be on moves made by companies and capital from overseas, rather than focusing on building and keeping our own tech ventures, and turning them into the world players they could be?

The fact that we herald the likes of Microsoft further embedding themselves into the fabric of U.K. tech surely begs the question as to why, as a nation, we haven’t cracked the code for building tech heavyweights of our own. 

Our universities are very capable of creating spinouts, the funding environment is conducive for raising, and early-stage venture capital is accessible. However, the capital required for these companies to continue growing and being capable of challenging the best tech businesses worldwide simply doesn’t exist. This is a challenge that the U.K. government isn’t yet addressing. We need to ensure that U.K. startups have the ability to scale and remain in the U.K. 

Today’s capital-talent matrix

The goliath-sized funding round raised by U.K. self-driving car technology startup Wayve is a perfect example of this capital tipping point issue in action. The company recently secured $1.05 billion (£840 million) in funding led by Japan’s SoftBank, with Microsoft and Nvidia also participating. This is the largest known investment in an AI company in the U.K.—and more broadly Europe—to date, and it was once again driven by overseas capital.

It’s almost been institutionalized over the last decade that U.K. startups are encouraged to have a presence in the U.S. simply to access scaling capital. The government needs to carefully consider what the incentives are, or indeed, what the strategy is for British tech scaleups so that the U.K. stock market can take advantage of the revenue they generate when they truly scale. We need an industrial strategy that more effectively supports and bolsters the credentials and potential of the U.K.’s tech startups. 

With the plethora of deep tech talent that London and the U.K. has to offer, and the strides forward our tech community has made in the last 20 years, the question we should be asking is whether companies like Microsoft are here to build or to plunder. Do they intend to introduce another layer into the U.K. tech community in and around London, or are they planning on sourcing more talent, and incrementally shipping that talent (or the fruits of their labor) back to the U.S.? 

Right now, there are very few places in the world where you can find top AI talent. But if the big non-U.K. tech companies are taking it all, then what is left for U.K. firms? We need these talented AI engineers coming out of our universities (subsidized heavily by U.K. taxpayers) and building the next Arm, DeepMind, Google, or Microsoft. 

This is a perpetuating cycle as well, as large companies not only directly employ top talent but also attract an ecosystem of supplier companies, and a percentage of those experienced employees go on to form new companies. Having global, world-leading homegrown companies has a huge positive impact at a national level beyond just that market cap. Though the Chancellor has been more vocal about the U.K.’s potential to produce such businesses, words need to translate into tangible action. 

But ultimately, we must ask ourselves, are we content with playing a supporting role to the existing U.S. tech beasts? Before we declare victory, as a tech community and as a nation, the U.K. should reflect on what success actually looks like, and what we are ultimately aiming for.

Noel Hurley is the CEO of Literal Labs and a former Arm VP.

More must-read commentary published by Fortune:

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

Related Updates

Recent Updates