We need overseas AI expertise — but must manage the risks too
Scanning the government’s press release trumpeting Big Tech’s investment in the UK’s AI sector earlier this year, one name kept cropping up: NScale. This hitherto unknown company was teaming up with Nvidia and OpenAI to deliver a “Stargate UK” and with Microsoft “to build out the UK’s cloud and AI infrastructure and build the country’s largest supercomputer”.
Why did this business — so young that it is yet to file accounts with Companies House — get involved? In essence, NScale puts a British face on the billions of foreign capital that are needed to achieve the country’s computing capacity goals and plays on the importance of “sovereignty”, or ownership. The apocalyptic vision increasingly being touted by some is that digital infrastructure could be switched off by a suddenly unfriendly United States. Unfounded or not, it is causing some very real fears, which companies like NScale are helping to allay. It sums up the UK’s continuing sovereignty conundrum when it comes to the investment and expertise needed to build out AI infrastructure.
There is no escaping the fact that it is impossible simply to replicate the hyper-scalers like Microsoft or the AI chipmakers like Nvidia. We need them. But yet it was only in July that the government called our dependence on the tiny club of global tech giants “a chronic strategic risk”. Their growing dominance, it said, creates “dependency risks, including operational, financial, and security vulnerabilities, while also restricting market innovation and customer choice”. This dominance could lead to a handful of large players abusing their power to manipulate the authorities, such as “by threatening to relocate unless governments meet their demands for low taxes and less regulation, potentially weakening governmental control”.
Furthermore, this “chronic risk analysis” paper found, their power is reinforced because it’s nigh on impossible for new competitors to enter the eye-wateringly expensive and technically difficult market.
As much as 80 per cent of UK data-centre capacity is estimated to be foreign-owned. The economy now relies on data centres, and that is only going to get more profound.
Companies’ demand for “sovereignty” is increasing, to at the very least ensure these precious sheds of servers are on UK soil.
In the past few weeks Equinix, the US digital infrastructure company, announced plans to invest £3.9 billion in a Hertfordshire data centre development which it said was “a clear sign of commitment to the UK’s ambition to lead in sovereign AI”.
Atos, the French IT services and consulting group, has been trumpeting the build of “UK sovereign data centres”, which it says means the tech stack is here “and only subject to UK laws and regulations”.
But merely building data centres within the UK does little to resolve the “chronic risks” that go to the heart of the power struggle between nation states and companies whose market value is larger than most countries’ GDPs.
So, as well as promoting British companies such as NScale, the government is starting to take a more muscular approach to keeping ownership and control in Britain.
Last year UK data centres were classed as “critical national infrastructure” and are gradually starting to fall under the sorts of regulations which cover telecoms, water and energy. The new Cyber Security and Resilience Bill will classify large data centres as “essential services”, imposing security and reporting duties with Ofcom in charge of oversight. (Yet another major responsibility for the media and telecoms regulator, but that is for another column.)
Ofcom’s role means that digital infrastructure is now moving into a regulated space traditionally occupied by utilities. Although there is a way to go until it is as rigorous, the starting gun has been fired.
The new regime focuses on behaviour, resilience and duty, sidestepping the far thornier ownership issue of Big Tech, a “chronic risk” which is nigh on impossible to resolve. Time will tell if this is enough: after all, Silicon Valley still holds the purse strings.
Katie Prescott is Technology Business Editor of The Times
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