Beyond Silicon Valley:
Why Starmer should look to Europe, not just California, to secure Britain’s digital future.
Political Capital and the lure AI
In a week where the Prime Minister moved from ‘beleaguered’ to ‘embattled’, we’ve seen just how quickly political capital evaporates. Britain is still living with the fallout of the 2008 financial crash, Brexit and the pandemic, all while facing a hostile Russia and trade wars with the US. Against that backdrop, the public’s expectations remain resolutely high.
Democracies often suffer from a lack of long-term vision, necessitated by electoral cycles, and politicians that will inevitably resign often sooner, rather than later. Despite a strong majority, the Labour government has continued this tradition and has hurriedly set about finding ways to deliver better services, faster.
It just so happened that there was a handy new technology, a hook that the government’s vision could neatly hang on: Artificial Intelligence.
A Silver Bullet from California
AI was perfect. It spoke to everything the government wanted– not the creation of new institutions, systems or Social Contracts (remember the Green New Deal?), but better management of the ones that already existed. AI could simply ‘level-up’ what we already had and prove that this crop of politicians were simply better managers than the ones that came before.
A ticking clock to the next election, and the burdensome promise of service delivery to an impatient electorate led to the inevitable entrance (stage left) of the US Tech Giants. Britain didn’t just need delivery, it needed it fast, and there was only ever one option.
In many ways, it’s a match made in heaven. A new special relationship based on the new great geopolitical agent: technology. After all, this is a relationship that worked in the past: the industrial and financial might of the New World, combined with the plucky, restrained individuals that pop out of the British education system. It’s a relationship that won wars, split the atom and props up the cultural hegemony of the Anglosphere – surely it could speed up the fixing of a few potholes?
The signs are positive - a new tech deal will see billions pumped into things like data centres from the likely lads of Google, Nvidia and OpenAI, including more than $30Bn from Microsoft alone.
This investment will strengthen Britain’s already enviable position on AI, as the third largest AI market in the world after the US and China. Let’s not forget that leveraging US partnerships has led us to this point, encapsulated perhaps by Demis Hassabis, CEO of DeepMind, partnering with Google to scaleup the company that is the jewel in the crown if British AI.
Yet reliance on Silicon Valley comes with trade-offs. Speed and scale are seductive, but they bring the risk of losing control over homegrown talent and innovation.
And herein lies the need for political skill and long-term strategic vision from the government. How can we maximise investment and cooperation with the US while ensuring that British firms retain the agency and talent to grow?
US tech firms have long been poaching British talent, offering huge sums either to individuals or buying companies outright.
In fact, on the very day that the Prime Minister took to the stage at London’s Tech Week, news was broke that Alphawave, one of the few UK semiconductor companies, was being bought by a US rival for $1.8bn. It wasn’t even the only plundering that day - Oxford Ionics, a Quantum startup, had also agreed to a takeover by another US rival for $1.1bn. Talk about bad luck for the PM.
Lessons from European Defence
The story of Alphawave and Oxford Ionics illustrates a broader point: when strategic assets leave your jurisdiction, sovereignty is diminished.
While tech companies, talent and IP flow across the Atlantic, we’re seeing something different when it comes to European defence. Europe is working together in new ways, forced into action through Russian aggression and American ambivalence.
Norway recently opted to buy their new tranche of frigates from the UK rather than the US, and Denmark elected for a joint French and Italian missile weapons system rather than the standard US Patriots- adding to a range of multilateral defence agreements that are springing out of Europe.
These decisions are coerced by necessity, with the Americans as a weakening partner to European security. Where Europe can turn to its own defence industry, it cannot yet do the same in technology. Here, the balance of power lies firmly in California which in turn is increasingly at the whim of Washington.
But technology is becoming a geopolitical asset every bit as important as defence.
A recent article in US publication, The Hill, argued that the US is increasingly moving to a state capitalism model, referencing increasing government interference and utilisation of US tech firms to further their political aims – from preventing chip sales to China, withholding government funding from AI firms they deem politically hostile to the President, to allegations of Microsoft interfering with the email account of International Criminal Court (ICC) Chief Prosecutor, Karim Khan, following a White House sanction.
European defence, democracy and society is reliant on algorithms written in California and wielded in Washington. With 70% of European cloud computing being run by three US tech firms, the risk to European sovereignty is significant. If Europe wants to be able to protect itself, it needs to work together to develop its own tech base.
Les Unicorns, Bitte Schon
This all points to a world where Britain and Europe have potential but not material. A world where Europe must look within itself for solutions.
There is a role here for state intervention. Poland, on the frontlines of foreign interference, has identified the need for stronger domestic digital infrastructure and has been able to adopt digital ID on the foundations of Polish tech. Other European countries, including Britain, must follow this example, creating new institutions and systems that are based on the increasingly unique European values of rules, democracy and human rights.
While there have been attempts to create European initiatives, they have not been empowered by the political will to prioritise them.
This is the UK’s chance to lead. Starmer’s premiership, while stalling at home, has been buoyed by international achievements. The Prime Minister should therefore look to his successes on the international stage, draw political capital from Britain’s growing role in defending Europe and successful trade deals to build new agreements with our European allies on digital sovereignty. This is the kind of bold, over-the-horizon policy that sets Prime Ministers apart and leaves a legacy for a stronger continent and a stronger Britain.