Are we heading for a Techxit of Big Tech in the UK?
Written by Rebecca Uffindell Wed 16 Aug 2023
Big tech companies are considering leaving the UK due in part to increasing regulations.
The Online Safety Bill is one such regulation that could potentially impact big tech companies. The Bill, due to be passed this autumn, is aimed at protecting children by imposing strict rules surrounding social media content. Those that do not abide by these rules could be hit with high financial penalties or prison time for executives.
Encrypted messaging services like WhatsApp, Signal, and Element have opposed clauses in the Bill that could give Ofcom the power to try to force the release of private messages on end-to-end encrypted communication services. Law enforcement will also be given rights to access encrypted messages if there is a national security or child protection risk.
Companies like Signal and WhatsApp have warned that they will leave the UK rather than submit to a requirement to weaken encryption.
Charities like the NSPCC back the Bill, with the organisation describing private messaging as the ‘frontline of online child sexual abuse’. A recent YouGov and NSPCC survey also suggested that 73% of the UK public back the new Online Safety Bill.
The Digital Markets, Competition and Consumers Bill is also making its way through Parliament. This could give the UK’s competition watchdog statutory powers to limit big tech companies like Microsoft, Apple, Google, and Amazon.
In recent months, Ofcom has investigated the UK cloud services market amid concerns about the increasing dominance by the likes of Amazon Web Services (AWS), Google Cloud and Microsoft Azure. While companies like Microsoft support the Bill in principle, big tech companies fear that this would give too much power to a single body.
There has been a proposal from Ofcom to refer the UK cloud market for investigation into anti-competitive behaviour, citing that AWS and Microsoft are currently the leading UK providers of cloud infrastructure services but may need to be investigated further.
“There’s a clear message here – the European Union is a more attractive place to start a business than the United Kingdom,” said Brad Smith, Vice Chairman of Microsoft, to the BBC after the Competition and Markets Authority (CMA) blocked its acquisition of the video game giant Activision Blizzard.
The regulations continue, as the UK’s proposed amendments to the Investigatory Powers Act require tech firms to obtain approval from the Home Office before new security features can be globally released. in July, Apple threatened to remove FaceTime and iMessage services from its UK products if these amendments were passed.
A big tech company also said to Zoe Kleinman of the BBC that there is a ‘definite tipping point’ at which they would leave the UK.
“Many of these companies are increasingly fed up. Their “tipping point” is UK regulation – and it’s coming at them thick and fast,” wrote Kleinman.
Within the UK tech landscape, Prime Minister Rishi Sunak has attempted to lure the artificial intelligence sector to set up base in the UK. Since then, OpenAI, Anthropic, and Palantir have all agreed to open London Headquarters.
The EU is also introducing strict rules in the same vein. But the union can be considered a much larger and valuable market for big tech due to its collective size.
It is yet to be seen what compromises or concessions may be made for big tech companies threatening to leave the UK.
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Written by Rebecca Uffindell Wed 16 Aug 2023