The UK wants to catch up in the global AI race – but is too wary to go all-in

a large white building with columns — The Bank of England in the city of London. Photograph: Amer Ghazzal/Shutterstock

Hello, and welcome to TechScape. I’m your host, Blake Montgomery, US tech editor at the Guardian. Today, we’re discussing the UK’s difficult position in the AI race, new doubts over OpenAI’s path toward a trillion-dollar stock market debut and the changes to IRL tech reporting in the age of AI.

Eager but afraid: the UK finds itself in a bind over AI

The UK wants a piece of the mammoth global investment in AI but fears it as well.

In the coming weeks, the Bank of England is planning to ease capital rules to help encourage more lending. But the central bank simultaneously expressed concerns that there are too many loans going to investors like hedge funds, who are using that money to buy up AI stocks.

The central bank’s moves reflect the country’s global position: hoping to catch up to the US and China in the AI race, struggling to mobilize its resources to do so, and too wary of the risks to go full bore.

UK banking regulators have recently been under enormous pressure to do more to stimulate growth, my colleague Kalyeena Makortoff this week reports. The relaxed requirements are likely to bring on a fresh wave of lending as investors are clamoring for more money to pour into AI-related stocks.

The rules that are slated to be loosened were implemented in the wake of the 2008 financial crisis, a fact sure to alarm critics worried about an AI bubble.

And even the central bank itself has made its concerns public. “The risk of a sharp correction in equity markets remains high,” said Andrew Bailey, the Bank of England governor, on Tuesday. He warned of a “triple whammy” of AI’s risks: oversized investment in AI stocks, slower adoption of AI than tech companies predict and the breakneck pace of AI’s development, which will leave even some massive companies behind.

The US’s largest companies have bet the farm on the AI boom in spite of these fears, as has Donald Trump, leaving Americans with the feeling that their country’s economic fortunes are bound up in a single industry.

From his end, Bailey, despite his warnings, did not recommend any new policies to guard against risks of high valuations to the UK’s financial stability, Politico reported.

New in Reworked, a Guardian series about what’s at stake as AI disrupts our jobs:

OpenAI’s difficulties are mounting and threatening its stock market debut

In May, I wrote that Sam Altman’s victory over Elon Musk had cleared the way for OpenAI’s trillion-dollar IPO ambitions. The legal triumph over the richest man in the world made it seem like OpenAI could surmount any obstacle. But two developments this week made me rethink.

On Friday, OpenAI was sued by Apple, which alleges that the artificial intelligence firm mounted a campaign to steal trade secrets in an effort to create its own hardware device.

The lawsuit is a major reversal in what was once a chummy relationship. Just two years ago, in 2024, Apple announced proudly that its revamped version of Siri would rely on ChatGPT. When that update launched last month, however, it was Google’s Gemini under the hood, just one of several signs of trouble between the companies.

In the meantime, OpenAI paid $6.4bn in equity to acquire the product-less startup of Sir Jony Ive, once Apple’s chief design officer, in 2025. If you want to be more like Apple, buying the sensibility of a principal architect of the iPod, iPhone and iPad is one way to do it. A subtle move it was not.

Apple is clearly worried about turncoats. Ive’s startup is named in the suit, as is Tang Yew Tan, a former Apple vice-president and current head of hardware at OpenAI. The suit may be an attempt to staunch repeated trade secret theft; it may also be a pre-emptive strike to preserve the iPhone’s dominance before an AI-infused competitor can go to market.

OpenAI said in response to the suit: “We have no interest in other companies’ trade secrets.”

And there was more news adding to OpenAI’s woes last week. The company’s second-in-command, Fidji Simo, stepped down. It’s a setback that threatens less ongoing or adversarial difficulty than Apple’s suit but still leaves a leadership vacuum at a critical time for the company.

OpenAI needs to generate as much hype and optimism about its future as possible as it prepares to go public. At this moment, its current difficulties, quotidian in comparison to ushering in a glittering future of all-powerful AI, seem to be miring it down and risk investors may lose faith in its ability to execute its vision for a future beyond ChatGPT.

Tech journalism is less online in the age of AI

I started covering tech a decade ago, in an era when the biggest stories happened online. Donald Trump’s novel and effective use of Twitter. Cambridge Analytica’s acquisition of data from Facebook. The rise of TikTok. Social media was the story.

Today, one of the biggest stories in tech is one that is developing offline.

We are still writing about how people live their lives online, but the offline footprint of today’s biggest story, the AI boom, has become a much bigger part of what we cover than in years past.

The explosion of AI has radically changed the presence of tech companies in the physical world. AI datacentres are some of the most massive and complex structures that humanity has ever created. So tech reporters now write about infrastructure and energy use (like in last week’s TechScape). They write about protests and city council meetings. We are still writing about how people live their lives online, but the offline footprint of the AI boom has become a much bigger part of what we cover than in years past.

The Guardian has sent reporters to report on datacenters in the dry US west, the ghostly plains of Scotland and the most polluted neighborhood in Mumbai, among other locales. Each place reveals a new facet of the rapid rollout of the structures that power AI. I’ve got my eye on a few more places with good stories to tell.

Several Guardian tech reporters and editors spoke to our deputy supporters editor about the shifts we’ve seen in our chosen subject in the past few years. You can read more: ‘These are some of the most complex structures ever created’: how tech reporting moved into the physical world