Big Tech could leave the UK behind in AI, report warns

A handful of technology companies control so much of the UK’s digital infrastructure that they could prevent the country from capturing the economic benefits of artificial intelligence, a new report warns.

The Institute for Public Policy Research report says the UK risks repeating the pattern established in search, cloud computing and business software: a small number of foreign technology companies control the infrastructure on which domestic firms must operate, leaving new competitors dependent on the companies they may need to challenge.

That dependence is already affecting businesses. A survey commissioned for the report found that 79 percent of UK businesses that rely on digital platforms are concerned that Big Tech will use its market power to restrict competition. Those businesses ranked platform dominance as a larger constraint on growth than access to finance or talent.

The report gives the following figures for concentration in UK digital markets:

The figures do not describe identical market measures: Google’s search figure is a share of searches, while the cloud figures refer to customer spending. They illustrate the report’s concern that UK companies have limited alternatives at critical points in the technology stack.

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AI infrastructure is becoming the next bottleneck

The IPPR argues that the problem becomes more serious as AI expands. Nvidia dominates the accelerator market, while Microsoft, Google and Amazon control much of the route through which companies obtain AI infrastructure via their cloud platforms. Those same three companies have invested more than $20 billion in major AI developers, partnerships that the UK Competition and Markets Authority and the US Federal Trade Commission have already identified as potential competition risks.

For UK AI startups, the issue is not simply whether they can raise money or hire engineers. If their training and inference workloads run on infrastructure controlled by overseas hyperscalers, those companies may also have relationships with competing model developers, control key distribution channels or determine the commercial terms under which new firms can scale.

The report says excessive dependence on foreign-controlled infrastructure could undermine investment in home-grown AI companies. If AI markets settle into a monopoly or oligopoly, the UK’s negotiating leverage would be limited and the country would capture less of the financial return from a sector that the government has identified as central to future economic growth.

“Big tech dominance is holding back British businesses, limiting competition and making it harder for new firms to innovate and grow.”

The UK can support domestic model companies on paper while still leaving them exposed to cloud pricing, capacity decisions and licensing terms set outside the country. Our previous reporting on GPU cloud providers found a market where power contracts, financing and pricing can matter as much as access to the processors themselves; the IPPR report extends that concern from individual providers to the structure of the UK market.

The report says the CMA needs stronger political backing

The IPPR is sharply critical of the Competition and Markets Authority, arguing that the regulator has often allowed dominant technology companies to preserve their position through voluntary commitments rather than binding requirements.

It cites senior officials who say support for the CMA weakened after resignations and dismissals over the past two years. The report also points to a 2025 government request that the regulator prioritize inward investment, a move it says was widely interpreted as pressure to take a less aggressive approach toward Big Tech.

The report recommends that the government issue a new strategic direction for the CMA, instructing it to act more quickly and aggressively and to focus on interventions that create conditions for competitors to grow. It also argues that competition policy should be treated as part of the UK’s technology sovereignty strategy, alongside efforts in AI, space and quantum computing.

The criticism arrives as the UK tries to turn its AI ambitions into domestic economic growth. The government’s AI Opportunities Action Plan, introduced at the start of 2025, identified AI as a major source of future growth, but the report argues that the country lacks a coherent strategy for building sovereign capability across important technologies.

CMA says it has already intervened

The CMA rejects the claim that it has stood aside. A spokesperson said the agency has used the UK’s digital markets regime since it took effect 20 months before the report and has designated three companies with strategic market status. The regulator also cited interventions involving Google search and the mobile ecosystems operated by Google and Apple.

“The CMA has not waited to act. Since the digital markets regime came into force 20 months ago, we have made 3 strategic market status designations, implemented targeted, impactful interventions in Google search and secured meaningful improvements to Google and Apple’s mobile ecosystems.”

The agency said it is continuing work on search and mobile markets and is investigating Microsoft’s business software ecosystem. That investigation includes cloud licensing practices and AI-enabled products, areas that are becoming more important as companies combine workplace software, cloud services and AI assistants.

“We continue to progress interventions in both search and mobile ecosystems. We also have an investigation into Microsoft’s business software ecosystem underway — which includes cloud licensing practices and AI-enabled products — at a time where these are becoming critical for the UK.”

The CMA said its actions are giving thousands of UK businesses more choice and fairer access to customers. The question is whether those interventions will alter the underlying infrastructure dependency quickly enough for domestic AI companies to scale without becoming permanently tied to the largest US technology platforms.