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— Tech Nation’s final report is out, looking at how to turn the U.K. tech sector into a $4 trillion industry.
— DSIT’s AI lead has given a taste of what to expect in the upcoming white paper, due next week.
— Do Twitter commentators really have the power to take down banks?
Good morning and welcome back,
You’ve made it to Thursday, it’s National Puppy Day and the sun might come out later. Make your morning even better by reading on.
NATION BUILDING: The U.K. tech industry will almost triple in value over the next decade, but could quadruple with “better conditions,” Tech Nation’s final report says today. ‘How to build a scale-up’, which you can hopefully read via this link, outlines three chief areas for policymakers to focus on.
Challengers: India, Indonesia and Mexico will all challenge the U.K.’s crown as the third biggest tech industry in the world over the next five years, the report finds. Closer to home the U.K. also risks being caught up by France and Germany “without the right conditions and support mechanisms in place.”
Keeping the crown: To hit a $4tn valuation, government rhetoric has to be paired with actual policies to plug gaps in talent, access to capital and exits.
Money problems: The government needs to fix the challenges startups and scaleups face accessing finance. That could contribute up to $450bn in value, the report claims. Meanwhile, “more patient” VC investment is needed, along with regional investment.
Talent gap: The report praises organizations like Colorintech for making the industry more accessible but says more must be done to support underrepresented people. “Addressing current gaps in access to talent for UK startups and scaleups… could contribute up to $400bn in additional value to the UK tech ecosystem over the next decade,” it says.
Best places: Women (at 25 percent of the tech workforce) and ethnic minority groups (at 20 percent) are still “heavily underrepresented,” the report adds. Edinburgh is the city with the most women in tech, followed by Newcastle and Cambridge.
Exiting: U.K. tech leaders must also develop a “Silicon Valley-like sense of exit,” it recommends. “Knowledge must be deepened and shared around late stage growth,” the report says, concluding that securing high value exits could add another $550bn in value by 2032.
Unlocking value: Gerard Grech, Tech Nation’s chief executive, said despite the successes of the last decade there was “much more we can do and value to be unlocked if we create the right conditions for future growth over the coming years.”
Read on: We’ll have a special report on the end of Tech Nation for our Pro subscribers tomorrow.
STATE OF THE NATION: Tech Nation marks the launch of its final report with a panel discussion at 4.30 p.m. Register here.
QUANTUM: DSIT Secretary of State Michelle Donelan is visiting the National Physical Laboratory in south-west London today to open a new Advanced Quantum Metrology Lab. The lab will provide the means for quantum companies to test and develop new products.
COMMONS: Business and Trade Secretary Kemi Badenoch will be taking questions from MPs in the chamber from 9.30 a.m., including on critical raw material supply and U.K. firms choosing to list in New York.
LORDS: The AI in Weapons Systems committee is holding its first public session looking at if autonomous weapons can be compatible with international law.
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WHITE PAPER TASTER: Sam Cannicott, deputy director for AI policy at the science and tech department, has given a taste of what we can expect in the forthcoming AI white paper (to be published next week, probably, hopefully).
Aims: The paper’s aim is to strike a balance between regulation and innovation, Cannicott told the AI U.K. conference in Westminster. “The idea is to drive consistency across the regulatory landscape,” he said, using existing regulators in different sectors who are the best equipped to deal with it.
Assurances: Alongside regulation, the government is also looking at an AI assurance scheme to make sure the technology “does what it says on the tin.” He said this would help develop confidence and trust. “We know one of the barriers (to adoption) is organizations not trusting AI.”
Also in the room: On the same panel, Ofcom’s director of technology policy, Amy Jordan, said she welcomed the “non-statutory framework” the government was using for AI i.e. leaving regulators to lead in their sectors without new legislation. Ofcom is currently looking at how AI can impact online safety, Jordan added.
NOT LEAVING: Despite the bans, EU politicians are clinging to TikTok to get Gen Z votes, my POLITICO colleagues in Brussels report.
BEYOND TIKTOK: Government officials have also warned French lawmakers against using WhatsApp and Instagram, POLITICO’s Laura Kayali reports.
MUSK IN THE HOT SEAT (AGAIN): Elon Musk’s social media giant Twitter plans to charge academics to access its data — in potential violation of EU content rules, POLITICO’s Mark Scott reports.
PROTECTING FRIENDS: The U.K. needs to protect “itself and its friends and its allies against pinch points in global tech supply chains,” said Foreign Secretary James Cleverly at the launch on Wednesday of the International Tech Strategy in response to questions from Morning Tech. He noted a principle of the plan “is about resilience.” Cleverly spoke alongside Science and Tech Secretary Michelle Donelan. The strategy was much as we billed yesterday but here a few key points:
China, champ: Building resilience means Britain will “continue to work very, very closely” with the U.S. and Europe, Cleverly added, “even though we’re not formally part of partnerships” such as the U.S.-EU Trade and Technology Council (TTC) — a forum shifting technology supply chains and tech regulation away from Chinese influence.
Biden bonded: “We’re working very closely with America,” said Donelan, citing the U.K.-U.S. technology partnership. Yet this forum is “ad hoc” and nothing like the scale of the TTC’s global tech regulation-shaping powers, a former Downing Street official previously told POLITICO.
AI, AI: “Technologies like AI are on the cusp of changing our lives forever — for the better,” Donelan said. “That international cooperation is going to be absolutely key to ensuring that it remains safe and secure.”
Malign ends: AI can be used for “malign ends” by countries around the world, Cleverly pointed out. The U.S. is also warning the public about AI-generated chatbots, deep fakes, and voice clones used in fraud and disinformation campaigns.
Right idea: Corneliu Bjola, associate professor of diplomatic studies at Oxford University, said the strategy had the right vision and principles but that he foresaw problems with its implementation. “All these technologies need access to critical natural resources,” he said, arguing the strategy lacked a detailed plan for how the U.K. will access them.
Looking for friends: The second issue with its implementation was the U.K.’s lack of partnerships, Bjola said. Being outside the U.S.-EU TTC was an issue, while its international academic partnerships had taken a hit by not being in the Horizon research program. So a 7 out of 10 then.
LIFT OFF: The UK Space Agency has several vacancies from comms officers, to spaceflight program planners.
SOCIAL MEDIA STORM: The post mortem into what exactly went wrong at 167-year old Swiss lender Credit Suisse, which was forced to merge with domestic rival UBS at the weekend, looks set to scrutinise more than just mediocre bank regulation. Speaking at this week’s press conference announcing the 3 billion Swiss Franc shotgun merger with UBS, Axel Lehmann, chair of the stricken group, noted that “last autumn we had this social media storm, and this had huge repercussions. More in the retail sector than in the wholesale sector and too much becomes too much.”
But did a bunch of internet commentators really take down a Swiss bank? Last September, a prominent Twitter account with over 700,000 followers and the handle @WallStreetSilv – and which often draws replies from Elon Musk – drew attention to a tweet by the head of research at Goldmoney, remarking that the collapse in the bank’s share price was of great concern. The hashtag #debitsuisse went viral on Twitter soon after and social media was filled with panicked voices speculating about a potential collapse. Credit Suisse lost over 111 billion Swiss franc deposits in that period.
They wanted frictionless banking, but they got frictionless bank runs. It’s not just in Europe that social media is facing potential regulatory scrutiny. Twitter played a crucial role in the downfall of Silicon Valley Bank too due to the speed with which news that American investor Peter Thiel had advised his company founders to withdraw from SVB traveled across Twitter.
Twitter time: As Kathleen Tyson, a former NY Fed lawyer and banking infrastructure expert, noted on Wednesday: “This was the first bank failure in ‘Twitter time’.” In the U.S., Senator Mark Kelly reportedly already asked representatives from the Federal Reserve, Treasury Department, and the Federal Deposit and Insurance Corporation if they have a way to censor information on social media to prevent a run on the banks. But since this newsletter was published, a spokesperson for Senator Kelly has been in touch to say that he had been solely referring to the risk of interference by foreign actors.
Peston: Similar public questions were raised about the role BBC journalist Robert Peston played in the downfall of Northern Rock and whether there should be limitations on this sort of reporting.
BROADCOM-VMWARE: The CMA has given Broadcom five working days to avoid a longer investigation into fears that it could shut off rivals from key hardware components after it takes over virtualization technology firm VMware, POLITICO’s Tristan Fiedler reports.
This newsletter has been updated to clarify Senator Mark Kelly’s comments.
Morning Tech wouldn’t happen without editor Oscar Williams, Emma Anderson and Grace Stranger.
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