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Big Tech dominance threatens UK's AI ambitions, think tank warns

IPPR report finds 79% of UK businesses fear market power of tech giants is stifling competition

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By LineZotpaper
Published
Read Time3 min
The UK risks losing the AI race unless it tackles the monopoly power of Big Tech, according to a new report from the Institute for Public Policy Research (IPPR). The think tank warns that a handful of companies control the digital infrastructure critical to the UK economy, and that the government's competition watchdog has been too slow and timid to act.

A report from the Institute for Public Policy Research (IPPR) argues that the UK's ability to benefit from artificial intelligence — a key plank of the government's economic recovery plan — is being undermined by the concentrated market power of a few global tech giants.

A survey conducted for the report found that 79% of UK businesses relying on digital platforms are concerned about Big Tech using its dominance to limit competition. Businesses ranked this as a greater constraint on their growth than access to finance or talent.

The report highlights specific market shares: Google handles more than 90% of UK internet searches; Microsoft and AWS each control 30% to 40% of customer spending on cloud services, with Google taking another 5%-10%; and Microsoft is under investigation for its dominance in business software.

The IPPR is sharply critical of the Competition and Markets Authority (CMA), accusing it of allowing the tech giants to entrench their positions. The report notes that over the past two years, senior officials have resigned or been sacked from the CMA, and that ministerial support for its work has collapsed. In 2025, the government explicitly asked the regulator to prioritise inward investment, widely interpreted as a call to go easy on Big Tech. Multiple investigations have led to voluntary commitments rather than binding rules, despite evidence of harm.

The stakes are even higher with AI, the report argues. The AI industry is already highly concentrated, with Nvidia dominating the accelerator market and hyperscalers controlling access to AI infrastructure. Microsoft, Google and Amazon have collectively invested over $20 billion in major AI developers, prompting the CMA and the US Federal Trade Commission to flag these partnerships as a risk.

"Big tech dominance is holding back British businesses, limiting competition and making it harder for new firms to innovate and grow," said IPPR senior research fellow and report author Roa Powell. "The CMA has the expertise and the tools to improve competition, what it needs now is clear political backing from government to act boldly."

The IPPR recommends the government develop an updated strategic steer for the CMA, encouraging more proactive, rapid and bold enforcement. It warns that if AI ends up as a monopoly or oligopoly, the UK's leverage will be tiny and its financial returns constrained.

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Analysis

Why This Matters

  • The UK government has pinned its hopes for economic recovery on AI, but if the sector is dominated by a few overseas firms, the benefits may flow abroad.
  • Small and medium-sized businesses that rely on digital platforms say market power is their biggest growth barrier — worse than access to finance or talent.
  • The report signals that the competition regulator may need stronger political backing to take on Big Tech, a shift from recent government signals to prioritise inward investment.

Background

The IPPR report comes amid a turbulent period for the Competition and Markets Authority. The chair of its cloud inquiry quit earlier this year, citing the glacial pace of reforms and concerns about the agency's independence. The CMA recently appointed Doug Gurr, a former Amazon executive, as permanent chairman. The UK government's AI Opportunities Action Plan, launched at the start of 2025, makes AI central to growth, but the report argues that home-grown AI investment is undermined by dependence on infrastructure controlled by overseas tech giants.

Key Perspectives

Big Tech companies (Google, Microsoft, Amazon): They argue that their scale enables investment in cutting-edge AI infrastructure and that voluntary commitments are sufficient to address competition concerns. They may resist binding rules, warning they could deter investment. UK businesses competing with Big Tech: They see the market power of the hyperscalers as a direct barrier to innovation and growth. They want the CMA to enforce tougher remedies, including potential breakups or mandated interoperability. CMA and the UK government: The CMA has the tools but may lack political cover to act aggressively. The government's recent steer to prioritise inward investment conflicts with calls for stronger enforcement. The report recommends a clearer strategic steer to empower the regulator.

What to Watch

  • The government's response to the IPPR report — whether it issues a new strategic steer for the CMA.
  • The outcome of the CMA investigation into Microsoft's dominance in business software.
  • The UK's progress on sovereign AI capabilities, such as the AI Opportunities Action Plan.

Sources

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Articles published under the Zotpaper byline are synthesized from multiple source publications by our AI editor and reviewed by our editorial process. Each story combines reporting from credible outlets to give readers a balanced, comprehensive view.

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