New Rules Implemented By UK To Protect British Firms From Tech Foreign Takeovers

New regulations designed to protect the best and brightest companies of the United Kingdom from being acquired by companies of other, potentially hostile, countries were introduced by the UK government this week.

But given two of Britain’s most innovative companies have already been sold overseas, many are raising questions about whether the rules are too little and too late. It has been several years that the new rules have been in the making and will be applicable starting Wednesday this week.

London-based artificial intelligence lab DeepMind was acquired by Google in 2014 while Japanese tech giant SoftBank acquired Cambridge-based chipmaker Arm in 2016.

The government should have “probably” intervened in these deals, said Matt Clifford, the chief executive of start-up factory Entrepreneur First, in a television interview.

“Tech is a big and growing national security issue,” he said, adding that “technological sovereignty is very important,” Clifford said.

While the deal for Arm’s acquisition was worth £24 billion ($31.6 billion), the deal for DeepMind was worth only a reported £400 million. The Google deal is considered by experts to a bit of a bargain because they also consider DeepMind to be one of the world leaders in AI today.

The UK government should have nationalized DeepMind in order to stop the company from selling itself off to an overseas tech giant, believes Ian Hogarth, an entrepreneur turned tech investor.

“I find it hard to believe that the U.K. would not be better off were DeepMind still an independent company,” he wrote in an essay in June 2018. “How much would Google sell DeepMind for today? $5 billion? $10 billion? $50 billion? It’s hard to imagine Google selling DeepMind to Amazon, or Tencent or Facebook at almost any price.”

Hogarth added: “With hindsight, would it have been better for the U.K. government to block this acquisition and help keep it independent? Even now, is there a case to be made for the U.K. to reverse this acquisition and buy DeepMind out of Google and reinstate it as independent entity?”

Arm is a market leader in designing of semiconductors, or chips while DeepMind is a global leader in AI.

95 per cent of the world’s smartphones use the energy-efficient chip architectures made by Arm and the company is widely considered to be the jewel in the crown of the British tech industry.

“In Arm’s case, I can’t see why some investors here didn’t outbid the foreign folks,” said Jon Crowcroft, a computer science professor at the University of Cambridge. “Arm are a massive success and long term super viable too.”

Japan’s SoftBank is now trying to sell off Arm to US chipmaker Nvidia in a deal tha could be as high as $40 billion. However any such deal will require the company to overcome a number of hurdles which include convincing regulators in China.

There are a number of other fast-growing tech companies that are considered to be British and could demand some protection from the government. Analysts cite the example of security firm Darktrace and AI chipmaker Graphcore.

(Adapted from CNBC.com)



Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability

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