The House of Lords communications and digital committee has found that regulators were not “striking the right balance between innovation and risk”, instead prioritising safety over opportunity.

Baroness Stowell of Beeston, the committee’s chairwoman, said: “We can’t afford our USP [unique selling point] to be all about safety. That would get exhausted quite quickly if we aren’t also at the vanguard of developing the technology.”

The report is a blow to the UK government, which hosted the inaugural AI Safety Summit at Bletchley Park in November, bringing together global leaders in the field, and has positioned itself as a world leader in mitigating the risks of the new technology.

The report also found that Britain should seriously consider taking on the tech giants and creating its own “sovereign” large language model to benefit the public sector, researchers and industry.

Large language models — includingOpenAI’s ChatGPT, Google’s PaLM and Meta’s Llama — are AIs that have been trained using vast amounts of information scraped from the internet. They are behind technology such as chatbots, able to generate human-like answers in response to prompts.

“There is a real risk thatwe get into the same position with this technology as we have done in the past, such as where you’ve got only two or three businesses operating the cloud and one dominating search,” Stowell said. “This technology is going to be more powerful than any that’s gone before, so we’ve got to ensure that we work to avoid that.”

The peers said that the UK’s limited computational capacity was also a concern. Despite putting more than £1 billion into this AI infrastructure, it was a fraction of the investment from the commercial sector.

The committee, which includes Lord Hall of Birkenhead, former director-general of the BBC, and Baroness Wheatcroft, former editor of The Sunday Telegraph, took evidence from contributors including OpenAI, Ofcom, Meta and Microsoft.

The peers also warned ministers of the need to support copyright holders in the face of tech companies using their work to power their AI models.

Their report found that some tech firms were “using copyrighted material without permission, reaping vast financial rewards” and that the government had a duty to act. “The point of copyright is to reward creators for their efforts, prevent others from using works without permission and incentivise innovation. The current legal framework is failing to ensure these outcomes occur,” it said.

Discussions between technology companies and the creative industries, held by the UK’s Intellectual Property Office, recently broke down, and it is understood that the issue is now being examined by the Department for Science, Innovation and Technology (DSIT). At the same time, litigation is building: The New York Times sued Microsoft and OpenAI in December, while Getty Images is embroiled in a case against StabilityAI.

The government plans to delegate regulation of the technology to different watchdogs but the report found that many, such as the Equality and Human Rights Commission, were not prepared for the responsibility. Ministers are expected to publish their response to a consultation on this imminently.

A spokeswoman from DSIT said that it “did not accept” the report’s main findings. “The UK is a clear leader in AI research and development and as a government we are already backing AI’s boundless potential to improve lives, pouring millions of pounds into rolling out solutions that will transform healthcare, education and business growth,” the spokeswoman said.

“The future of AI is safe AI. It is only by addressing the risks of today and tomorrow that we can harness its incredible opportunities and attract even more of the jobs and investment that will come from this new wave of technology.

“That’s why have spent more than any other government on safety research through the AI Safety Institute and are promoting a pro-innovation approach to AI regulation.”

“I don’t ‘Google it’ any more. It’s a back-up now,” said Owyang, an investor at Blitzscaling Ventures. “That’s 20 years of behaviour unlearnt in just a few months.”

So what has knocked Google from its perch as his first stop on the internet? The answer is Perplexity AI, a one-year-old artificial intelligence search start-up that, rather than pumping out endless pages of web links in the style of Google, provides answers to natural language questions. And those answers are embedded with links to its sources, so you can easily check whether they are likely to be true or not.

Owyang is not alone. Austen Allred, founder of the education start-up BloomTech, said recently: “Perplexity is the first app I’ve ever used that I can realistically see replacing Google for me in the long run.”

For the first time this century, Google — which handles nine out of every ten searches and last year sold more than $280 billion (£225 billion) in ads, which it stuffed within those results — faces a threat to its dominance.

And that threat is start-ups such as Perplexity, built on rapidly improving AI that understands and responds to natural language prompts, portending a fundamental shift in how we interact with technology. We will be able to talk to computers, and they will talk back. In that world, a static list of ads and website links feels suddenly less useful.

It was against that backdrop last week that some of the world’s biggest tech names made a series of dramatic moves in what is shaping up to be an epic landgrab for a technology that, experts reckon, will become as ubiquitous and transformational as electricity.

Meta and IBM teamed up to create a global “AI Alliance” — along with 50 other companies, universities and foundations — to promote the open creation and sharing of foundational AI systems, such as Meta’s powerful Lllama language model. Meanwhile, the UK Competition and Markets Authority (CMA) announced a probe into whether Microsoft has in effect taken control of ChatGPT’s creator, OpenAI, where it has invested $13 billion and owns a 49 per cent stake. The inquiry was prompted by the unsuccessful attempt by OpenAI’s board last month to fire chief executive Sam Altman. Amid the ensuing chaos, Microsoft threatened to poach most of the company’s staff and emerged with a non-voting board seat.

Then, Google owner Alphabet released Gemini, its powerful new AI model and the latest attempt by the $1.7 trillion giant to show that this moment of frenetic AI development — “unrivalled”, the CMA said, “in economic history” — will not pass it by.

Some of the demo videos it released — and there were many — were jaw-dropping. The system, married to a camera, was able to understand not just written words but crude pen-and paper drawings and hand gestures, like when a person played “rock-paper-scissors”. It responded to spoken prompts and created simple games.

When the system saw a rubber duck, it predicted it would float (because it was rubber), told the person the word for duck in Mandarin, and then helped pronounce it properly.

Unlike many AI models that are limited to understanding and responding in text, Gemini promises to be “multi-modal”, meaning it can interpret audio, video, words, images and software code. “Gemini can understand the world around us in the way that we do,” said Demis Hassabis, the British computer scientist who runs Google’s AI arm, DeepMind. “In each one of 50 different subject areas that we tested on, it’s as good as the best expert humans in those areas.”

Google’s immediate target was the San Francisco-based OpenAI, which launched ChatGPT, its impressively capable chatbot, a year ago. It was, by many measures, the most successful product launch ever, being used by more than 100 million people each week. The company has since announced the imminent launch of an app store, which would allow companies to build tools on top of ChatGPT. And last month, it unveiled multi-modal capabilities very similar to Gemini’s.

Google has created three versions of its rival product. The least powerful, Gemini Nano, is available now and can run on mobile devices. The company’s most powerful version — the one that featured in all the whizzy demos — won’t come out until next year, while the mid-tier option, Gemini Pro, for software developers, is available this week.

Despite last week’s polished roll-out, one got the distinct sense that this was a rush job due to mounting pressure on chief executive Sundar Pichai to show Alphabet was not off the pace set by OpenAI. It emerged that some of the demo videos were creatively edited to give the impression that Gemini was quicker and more powerful than it actually is.

When ChatGPT set the world alight last year, Pichai declared it a “code red” for Alphabet. He bashed together DeepMind and Google Brain, two AI divisions that for years had operated separately, while Google’s hands-off founders Larry Page and Sergey Brin parachuted back in. The Gemini white paper credits Brin as one of its creators.

The ability of machines to hear, see and respond in natural language cannot be understated because it threatens to transform how people use technology. This is why OpenAI’s Altman has begun talking to Sir Jony Ive, the iPhone designer, about creating a novel mobile device that would be built around AI’s unique capabilities.

For Google, the stakes could not be higher. For billions of people, the primary way in which they gain access to the web is via the Google search window, typically on a mobile device. This is not an accident. It emerged in the federal government’s anti-trust case that, in 2021 alone, Alphabet paid an astonishing $26 billion to the likes of Apple and Samsung to secure its place as the default search engine on their devices.

But what if our devices change? What if we can simply converse with our devices? This is the future that the company sees barrelling towards it, and Gemini is its attempt to not get squashed. People like Owyang, however, are exactly what Google is afraid of.

The investor has replaced his Google habit principally with Perplexity, which was started by former OpenAI researcher Aravind Srinivas. But Owyang has also started using others to fill in the gaps. He talks through ideas for speeches, or about market trends, with Pi, an AI personal assistant invented by Inflection, a start-up launched last year by DeepMind co-founder Mustafa Suleyman (Owyang is an investor). And he relies on ChatGPT as a business assistant.

People have griped for years that Google is not what it used to be — that it has become a glorified Yellow Pages overflowing with ads that shove the genuine results to the bottom. “Google search is actually disrespectful to users,” said Owyang. “It has the answers that we seek; it just chooses not to show us in order to monetise with ads.”

Until recently, there was little other choice.

Now, when Ellis tours schools as the UK head of PwC, the country’s largest accounting firm, the potential beancounters of the future are anxious about something else. “The one question I get asked by every single school group is: ‘What does artificial intelligence mean for my job?’”

Despite leading the firm for eight years, Ellis is still unsure of the answer. “Nobody’s got a crystal ball,” he says. PwC may have to hire fewer people in the long term, he adds, but AI is already eliminating the menial tasks he cut his teeth on all those years ago. “[Accounting] will be less boring,” says Ellis, in an accent that still carries the trace of his upbringing in Essex.

Ellis’s views on the job market matter — PwC employs 26,000 people in the UK and is one of the country’s top graduate recruiters, hiring 1,500 people out of university every year. Sitting in PwC’s vast office above London’s Charing Cross station, Ellis is in a reflective mood as he prepares to leave the firm he joined as a graduate from Nottingham University in 1984.

Ellis is 60, the age at which PwC boots out its partners to make way for fresh blood, meaning that he has prepared for this moment for most of his professional life. “The good thing about this job is you’ve always known your exit date,” he said.

As his 1057 partners prepare to elect a successor, Ellis reflects on his time at the helm of the largest of the Big Four firms, alongside KPMG, Deloitte and EY.

It started chaotically a week after the vote to leave the European Union, which PwC opposed. He said it was the lowest ebb of his leadership: economic uncertainty caused clients to scale back spending, which forced him to cut jobs just months into his tenure, including among partners who may have voted for him just a few months earlier. “Because there was shock in the business world, everyone kind of went away for the summer. That was one of the hardest periods of trading.”

He stood unopposed in his second election in equally tumultuous circumstances, as the country was locked down in the early days of the pandemic.

Disruption was not confined only to election time. Ellis’s time at the top has also witnessed some of the worst scandals to hit the profession in decades. The largest, the collapse of the construction giant Carillion, prompted calls for an overhaul of the sector after the failings of auditor KPMG.

Under Ellis’s watch, PwC has also seen its share of scandals, and has been investigated for audit failures at logistics giant Eddie Stobart, BT and the engineer Babcock, which alone cost PwC £5.6 million in fines last year from the Financial Reporting Council. In 2022 it was even fined twice in one day for audit failures at the construction companies Kier and Galliford Try.

Despite that, Ellis insists that audit quality has improved over his years of leadership. “Auditing is an art, not a science … you will sign thousands of audits a year. If something goes wrong with one of them, that will be headline news. ‘Plane lands safely’ is never news.”

His tenure has also seen a debate raging across the Big Four about spinning off the firms’ once-lucrative consulting arms to liberate them from conflicts of interest that prevented them from serving auditing clients. EY tried, and failed, with its abandoned Everest project. Ellis reveals that PwC also looked at this option early in his tenure in 2017 and decided against it.

“Being a multi-disciplinary firm, having a deals business alongside an audit business, gave us financial stability,” he says. It is, he adds, the equivalent of an “à la carte, not a set menu” for clients. He claims that the firm was vindicated during Covid, when audit revenues helped power the firm, while the flurry of deals that came afterwards saw the consulting arm boost revenues in turn. Under Ellis, the UK firm’s revenues have increased from £3.4 billion to £5.8 billion.

But today, that model is being tested. The advisory division, where Ellis worked for 25 years as a restructurer, is posing fresh problems for PwC and its rivals, as cash-strapped companies cut back on expensive corporate advice. In November, Ellis acted and announced 600 job-cuts, mainly in consulting, part of the advisory section of the PwC. He does not rule out more. “You are always recruiting ahead of a cycle … If you are driving a supertanker and are 1 per cent off, you will end up in China rather than Africa. You have to keep correcting [headcount] otherwise you end up in the wrong place.”

It was joblessness, or the fear of it, that motivated Ellis to first become an accountant. He remembers his first encounter with unemployment in the 1970s: he was playing at a classmate’s house and saw his friend’s father, who had recently lost his job, gardening in the middle of the day. It unnerved the 14-year-old. “You rarely saw dads at home on a weekday … I was shocked by the event, I hadn’t come across that before.”

Anxious, he went home to ask his father if he might also lose his job. His father reassured him that, because he was a certified accountant, he would be able to get another job even if the fruit giant Fyffes, where he had worked for decades, fired him. “I remember distinctly that that was when I wanted to be an accountant,” he says.

Ellis qualified at what was then Price Waterhouse in 1988 and had always intended to be one of the legions of Big Four trainees who leave soon after qualifying to take up other roles in the City. But it never happened; instead, Ellis met his wife, Kathryn, at the firm, made friends that he still watches rugby with, found a passion for restructuring work, and became a partner just before his 30th birthday.

Ellis makes the point to new recruits that, like him, they may end up staying longer than intended. “I tell them: the one thing I can promise you is if you look around, there will be at least three people you’ll know in 20 years time. One of them could be your spouse, your bridesmaid, or your best man.”

Ellis says he has used his time at the top to try to boost the social diversity of the firm. He installed measures such as ending the requirement to have at least a 2.1 degree, which blocked out a whole range of potential applicants perhaps unable or unwilling to go on to further education. “I always say to partners that if we’re not diverse, we are irrelevant, and if we are irrelevant, that hits your pocket … it’s an economic necessity, not a social initiative.”

He has also put investment in AI at the heart of his leadership. He says it is already eliminating routine tasks such as poring over spreadsheets, previously assigned to trainees. But these investments have sometimes put him at odds with more conservative partners, who saw their profits flatline last year — in part because of big investments in technology. He believes the hit is in the long-term interest of the firm: “Unless you disrupt yourselves, someone else will disrupt you. So, if we stood back and said ‘we can’t afford to invest’, then someone else will invest and they will take our work.”

One aspect of modern working he has not embraced personally is working from home, which he did for the first time in his career during the pandemic. While he was one of the first business leaders to coin the phrase “hybrid” working — the mix of continuing to work from home and in the office — he is now back in, five days a week. “I get far more from being in the office — the zeitgeist, how it makes me feel. The idea of being trapped in a room with a screen doesn’t fill me with any excitement.”

Dismissing any notion that accountants might be geeky, solitary creatures, he admits that he prefers the social contact derived from in-person working: “If you’re the boss, few people ever contact you outside of a meeting if you’re at home. But when I’m in the office, people talk to me about the football, rugby results, and what’s been on social media. So it’s far more energising. I need energy to do this job and you’ll get more energy for being in the office, chatting to people, wandering around.”

According to Justin King, the former chief executive of Sainsbury’s, Ellis is a “a very straightforward individual with a great brain”. King, who got to know Ellis when sitting on PwC’s advisory board, said he “carried the responsibility of the managing partners, something that had been his life’s work, very lightly”.

As that life’s work draws to a close, Ellis is reminded that when he started his tenure in 2016 he told The Sunday Times that his primary goal was to keep PwC as the leading Big Four firm in terms of “brand health”. That has been tested by the fines on its auditors and an ongoing scandal in Australia that involved using confidential government information about forthcoming tax legislation to win business from clients.

“We’re a global brand and it does impact us,” he says. “Every business is about culture and governance and sometimes a bad apple can cause the culture to fail.” The Australian branch fired partners who were implicated in the scandal and last year sold its government consulting business to a private equity firm for the equivalent of 50p. “All you can do is accept that we didn’t spot it early enough, but you also accept that as a global network we were able to intervene.”

So, as his career at PwC ends, is his working life over? “There are loads of exciting things to do when you’ve worked somewhere for 40 years. The idea of taking your experience, and your network, and doing something completely different is really exciting. So I will do something else, though I’ve not quite decided what.”

More immediately, he seems likely to don those sunglasses again — not for photocopying, but for a holiday.

The life of Kevin Ellis

Born: July 24, 1963

Status: Married to Kathryn. The couple met at work and have a daughter and three sons

School: Forest School, Snaresbrook, northeast London

University: Nottingham (industrial economics)

First job: Delivering double-glazing leaflets around Chingford, Essex. “It was a good lesson that jobs aren’t always as easy as they look and you can’t circumvent hard work”

Pay: £4.7 million

Home: Richmond, Surrey

Car: white Porsche Taycan

Favourite book: Papillon by Henri Charrière

Film: Groundhog Day — “I also loved the Old Vic’s musical version”

Music: Billy Joel

Drink: gin and tonic

Watch: Fitbit

Gadget: iPad

Charity: PwC Foundation. “It does a huge amount to support social inclusion and skills, working alongside other charities”

Last holiday: skiing in Les Arcs

Working day

Kevin Ellis tries to do some exercise, stretching or using weights, before setting off to work from his home in Richmond, west London, each day. He travels mostly by train either to PwC’s head office above Charing Cross station, or to one of the professional services firm’s branches across Britain. The head of PwC in the UK spends the day in meetings with clients and goes to a dinner four times a week. “One of things with Covid that’s changed is the time dinner starts and ends — we’re now up from the table before 9pm.”

Downtime

Ellis has four children, the eldest of whom is on a gap year in Australia, but tries to spend time with his family. He runs in the park every Saturday with his friends and has cockapoo called Henry.

The concern has stalked Apple for years, but a lawsuit filed by the US Department of Justice last week could mark an inflection point. It alleges that Apple has reached its “astronomical valuation” of $2.6 trillion more by “making it harder or more expensive for its users and developers to leave, than by making it more attractive for them to stay”.

Apple denies this, but it is its so-called walled garden that investors love so much. This is the idea that customers are more inclined to buy more Apple devices and services if they already own one, because they can integrate more easily with each other than rival products. Access to this Apple ecosystem is expensive: Google is said to pay somewhere between $18 billion and $20 billion a year to be the default search engine on the iPhone. If the walled garden is broken open, it could seriously affect Apple’s earnings.

It is not just in the United States where regulators are circling. In Europe, Apple (as well as Google and Meta) could face fines of up to a tenth of its global revenue if it is found not to be complying with digital competition rules.

Apple’s business in China, the market once hailed as its growth engine, is also slowing. Tim Cook, the group’s chief executive, was on a charm offensive last week, opening a new store in Shanghai, attending Beijing’s business development forum and holding an “outstanding” meeting with Li Qiang, the Chinese premier, the country’s second highest-ranking official. But Cook cannot get around the simple fact that China’s consumer economy is faltering: iPhone shipments to the country fell by about a third in February compared with a year earlier, according to official data.

Apple’s future depends on how rapidly it can find the next product to revolutionise consumer technology and whether it will fall foul of regulators. The company spent $29 billion on research and development last year, but not everything comes off. It recently abandoned “Project Titan”, an expensive attempt at building a self-driving electric car. Its new virtual reality headset was warmly received by critics, but at $3,499 it is far from being a mass-market product. The company’s services division, which makes up about a fifth of its top line, covers television, music streaming, cloud storage, gaming, payments and advertising. There are not that many markets left to win.

There is no denying that Apple is extremely well run — few businesses can boast a net income of $96 billion on a gross margin of 44 per cent — but regulation is turning a corner and could make a serious dent in its earnings. Apple has an enterprise value that requires about $800 of annual spending for every person in the world, according to an analysis by UBS, the investment bank, and there are estimated to be only 1.2 billion people with an income above $12,000 a year. This is starting to slowly trickle down into market views, with a third of analysts who cover the stock now rating it as a “hold”, compared with less than 20 per cent a year ago.

Apple’s shares trade at a forward price-to-earnings multiple of 26, at the lower end of the “Magnificent Seven” group of leading technology stocks (the others being Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla) as investors adjust their expectations for growth. There is still decent progress in Apple’s services division and margins have improved significantly since it developed its own silicon chip, but without a clearer view on what will drive the long-term growth of this multitrillion-dollar company, investors should proceed with some caution.

Advice Hold

Why This is a high-quality business with sticky customers and expanding services, but the path to long-term growth looks unclear compared with its Magnificent Seven peers and regulators are circling on both sides of the Atlantic

Softcat

Softcat seems to have wriggled out of its tight spot. Six months ago it warned that some of its clients were growing more cautious about their information technology spending; turn the clock forward to today and it has reported its best operating profit on record in the first half of the year, rising by 5.8 per cent to £66.7 million.

The IT reseller’s top line did drop by 8 per cent to £467 million, but this was mostly because of a decline in its lower-margin hardware sales business. The underlying figures looked healthy, with growth in all its core divisions and total customer numbers nudging up by 1 per cent. The company is squeezing more profit out of its client base, too, with gross profit per customer rising by 9.6 per cent to £38,900.

Together, this meant that overall earnings per share grew by 2.4 per cent in the six months to the end of January. In a further sign of confidence, it declared an interim dividend of 8.5p, compared with 8p at the same point last year.

Most technology businesses are stuffing their updates with promises of artificial intelligence-powered growth, but Softcat is among the few listed in London that could benefit directly from an AI boom. It is one of two of Microsoft’s largest partners in Britain, according to Graham Charlton, its chief executive. He estimates that more than 90 per cent of customers have already been in contact about generative AI tools, with somewhere between 10 per cent and 20 per cent starting a trial. While investors should not expect a sudden explosion of profits here, it looks like it could be a gradual source of growth.

Overall, therefore, this was an encouraging set of figures, with investors rejoicing that demand is not as soft as they feared it might be. The shares rose by as much as 8 per cent, giving a ratio of forward enterprise value to pre-tax earnings of 17.7, compared with Bytes Technology Group, its rival IT reseller, at 19.5. This is not particularly cheap, but with improved demand and incoming Microsoft Windows update cycles, Softcat looks like it is in for a good year.

Advice Buy

Why Signs of improving IT demand

The publicly edited online encyclopaedia had 84 billion views in 2023 and the most popular article was on OpenAI’s ChatGPT.

More than 49 million readers accessed the ChatGPT Wikipedia page which details the stratospheric growth — from its launch just over a year ago, to the technology now being used across society, from schools to healthcare.

According to numbers released by the non-profit Wikimedia Foundation this week, the second most accessed page was on deaths in 2023, which had 42.6 million views. Notable death pages often top Wikipedia’s yearly views and this year’s page included Matthew Perry, the Friends actor, and Lisa Marie Presley, the daughter of Elvis Presley.

The 2023 Cricket World Cup took third place on the list, alongside three other cricket-related entries in Wikipedia’s top 25 articles this year, including the Indian Premier League at No 4. This is the first time cricket content has made the list since Wikimedia Foundation started tracking in 2015.

Oppenheimer the film, and its real-life subject J Robert Oppenheimer, also attracted attention with 28.3 million and 25.7 million page views respectively.

Other movies to make the list were Greta Gerwig’s Barbie at number 13 with 18 million page views and the highly anticipated second instalment in the Avatar series, The Way of Water, which secured 14.3 million views at No 20.

Pages on famous people with the most views included Taylor Swift (19.4 million), Cristiano Ronaldo (17.5 million) and Elon Musk (14.4 million).

The page on the Russian invasion of Ukraine received 12.8 million views and was just one position higher on the list than Andrew Tate, the influencer charged with rape and human trafficking, whose page had 12.7 million views.

According to the Wikimedia Foundation, the top 25 list was created using English Wikipedia data as of November 28 and numbers for the full year are set to be updated in January.

The top countries that accessed English Wikipedia overall to date in 2023 are the United States (33.2 billion) and the United Kingdom (9 billion) — followed by India (8.48 billion), Canada (3.95 billion) and Australia (2.56 billion), according to data shared with the Associated Press.

• Google’s AI disaster heaps pressure on Alphabet heir Sundar Pichai

Musk joins a long queue of parties that claim the creator of ChatGPT, which was last valued by investors at $86 billion, is an empire built on dubious legal foundations, just like early Napster was. The question for OpenAI is whether the onslaught is par for the course for a company whose technology threatens to undermine vested interests in virtually every industry. When it was launched in November 2022, ChatGPT wowed the world with its abilities to pass standardised tests, write software code and hold conversations. Critics were terrified that it would wipe away millions of jobs while accruing vast wealth and power into the hands of Altman and his financial benefactor, Microsoft. Among OpenAI’s enemies was a group of online publishers, including The Intercept and Raw Story, which sued it last week for illegally using their copyrighted articles to train its bots. The New York Times filed a similar suit in December. In September, the Authors Guild, an industry group that includes the writer John Grisham, alleged “mass-scale copyright infringement” in a separate case. ChatGPT is a large language model that ingests huge amounts of data; the entire written internet and more. Its algorithms are then tuned to give the best answer to a given question. It is adept, but it would not have got there without scraping up every last word from across the web. And as it turns out, it didn’t ask for permission before doing so. The result is a tool that could replace the humans who generated the very data that was used to put them out of work. So, the backlash is understandable.The difference between Napster, created by a teenager, and OpenAI is the latter has Microsoft by its side. The company, which owns just under half the for-profit operation of OpenAI, has vowed to cover the legal costs of any copyright kerfuffle.A data licensing industry has sprung up. In December OpenAI announced a “first of its kind” licensing deal with the German media company Axel Springer. Reddit revealed in its recent stock market filings that Google had agreed to pay $60 million for access to the social network’s user posts to train its rival AI models.Rivals such as Mistral AI in France and Mark Zuckerberg at Meta, having been shown the way, have launched “open-source” models that are free to use and build upon.Musk funded OpenAI in 2015 as a non-profit counterweight to Google, which he saw as too “cavalier” in its ambition to build superhuman artificial intelligence. So, with Altman he created OpenAI as a non-profit with the purpose of developing AI to “benefit humanity”.Musk left and Altman took over as chief executive in 2019. He raised more than $13 billion from investors, mostly Microsoft, and, as the suits claims, “transformed [it] into a closed-source de facto subsidiary of the largest technology company in the world”. Musk wants the court to force OpenAI to share its work, not to make money, for the benefit of humanity. Musk launched his own AI start-up, xAI, last year, so a suit that could hobble the market leader would be rather helpful. He also argues Microsoft should be forced to excise OpenAI’s most advanced tools, namely GPT-4, which it launched last year, from all its products, because its licence applies only to less advanced AIs that have not achieved human-level intelligence, a threshold that GPT, he argues, has already crossed. As the first one over the technological hill OpenAI, like Napster, is taking all the arrows. It is up to Altman to ensure it survives.

Undergraduates at the University of Glasgow were expecting to sit “open-book” exams, which allow students to use notes and are often taken online at home.

But the university said rapid developments in artificial intelligence (AI) had prompted a swift return to handwritten assessment under exam conditions.

Open-book, online exams were introduced in 2020 due to the pandemic, but a group of life sciences students say they have been given two months’ notice that exams will be reverting back to their traditional format. It will affect students in years three and four of their degrees, who said they had not been given enough time to prepare and had been assured they would sit end-of-year exams online with access to study materials.

Rosie McCrone, a fourth-year microbiology student from Perth, told BBC Scotland News she would be sitting in-person university exams for the first time for her final test before graduation.

“I’ve not felt this anxious since I was a teenager in school,” she said. “Up until now we’ve been tested on the way we format an argument; we’ve never been tested on our ability to recall information. That’s something we are going to need to teach ourselves.”

Another student, Stacey Harris, said: “Everyone’s really stressed because you can’t re-sit the year if you’re in third or fourth year unless you have a medical reason. There was no real indication of when they would go back to in-person [exams]. It’s not even the start of the semester.

“I don’t understand why they didn’t include us in the conversation from the start … They told us to use past papers to study, but the papers for the past four years were for online exams, and before that the course content was different.”

The University of Glasgow said a range of measures had been put in place to support students in their preparations. A spokeswoman added: “The university made the change to invigilated, in-person, hand-written exams in life sciences in response to the rapidly changing capabilities of generative AI tools. Online exams in many scientific disciplines were becoming more susceptible to misuse by these tools.

“We are taking this step so that we can assure all students — together with the quality bodies that accredit degrees, as well as future employers — that the life sciences exams are reliable and the grades awarded are, too.”

Yet the one I always return to is milk. When I was a child in the 1970s, a daily ritual was sniffing the milk at breakfast because there was always a strong possibility that it had gone off. When was the last time you smelt rancid milk? I haven’t for years. That is because of the incremental but substantial improvements made in processing this highly volatile product.

You may think I’m being flippant, but I’m not. Food and drink is Britain’s biggest manufacturing sector, contributing £30 billion to the economy annually and employing more than 450,000 people. We do not make many trains, textiles or toys any more, but we make an awful lot of pigs-in-blankets, vegan bao buns and frangipane-topped mince pies.

In recent years the food industry has been cast as a bit of a bogeyman, a sector that peddles dangerous ultra-processed food, and it is certainly true that, in the quest for longer shelf lives and lower prices, some of the innovations in food manufacturing have worsened the nutritional content of what we eat. In criticising ultra-processed foods, however, we should not diminish how cutting-edge the British food industry has been.

Which is why I was saddened to hear of the proposed move by Jacobs Douwe Egberts in Banbury, Oxfordshire. The Dutch coffee group has proposed abandoning manufacturing at the site, moving production to the Netherlands and making Banbury merely a packing facility. It will no longer make coffee, merely put it into jars and pods. Unlikely as it sounds, north Oxfordshire was once a global centre for coffee production. This factory, founded in the 1960s by Bird’s, the custard company, used to produce 11 billion cups of coffee a year, under the Kenco, Maxwell House, Tassimo, Millicano and Mellow Birds brands. Don’t laugh. Mellow Birds was sophisticated enough back in the early 1980s to be advertised by Joanna Lumley having flirty “mellow moments”. The proposals put about 280 workers at risk of redundancy.

There will be plenty of people who will welcome the closure of a manufacturing facility that specialised in making powdered food, a 20th-century aberration. All those coffee snobs, the types who splash out £3.50 on flat whites in town and indulge in single-origin estate filter coffee at home, will not mourn the demise of soluble coffee, but it remains the most popular form of caffeine in the UK.

According to Mintel, the market research company, the British retail coffee market (as in the stuff we buy to drink at home) is worth £1.8 billion a year. Just over half of that, £903 million, is instant. It is a way bigger market than freshly ground or beans, which command sales of £296 million. The rest is pod coffee, such as Nespresso. Yes, instant has fallen in popularity in relative terms, but it is still a vast revenue stream for any manufacturer.

Jacobs Douwe Egberts says it is moving out of Banbury because the site is expensive to run, uncompetitive and “the industry is operating in a challenging economic environment and there is an overcapacity of freeze-dried coffee in our European factories”. No one should expect a company to maintain an unprofitable factory and it is understood that sky-high energy costs have been the main problem for Jacobs Douwe Egberts: freeze-drying coffee is very energy-intensive. We should ask, though, why they have shifted production to the Netherlands rather than the other way around.

In the grand scheme of things, 280 jobs being lost is not material to the nation’s economy, although it’s pretty devastating for the individuals, but with the loss of processing jobs also comes the loss of research and development roles. Banbury used to attract the very brightest and best chemical engineering graduates.

It is not the only food factory to shut in Britain risking the loss of R&D jobs. Bakkavor, a huge supermarket own-label supplier, making pizzas and puddings, shut a couple of factories this year. Unilever and Nestlé have closed facilities recently, too.

All of this has an impact on new product development. Christmas traditionally has been the time that supermarkets push food innovation. Over the years, they have pioneered turkey crowns, pigs-in-blankets and truffle-infused cheddar, things that would have baffled our grandparents but make many family dinners easier to cook or certainly more joyful.

But this innovation is rapidly slowing, according to Mintel. Its figures show that so far this year only 16 per cent of food and drink launches have been genuinely new products (rather than reformulations or new flavours), down from 21 per cent in 2019 and 40 per cent in 2009. “It’s probably the most barren time that I’ve ever noticed in food and drink,” Jonny Forsyth, director of food at Mintel, tells me. “During Covid, R&D teams couldn’t get together and collaborate.” Since then, with budgets slashed, innovation has been stuck in the doldrums.

Instant coffee is not an obvious crucible for food innovation, but the development of pod coffee was a revolution, while Millicano, which incorporated real freshly ground coffee into instant jars, required proper cutting-edge technology. It is not smallpox-curing vaccines, certainly, but it adds value to otherwise stable, no-growth products; it saves us time or improves our morning brew.

A post-Brexit Britain is meant to be a world leader in value-added manufacturing. That means instant coffee just as much as pharmaceuticals and every time that a factory closes, it is not only the manufacturing we lose but also the research and development that comes with it.

Harry Wallop is a consumer journalist and broadcaster. Follow him on Twitter: @hwallop

Ashley Montanaro and Toby Cubitt, two of the three co-founders of Phasecraft, a company that emerged from University College London and the University of Bristol, said the technology was at a “critical juncture”. The government’s decision in August to withdraw £1.3 billion of investment in technology and AI projects promised by the Conservatives had unnerved the industry, they said.

With venture capital investment in the sector also declining this year, when compared with last year, concerns are growing over Britain’s ability to compete with the United States and China.

Cubitt, Phasecraft’s chief technology officer, said: “Those countries leading the way will not only be amongst the first to reap the direct benefits of this quantum computing, but also will be able to capitalise on the underpinning technical, manufacturing and commercial capabilities developed as part of the process.

“Those left behind will be left in a position where access to quantum computing, and the ability to unlock advances across many sectors through their use, will be entirely dependent on the goodwill of others.”

Montanaro, the company’s chief executive, said: “Governments continue to be the main source of support for start-ups, providing twice as much on average, a critical factor that the US and China understand, having both invested heavily in quantum.”

Phasecraft, founded in 2019, develops algorithms to move quantum computing from experimental demonstrations to useful applications. It has raised $21 million in external capital, including from the venture capital firms Playground Global, LocalGlobe, and the UCL Technology Fund.

It has published eight scientific papers about its work in Nature magazine in the past fours years and expanded to America his year when it hired Steve Flammia, previously the principal research scientist at the Amazon Web Services Center for Quantum Computing.

Montanaro and Cubitt have set out their concerns in a paper that calls on the government to strike a better balance on investment and regulation, as well as to encourage collaboration and create a deeper skills base in the UK. More than a quarter of a million people are already employed within the British quantum sector.

The paper states that it is “critical that public investment is maintained until that time in which the sector is able to support itself. Failure to do so will not only compromise our ability to compete globally in quantum computing, but will also risk squandering decades of investment in the field”.

Quantum computing has long promised to revolutionise complex problem-solving, with systems developed by the likes of Google and IBM beating the world’s best supercomputers. Applications could include new drug discovery and developing materials for battery storage, as well as to optimise energy grids to better incorporate renewable sources. Phasecraft recently won a £1 million government contract to develop quantum algorithms to optimise energy grids.

McKinsey, the consultancy, estimates that the four sectors most likely to see the earliest impact from quantum computing are chemicals, life sciences, finance and mobility. They could generate gains of up to $2 trillion globally by 2035. Quantum computing by itself could account for nearly $1.3 trillion in value by the same year.

Cubitt said: “The intuitively simple step of replacing a classical bit with a quantum one is enough to completely transform the capabilities of a computer, opening up a range of applications that were previously beyond reach, from computer-driven materials design to the ability to understand and predict the behaviour of complex, many-body systems, such as those that appear in nature.

“For decades, scientists around the world, often supported through ambitious government programmes, have strived to deliver the promise of quantum computing and, with the recent progress made in both algorithms and hardware, it is now within reach.”

The entrepreneurs also warned governments against imposing regulations designed to stifle international collaboration on quantum computing research: “Regulators also need to remember that never in the history of progress has it been possible to stop the juggernaut of innovation. Putting up barriers may slow it down, but innovation will always find a way to move forward.

“It’s better to be on the side of history that enables this innovation in the most responsible and balanced way possible, rather than being left behind; to mitigate the negative impacts, rather than try to stop it.”

The £1.3 billion in funding includes £800 million for the creation of a next-generation supercomputer at the University of Edinburgh and £500 million of extra cash for the AI Research Resource, a scheme that helps to fund computing power for AI.

A Department for Science, Innovation, and Technology spokesperson said: “We are absolutely committed to our transformative quantum sector, with a key focus on quantum computing. We have recently announced £100 million funding for five new quantum research hubs, including a quantum computing hub based in the University of Oxford which will advance UK capabilities across both hardware and software.

“Whilst future R&D funding is still to be determined, the government will take a long-term approach to funding cycles, giving researchers the certainty they need to keep the UK at the forefront of global innovation.’’

Hiring managers have observed potential recruits using generative AI such as ChatGPT to write cover letters, improve their CV, formulate interview answers and complete content writing tests.

The warnings come as the European parliament approved on Wednesday the world’s first comprehensive framework for mitigating the risks of AI, which aims to regulate it based on its capacity to cause harm to society, with applications that pose a risk to fundamental rights being banned.

AI has experienced explosive growth but concerns are growing on bias, privacy and fairness, with the technology expected to eliminate 85 million jobs by 2025 but simultaneously create 97 million new ones.

Daniel Wolken, a human resources expert at DailyRemote, realised an employee had used AI to help with an application.

“Nothing quite prepared me for the candidate who used AI to get through our screening,” he said. “After an initial phone call that went swimmingly, this applicant seemed like a perfect fit on paper.

Wolken said that “alarm bells started going off” when the applicant appeared for the interview and “didn’t match the smooth-talker I’d spoken with earlier”.

“That’s when the lightbulb went off — this person had likely used AI assistance to ace the pre-screening,” he said. “While I was impressed by the technology, I was disappointed by the deception.”

He said the department now included rigorous assessments early on in the hiring process, adding: “It helps ensure we don’t waste time on candidates who can talk the talk but can’t walk the walk.”

Charlene Espie, the owner of Tartan Social, a social media marketing agency in Glasgow, compared candidates’ use of AI to generate cover letters to “smoke and mirrors”, adding it was eroding individualism.

Espie said: “We have done a lot of workshops around the world of AI and it has really opened my eyes. It’s like smoke and mirrors.

She was surprised by the amount of applicants who had clearly used AI to answer qualifying questions.

“I get so many cover letters where the applicant’s personality just does not come through. You can completely tell it’s been AI generated,” she said. “I had to change how I interview people because of it.”

Espie added: “Individualism is getting lost. It would be amazing if the government could establish guidelines for employers.”

Research conducted by Bright Network, entitled What do graduates want?, surveyed more than 14,000 British students and graduates and found that 38 per cent used AI to improve job applications.

James Uffindell, the chief executive, called for clear guidance for hiring companies and urged them to clarify where AI should and should not be used during the application process “so candidates know where they stand”.

“Whilst assessment technology and methods catch up to cope with, or embrace, AI, the need for clear guidance and instructions must be the focus for hiring companies,” he said. “The early careers sector is one of the most susceptible to AI-driven challenges in hiring, especially with assessment practices like online aptitude tests and one-way video interviews.

“On the flip side, AI is also an extremely powerful tool to drive social mobility and diversity in the workplace. Gen [generative] AI can also be a great tool for neurodiverse students, helping level the playing field when it comes to application processes.”

OpenAI, which developed ChatGPT, has been approached for comment.