The great transatlantic tech romance has hit the skids. What was sold as a landmark agreement binding Silicon Valley brains to British ambition has been shoved into neutral, all because Britain decided it quite fancies telling American machines what they are allowed to say.
Washington has now suspended the much-trumpeted US-UK technology agreement, a decision driven by mounting alarm over Britain’s new censorship law, the Online Safety Act.
The idea that a British regulator might fine or muzzle American firms has landed in Washington like a dropped wrench.
One participant in the talks put it bluntly, telling The Telegraph, “Americans went into this deal thinking Britain were going to back off regulating American tech firms but realized it was going to restrict the speech of American chatbots.”
The Online Safety Act gives Britain the power to fine companies it believes are enabling “harmful” or “hateful” speech, concepts elastic enough to stretch around just about anything if you pull hard enough.
The communications regulator Ofcom has not been shy about using these powers.
Enforcement notices have already landed on the desks of major American firms, even when their servers, staff, and coffee machines are nowhere near Britain.
From Washington’s perspective, this looks less like safety and more like Britain peering over the Atlantic with a ruler, ready to rap American knuckles.
The White House had been keen on the £31 ($41) billion Tech Prosperity Deal, seeing it as a front door to closer ties on AI research and digital trade.
Instead, officials began to see the Online Safety Act as a mechanism for deciding what American platforms, and their algorithms, are allowed to say. Chatbots like ChatGPT or Elon Musk’s Grok suddenly looked like potential defendants in a British courtroom, accused of wrongthink.
Matters finally tipped over when UK Technology Secretary Liz Kendall announced in early December that the government would “impose new restrictions on chatbots” to close supposed loopholes.
That was the moment Washington’s patience packed its bags. Monitoring the rollout, US officials concluded that the law had wandered far beyond its original promise and straight into the regulation of AI speech itself.
As one US source put it, “the perception is that Britain is way out there on attempting to police what is said online,” a phrase that, in diplomatic language, means this is a complete nightmare.
If the speech row was not enough, Britain has also managed to irritate Washington with its Digital Services Tax.
This 2 percent levy on the revenues of companies like Meta, Google, and Amazon was supposed to be temporary. It has turned out to be more like that houseguest who says they are just staying the weekend.
The Labour government has confirmed the tax will remain until some grand global solution appears.
President Trump, never one to whisper, has described countries that do this as treating US firms like a “piggy bank,” and he has dangled the threat of retaliatory tariffs with the enthusiasm of a man who enjoys pulling levers.
Together, the speech rules and the tax have frozen progress on the wider Economic Prosperity Deal agreed in May 2025. US negotiators now accuse London of failing to reduce trade barriers or update its regulatory mindset for the digital age. In other words, you promised an open road and delivered a maze of speed bumps.
Britain is not alone in poking Washington’s free speech nerve. Across the Channel, the European Union has been busy too. X was recently fined €120 million under Brussels’ digital rules, a move that American officials see as part of the same trend. The EU’s Digital Services Act and Britain’s Online Safety Act look, from afar, like siblings who both enjoy telling other people how to behave.
To US policymakers, these regimes risk building a global censorship machine under the comforting label of safety.
Washington’s view remains rooted in the First Amendment belief that governments should not decide acceptable speech, whether it comes from a human throat or a line of code. If an algorithm says something foolish, the answer is more speech, not a regulator with a clipboard.
Downing Street insists all is not lost. A spokesperson says the two countries remain “in active conversations” and that Britain is “confident of securing a deal that will shape the future of millions on both sides of the Atlantic.” Perhaps. But this feels a long way from the optimism of Trump’s September state visit, when both sides cheered more than $40 billion in US investment pledges for British AI and data centers.
For now, the tech pact sits in limbo, a casualty of a deeper argument about who gets to decide what can be said online.
The United States keeps insisting that open expression is the engine of innovation. Britain has opted for an illiberal approach that places expression under its official supervision.
