Tech’s Shifting Landscape: Five Trends Shaping the Conversation

Episode Summary

At the start of 2025, Deborah Kirk and colleagues at Skadden identified five tech trends that clients should watch. “Time flies when you’re having fun, and unbelievably, it is now already mid-2025,” she observes as she introduces Skadden’s newest podcast. “SkadBytes” focuses on the intersection between tech innovation and tech regulation. In this inaugural episode, Deborah invites Jonathan Stephenson and Alistair Ho, on Skadden’s Intellectual Property and Technology and Cybersecurity and Data Privacy teams, to reflect on the trends: equity fundraising, the EU’s approach to tech regulation, proactive compliance strategies, the “next chapter” of AI, and power sources enabling innovative tech infrastructure.

Voiceover (00:01):
Welcome to SkadBytes, a podcast from Skadden exploring the latest developments shaping today’s rapidly evolving tech landscape. Join host Deborah Kirk and colleagues as they deliver concise insights on the pressing regulatory issues that matter to tech businesses, investors, and industry leaders worldwide.

Deborah Kirk (00:25):
Hello, everyone. My name is Deborah Kirk. Welcome to the inaugural episode [00:00:30] of SkadBytes, where we talk about the intersection between tech innovation and tech regulation. We’re really excited to be launching this podcast. We’ll touch on poignant topics in the tech space. But we are also going to help you out with a bit of jargon busting with our bites, which will be shorter versions of our podcast, giving you a one to two minute snippet to introduce you to some of the lesser understood phrases and concepts in the tech world.

(00:56):
I am joined by Jonathan Stephenson and Ali Ho from our [00:01:00] IP and tech team at Skadden here in London. We are halfway through 2025. What a year it has been in terms of developments in tech regs so far, both from a legislative and enforcement point of view. We’ve had the AI Act come into force, the Data Act is coming into force in September, and we’ve seen continued enforcement with a particular focus on children and data transfers under the GDPR and also the DSA.

(01:27):
At the start of 2025, we [00:01:30] reached out to our clients and identified five key emerging tech trends that we thought they should keep their eyes on in 2025. Time flies when you’re having fun and unbelievably, it is now already mid-2025. We’ve just had Tech Week and the AI Summit in London. So a great time to launch a podcast about tech, but also a great time to reflect on where we are with these themes and were we right.

(01:56):
Jonathan, what do you think?

Jonathan Stephenson (01:58):
Absolutely, Deb. [00:02:00] I think where do we start? I think firstly, looking at the first topic, we expected that there would be a robust return to equity fundraising. Let’s face it, a lot has happened so far this year in 2025 already. But we are seeing some really positive mood music. We identified a shift from alternative funding to equity raises, and in quarter one of this year, we’ve definitely followed the same approach. In the UK, fintech giants like Revolute maintained their 45 [00:02:30] billion valuation, and Zopa which achieved unicorn status with an 80 million raise are really leading the charge.

(02:37):
The AI sector is also booming globally with players like Databricks leading the pace, while UK startups like Luminence secured $75 million. As reinforced in London Tech Week that we all attended, the UK government is really keen to make the UK an investor friendly environment.

Alistair Ho (02:57):
I think just turning to IPOs and the IPO space, [00:03:00] I think it’s fair to say it’s been a challenging couple of years there, but there’s still definitely a lot of interesting activity. One that comes to mind is Monzo eyeing up a London IPO. As you mentioned, London Tech Week, listening to speakers there, Jensen Huang and Keir Starmer, they announced a 1.5 billion investment by the UK’s first sovereign industry forum. So looking at boosting UK domestic computer capabilities by 20-times. I think looking at the IPO market, we can definitely expect an increase in equity fundraising in the UK AI space.

Deborah Kirk (03:28):
Sounds good. Thank you. [00:03:30] One down. Number two, our second top tech topic for 2025, you can’t say that too quickly. We anticipated continued developments around tech regulation in general in the EU with a lighter touch approach in the UK. Now I would say that this is continuing directionally to unfold to an extent as signaled, but I guess with a few surprises on the way. From an EU perspective, the product liability directive came into [00:04:00] force in December last year. Now that imposes strict liability for defective products, but crucially for us, expanding its scope to include software and digital systems. Then of course, the famous AI Act effective since August, but really seeing its provisions come into force in 2025. That is I think questionable in terms of whether it’s on track.

(04:23):
Jonathan, perhaps give us your thoughts on that?

Jonathan Stephenson (04:26):
Yeah, exactly that. I think what’s been especially interesting is to see [00:04:30] the change of tone coming from the EU. The European Commission, as we’ve seen, they’ve withdrawn the AI liability directive in February of this year. This comes potentially coincidentally, potentially not, after US Vice President JD Vance, as well as France’s President Emmanuel Macron, made really insightful comments and newsworthy comments in the Feb 2025 AI Action Summit in Paris. That was very much about bolstering innovation and relaxing regulation.

(05:00):
[00:05:00] An interesting quote I have here from JD Vance where he said, “We need international regulatory regimes that foster the creation of AI technology rather than strangling it.” It’s an interesting takeaway there.

Deborah Kirk (05:11):
Perhaps less and less coincidence, right?

Jonathan Stephenson (05:13):
Less coincidence potentially. I think also, we’ve just seen from the EU that they’ve signaled a really much more measured approach, even in relation to existing regulation like data protection. Which are well tested and tried, with revision to the GDPR requirements [00:05:30] that really ease the burdens on SMEs in relation to the papering requirements there. And the withdrawal of the plans to amend the EU privacy directive, which we’ve formerly known as PECR. On the whole, this is just a steady move towards a more business friendly application, while still trying to uphold those core privacy principles.

Deborah Kirk (05:50):
In the UK, right?

Jonathan Stephenson (05:51):
I think in the UK and in Europe more generally. I think what we’ve seen is that some bodies of regulation really are presenting as very [00:06:00] challenging to our clients. That’s due to a lack of clear regulatory approach towards both compliance and enforcement.

(06:08):
What immediately comes to mind is the Data Act, the incoming Data Act from the EU’s April 2025 guidelines. The key question there is whether product redesign is required or not. That remains unclear and we’re keenly watching on our side. I think more generally, what’s occupied quite a lot of us and our clients’ time this year is the incoming EU [00:06:30] AI Act obligations as they sift in and we get that guidance. Particularly the EU GPAI Code of Practice, the original deadline being for the end of last month, May 2025, and currently pushed out to 2026, with in parallel ministers from various member states calling for the Commission to pause implementation of the act. What we’re seeing as a whole in the why do we care is that any tech regulation timeline is not without its hiccups.

Alistair Ho (06:57):
I think just to stay on that, when we’re talking to clients [00:07:00] about these implementation timelines and how they’re thinking about it, it’s also clear that there’s quite a lot of overlap between these regulations and I think that continues to be a challenge. What do I look for? What do I comply with? Rather than look at something act by act, taking that holistic approach. Thinking, for example, Digital Networks Act and Cyber Resilience Act, there’s quite a lot of overlap there. Clients are coming to us and we’ve been helping them heat map that, so work out what actually impacts them, when it comes into effect, and what they should be looking at right now. They’ve [00:07:30] been finding that really useful just to take a holistic approach and a really practical approach to navigating that compliance journey.

Deborah Kirk (07:36):
And also I guess how that impacts the way that different teams work together because there’s so much overlap between these regulations that we need to encourage our clients to encourage their teams to talk to one another so that they’re aligned in their approach. That’s right.

Alistair Ho (07:50):
Yeah, exactly. I think governance is an essential theme throughout all this.

Deborah Kirk (07:53):
Yeah.

Alistair Ho (07:53):
When you’re looking at any act, governance is key.

Deborah Kirk (07:58):
I think again, just such a massive topic for our clients. [00:08:00] Talking about, between them actually, benchmarking and seeing how others are doing things seems to be a really useful tool.

(08:06):
Actually, the EU’s Cyber Resilience Act is an interesting one. That came into force in December last year and it’s another critical piece of legislation setting out mandatory cybersecurity requirements for hardware and software products. Then in the UK, we have, well, we forecasted again a lighter regulatory approach. I think that has also held. But of course, we’re going to need to keep an eye on how [00:08:30] the government implements and enforces the proposed cybersecurity reforms under the Cybersecurity and Resilience Bill. But either way, it certainly looks like both the UK and the EU are dedicated to the theme of cybersecurity-focused regulation, perhaps in a way they aren’t elsewhere. I think perhaps a key tech trend for the rest of 2025 and beyond.

(08:50):
Jonathan, adding any more thoughts on that one?

Jonathan Stephenson (08:52):
Just to echo that, I think where it’s the focus of the UK government, it’s going to focus innovation to companies and their IP and tech strategy, when they’re looking at, as you [00:09:00] mentioned, governance and compliance. Thinking about compliance, that takes us to our next theme, which was proactive compliance. What’s the update on that proactive compliance?

Deborah Kirk (09:11):
Yeah. I think our theme was I guess this idea of regulators encouraging conversation, so taking the more preventative rather than curative approach. I think there’s been some nervousness about that, as you would expect. Which is, “Well, we don’t want to air our dirty laundry.” But I think where this can be beneficial is having the conversation with the regulator, “Do I take [00:09:30] route A or B? I’ve got a choice here from a tech build point of view.” Having that conversation early on I think has the benefit of reducing compliance risk.

(09:39):
We’ve seen the UK ICO leading with these non-punitive audits to help businesses identify those compliance gaps under applicable data protection legislation. Again, in order to try and reduce the amount of enforcement actions. Jonathan, any examples of how we’ve actually seen this play out in industry?

Jonathan Stephenson (09:59):
Yeah, exactly. [00:10:00] As you say, it’s a two-way street between both businesses and regulators. What immediately jumps to mind is how Google rolled out Google Gemini as a product, which was a really proactive ongoing communication with multiple data protection authorities all over Europe where they planned to implement that product, which worked really well for the proactive approach.

(10:21):
Looking at the flip side, regulators have really taken organizations level of cooperation into account in those bad case scenarios where they’re [00:10:30] issuing fines. For example, the relative recent €45 million fine imposed on Vodafone in Germany for GDPR non-compliance. One of the key factors in terms of the final fine issued was their good cooperation, which was a real takeaway from that. We’re seeing things both at the very start of a product lifecycle, as well as slightly closer towards the end in standout circumstances.

Alistair Ho (10:56):
Yeah, I think that’s true. I think that is the message being pushed by both regulators and companies [00:11:00] is that collaboration. But I still think underlying that, a word of caution perhaps. Because whilst cooperation is encouraged, that I don’t think it’s a guarantee. We’ve definitely seen that fines remain significant even with that cooperation element. Of course, depending on the fine.

(11:14):
For example, there was a recent Meta Platforms Ireland case. The Irish regulator fined Meta €251 million for data protection breeches. International data transfers I think continue to be facing increased scrutiny, increased fines. Just in May, Irish DPC hit TikTok with a €530 million [00:11:30] fine for unlawful data transfers to China. Whilst collaboration is the message and definitely, for example, with London’s Tech Week, Keir Starmer was very much saying he was there to listen to the companies and work out what they should do together. It’s still that underlying message that you still have to be cautious when you’re looking at your compliance.

Deborah Kirk (11:48):
Interesting. Okay. Perhaps a move towards our prediction, but it’s a journey.

(11:53):
Okay, looking now to AI, which is, as we know, the topic on everyone’s lips and was certainly the topic of Tech Week. [00:12:00] I think our prediction was that we see 2025 as being really the next chapter for AI. How is that prediction faring, Ali?

Alistair Ho (12:08):
Yeah, I think the regulatory approach to AI has developed largely as people expected. There’s been a few twists in there, but it’s rapidly evolving as you would expect. From an EU perspective, there’s been quite a lot of changes. The AI liabilities directive was dropped, but significant development was the revised product liability directive. As you mentioned earlier, there’s strict liability for defective AI products. That’s really seen a push for companies to integrate privacy [00:12:30] preserving techniques, like federated learning, into their IP frameworks to avoid this more strict liability regime.

Deborah Kirk (12:36):
Yeah. I guess looking at the UK, our forecast of a more sector-specific principles-based approach also I think looks to have been fairly on the money. With I guess regulation as you’d expect, because there isn’t an AI office in the way that there is in the EU. That sector-specific regulator role is very much playing out, so the ICO and the CMA. [00:13:00] I’ve got a stat for you here. We heard recently from the Secretary of State for Science, Innovation, and Technology Peter Kyle that 213 communities so far have applied to be UK AI growth zones, which I guess is a positive step forward, right?

Jonathan Stephenson (13:13):
Definitely.

Alistair Ho (13:14):
UK is more focused on sector approach, but we have seen a few pieces of regulation come through or at least proposed. One that comes to mind was the UK government proposals around AI and copyright regulations.

Deborah Kirk (13:25):
Right.

Alistair Ho (13:26):
Mirroring much of what the EU text and data mining exceptions say. That’s [00:13:30] of course a lot of discussion, some would say even controversy with Elton John and other celebrities getting involved. I think it’s something that we’re watching very closely, these few pieces of UK regulation.

Deborah Kirk (13:40):
Yeah. He’s very mad about it, as you will see if you look at his video on the BBC News site.

Alistair Ho (13:46):
Exactly.

Deborah Kirk (13:46):
All right. Last one. Jonathan, power sources enabling innovative technology will grow in importance, both from a commercial and regulatory perspective, sustainable powering of technology. Where are we and were we right?

Jonathan Stephenson (14:00):
[00:14:00] Yeah. I have to say, this topic is my favorite one because it’s very much about what powers all of these changes. In that we essentially thought that what we needed was sustainably powered technology continuing to evolve. Just to recap, we’ve already foresaw and I think we were right on this one, innovative solutions from Europe in relation to the capacity crisis, such as increasing energy efficiency in data centers and expanding edge computing. The EU’s already delivering with [00:14:30] about, from memory, €1.2 billion invested in high efficient data centers. Also, cutting consumption by about 20% in countries such as Germany. That is a significant public push and I think we should call it that.

(14:44):
But as anticipated, it pales in comparison in relation to the colossal private investment that we’re seeing from tech giants, principally driven by AI demand. In 2025 alone, we’ve seen from Microsoft that they’ve earmarked [00:15:00] around $80 billion for AI-enabled data centers globally. Nvidia partnering with some French firms to build Europe’s largest AI data center in France, valued at around €8.5 billion. From edge computing perspective, those deployments have surged by about 30%, probably as expected. That’s backed by some guidance, being the draft cloud development framework which is looking to be finalized in the final quarter of this year. There’s just a lot of activity [00:15:30] and necessary activity really to provide that foundational base for this growth.

Deborah Kirk (15:34):
Right. In terms of I guess energy sources to power the technology, we’ve seen the UK approve two small modular nuclear reactors earlier this year, I think in April, committing £14 billion of government investment in the Sizewell C nuclear plant. These are big steps towards supporting tech infrastructure and aligning with the UK’s net-zero 2050 goals. Then we’ve got [inaudible 00:15:58] addition of 50 [00:16:00] partners in 2025 to enhance resource sharing, as I think we also predicted.

Jonathan Stephenson (16:05):
It’s not just sustainable, it’s also of huge importance from a commercial perspective. They’re creating more commercial opportunities for our clients. It’s seeing a 15% spike in tech M&A. Whilst regulatory foundation remains a hurdle, we do expect that deal making growth to continue.

Deborah Kirk (16:23):
Right, exactly. Just to build on that, I guess it’s been interesting to see the interplay between the massive private sector [00:16:30] investment in the digital infrastructure, like the data center spending we’ve just discussed from Microsoft and Nvidia, versus the more targeted public initiatives from the EU. It brings to mind what Mistral CEO Arthur Mensch touched on at London Tech Week, that the actual infrastructure needed to support the AI and the EU’s digital decade ambitions is not where it could be.

Jonathan Stephenson (16:53):
Precisely. That’s the point. That’s the really interesting takeaway in terms of the blend between both the political and just [00:17:00] the technological drivers behind all of this. The realities of what we’re living in 2025 and onwards, it definitely highlights a degree of tension or inconsistency between some of the more ambitious policies. United digital decade, we’ve got the competitive compass. There’s other strategies in place being set. And the practical realities of what can be done and what can be done within the intended timelines.

Alistair Ho (17:24):
Let me say it’s not all challenges. There’s these strategies and there’s a lot of uncertainty about what can be achieved, [00:17:30] but you’ve really seen regulators get behind their strategies and that collaboration, as you mentioned earlier. Not just to say, “This is strategy, please do it and do it compliantly,” but to say, “What can we be doing to support businesses innovate compliantly?” As you mentioned earlier, there’s definitely an increase in sandboxes. UK government announced a new digital sandbox invest. The FCA announced that they’ll launch a super-charged sandbox initiative to help firms experiment safely with AI, and again, support innovation. All these are fantastic steps towards innovation, securing [00:18:00] collaboration, and basically making a nice environment to advance and innovate.

Deborah Kirk (18:04):
Right. I think that’s the message, that there’s a lot going on. There’s a lot going on, both from the government point of view, practically, we’re seeing movement on enforcement. But I guess on the regulatory piece, that remains an ever-evolving moving thing. It’s not always important to be right, but Jonathan, wrapping things up, how did our predictions hold up in 2025 so far?

Jonathan Stephenson (18:27):
We’re exactly right.

Deborah Kirk (18:28):
Of course.

Jonathan Stephenson (18:30):
[00:18:30]
This is the interpretation [inaudible 00:18:31]. Our analysis at the start of the year for the moment is holding strong, which is great. That’s exactly what our industry stakeholders and leaders expected to be happening. There have been some hiccups for sure. There’s been developments, there’s been opportunities, but they are continuing to shape the IP and tech landscape as we move throughout the year and generally occur the direction that we’d anticipated. From fundraising to sustainable tech, what we’re seeing is growth. We’re seeing regulatory activity, and [00:19:00] what we’re hoping for is some genuine innovation.

Deborah Kirk (19:03):
Good stuff. Thank you very much, Jonathan and Ali. We are the IP and tech team at Skadden. We are here the guide you through your tech, IP, and data challenges to keep you tech-savvy and identify and manage your tech risks on your transactions. Thank you for joining us. Do join us on our next episode, where we dive into the case on every AI and IP lawyer’s watch list, which is the Getty and Stability AI case. Look out for our bites in the meantime.

Voiceover (19:30):
[00:19:30] Thank you for joining us for today’s episode of SkadBytes. If you like what you’re hearing, be sure to subscribe in your favorite podcast app so you don’t miss any future conversations. Additional information about Skadden can be found at skadden.com.