Britain's Labour faces an uphill battle as it looks to rein in AI's key players

LONDON — Britain is set to introduce its first-ever law for artificial intelligence — but Prime Minister Keir Starmer's new Labour government faces a delicate balancing act of forming rules that are strict enough while also allowing for innovation.

In a speech delivered by King Charles III on behalf of Starmer's administration, the government said Wednesday that it would "seek to establish the appropriate legislation to place requirements on those working to develop the most powerful artificial intelligence models." 

But the speech refrained from mentioning an actual AI bill, which many tech industry executives and commentators had been expecting. 

In the European Union, authorities have introduced a sweeping law known as the AI Act which subjects companies developing and using artificial intelligence to much tighter restrictions. 

Many tech firms — both big and small — are hopeful that the U.K. doesn't go the same way in applying rules that they deem to be too heavy-handed. 

It's expected that Labour will still introduce formal rules for AI as the party laid out in its election manifesto.  

Starmer's government pledged to introduce "binding regulation on the handful of companies developing the most powerful AI models," and legislation that bans sexually explicit deepfakes.

By taking aim at the most powerful AI models, Labour would impose tighter restrictions on companies such as OpenAI, Microsoft, Google, Amazon, and AI startups including Anthropic, Cohere and Mistral. 

"The largest AI players will likely face more scrutiny than before," Matt Calkins, CEO of software firm Appian, told CNBC. 

"What we need is an enabling environment for wide-ranging innovation that is governed by a clear regulatory framework that provides fair