Recent years have seen a proliferation of digital regulation across major economies, creating a fragmented international picture shaped by overlapping rules, geopolitical tensions and divergent domestic priorities. The UK has positioned itself as pursuing a pro-growth agenda, even as its own government concedes that regulation “still acts as a boot on the neck of businesses”. The European Union is contending with criticism that its extensive rulemaking is constraining innovation and is now trying to recalibrate, while the United States, with its powerful technology ecosystem and a broadly pro-growth, anti-regulation stance, continues to exert global influence. Against this backdrop, the article tracks how these differences are playing out across artificial intelligence, data, competition, financial services and tax.
In artificial intelligence, regulatory strategies reflect both economic ambition and geopolitical competition. The EU sits at one end of the spectrum with the comprehensive, risk-based EU Artificial Intelligence Act, which is being partially reviewed under the Digital Omnibus simplification programme but still sets out a detailed framework for Artificial Intelligence development and deployment. The US federal approach occupies the other end with a minimalist, innovation-first agenda, while the UK’s sector specific model and expected Artificial Intelligence Bill place it in the middle, leaving open how far it may shift along this spectrum. When comparing the UK and EU, there is also growing divergence in legal regimes that indirectly govern Artificial Intelligence, including privacy and intellectual property, even as certain principles, such as those from the OECD, provide some shared reference points.
Data protection rules illustrate both divergence and convergence. The UK’s Data (Use and Access) Act 2025 amends the UK data protection regime while the European Commission has proposed simplifying the EU GDPR in its Digital Omnibus programme, and although both aim to streamline rules, their differences may make it harder for organisations to operate a single EU-UK compliance model. Regulators such as the European Data Protection Board are pushing for greater consistency of interpretation, and UK courts have signalled a willingness to align with settled Court of Justice of the EU case law, while globally businesses still must navigate a patchwork of privacy laws, only some of which are GDPR based. Enforcement is uneven, with Data Protection Authorities differing in the frequency and value of fines and some preferring engagement over monetary penalties, while the risk of mass data litigation is higher in some jurisdictions and continues to develop.
Competition policy toward large technology companies is another fault line. The UK’s new digital markets regime is now live, and the Competition and Markets Authority has issued its first “strategic market status” decisions for Google and Apple, paving the way for firm specific interventions that contrast with the more standardised Digital Markets Act in the EU. The European Commission has opened several non-compliance cases and issued its first decisions in 2025, with sanctions believed to be calibrated to avoid provoking US retaliation, yet it is still expanding its scope by examining whether certain cloud services should be covered. A central question for 2026 is how effectively these regimes will tackle competition concerns arising in the Artificial Intelligence sector, with the UK framework deemed flexible and the EU direction to be clarified by the Commission’s Digital Markets Act review due to conclude in May 2026.
In financial services, both the UK and EU are building targeted digital rules without pursuing omnibus simplification, as the boundary between financial institutions and technology firms continues to blur. In 2026 the UK will follow in the EU’s footsteps and finalise its list of third-party tech providers which are considered “critical” to the financial sector, and although headline requirements are similar, material divergence could arise if the underlying provider lists differ. The EU is ahead on regulating cryptoasset activities, with its Markets in Cryptoasset Regulation fully in force and grandfathering periods ending by 1 July 2026 across all member states, while the UK is creating new cryptoasset regulated activities under the Financial Services and Markets Act 2000 which are expected to go live in October 2027. Artificial Intelligence rules show the sharpest split, as UK financial regulators cling to a principles based, technology agnostic approach in contrast to the EU’s classification model, and advances in generative and agentic Artificial Intelligence could widen this divide.
Tax policy is also adapting as digital business models spread. Authorities are wrestling with how to tax cryptoassets and income made through online marketplaces, while many countries, including the UK, have introduced digital service taxes on sectors such as social media, search and marketplaces. Some governments are considering repealing or redesigning these levies, others are exploring new ones, and US resistance to digital service taxes continues to raise concerns about retaliatory measures. For global organisations, these diverging digital rules present both increased compliance burdens and strategic opportunities, prompting a choice between building a single global regulatory baseline or leveraging jurisdictional differences to benefit from lighter regimes in some markets and enhanced transparency and security where stricter frameworks drive higher standards.
