Eight key trends for the technology sector in 2025

1. The EU AI Act: Redefining AI compliance 

February 2025 marks the first step of the implementation of the EU AI Act, as the prohibited AI practices under Article 5 come into force. Article 4 will also apply from February, obliging companies to ensure that their employees have sufficient “AI literacy”. Then from August 2025, rules governing General Purpose AI (GPAI) models, including governance standards and penalties for non-compliance, will take effect. 

Generally, the AI Act can be considered a groundbreaking regulation demanding transparency and accountability in AI systems. To comply, companies must map their AI tools, adhere to strict data governance protocols and avoid high-risk applications. This shift will necessitate robust employee training on AI governance and ethics, along with meticulous record-keeping practices. 

Large language models (LLMs) and generative AI (Gen AI) will face heightened scrutiny. Questions around training data transparency and copyright compliance could result in fines or even the phasing out of non-compliant models. Investors will demand stronger assurances of regulatory adherence, reshaping funding, mergers and acquisitions. As transaction costs rise, businesses will need to prioritise compliance to maintain market credibility and attract investment. 

2. IP challenges: AI and content creation 

AI’s role in generating creative content is intensifying intellectual property disputes. High-profile litigation, such as Getty Images’ case against Stability AI, highlight the growing concerns around AI systems using copyrighted materials. Further litigation and lobbying from content creators and owners will also likely ensue. Performing rights body for musicians have publicly stated that AI models should not be trained on artists' music without them knowing about it and the artist should be paid for use of their copyrighted music and for the use of the AI output incorporating the same. 

To stay compliant, businesses must implement systems that track and verify their data against copyright laws. Failure to do so risks litigation, financial penalties and reputational damage. These developments will also spark broader discussions about modernising copyright laws to reflect the realities of AI-driven content creation. Ethical approaches to IP will be vital for maintaining trust and avoiding backlash. 

3. Sustainability: Meeting ESG standards 

ESG considerations will continue to feature in 2025, particularly for the tech sector. AI, while transformative, is under scrutiny for its energy consumption and environmental impact. Regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and similar measures in the UK will require companies to review the applicable reporting and disclosure requirements and any conflicts between them, adopt sustainable practices and demonstrate measurable progress. For groups with US parent companies that are listed, the SEC reporting requirements may also need to be considered alongside the reporting requirements in the UK and Europe. 

Businesses need to evaluate their carbon footprints, reduce energy consumption and ensure supply chain transparency. These pressures will also drive innovations in energy-efficient AI systems. Simultaneously, AI will play a pivotal role in enabling sustainability reporting, helping organisations map and achieve their ESG goals. Companies that align with these priorities will attract investors and strengthen their market position. 

4. Cybersecurity: A growing priority amid geopolitical risks 

As cyber threats grow in sophistication, driven by state-sponsored attacks and escalating geopolitical tensions, cybersecurity will remain a critical focus. Governments worldwide, including the EU with its NIS2 Directive, are tightening regulations, prompting businesses to bolster their defences. 

The cybersecurity sector is expected to see significant consolidation as companies acquire new capabilities to counter emerging threats. AI systems themselves will need to be safeguarded against vulnerabilities. Secure infrastructure will help businesses to protect their operations and stakeholders will be better positioned to navigate this evolving threat landscape. 

5. The Data Act: A gamechanger for the IoT industry 

Set to take effect on 12 September 2025, the EU’s Data Act (Regulation (EU) 2023/2854) introduces new rules for governing non-personal "machine data". Manufacturers will no longer have automatic access to this data and must secure explicit contractual permission from users. 

This marks a significant shift in data ownership and could challenge existing business models, particularly in industries like automotive and smart home technologies. However, it also offers an opportunity to strengthen customer trust and foster innovation through transparent, responsible data-sharing practices.  

6. Regulatory divergence: Contrasting approaches in the US and Europe 

The regulatory divide between the US and EU might become increasingly pronounced in 2025. The EU’s comprehensive frameworks, including the AI Act, Data Act and NIS2 cybersecurity rules, plus its approach to antitrust enforcement, contrast sharply with the US’s expected continuation of a more deregulated, business-friendly approach.  It is notable that the EU has recently announced a “reassessment” of its investigations into Apple, Google and Meta.   

The UK is also carving out its own regulatory path, with the Online Safety Act due to take effect early in 2025 and the government planning to introduce the Cyber Security and Resilience Bill in the coming months. 

Against an increasingly challenging economic backdrop for Europe, political pressure on regulators is growing. For companies operating trans-atlantically, navigating the regulatory differences and taking advantage of the political pressure on regulators may yield significant benefits.   

7. The growing demand for data centres 

The expansion of cloud computing, AI and data storage needs will drive significant investment in data centres in 2025. Advanced AI applications, which require extensive storage and processing power, will necessitate scalable, energy-efficient infrastructure. 

Companies will need to prioritise building data centres capable of handling high computational demands while adhering to sustainability standards. This surge in investment underscores the importance of infrastructure in supporting the next wave of technological innovation. 

8. M&A: Navigating regulation and opportunity 

Inevitably some of these trends will play their part in defining some of the direction of travel for M&A in the coming year. Companies will look for strategic acquisition targets which will catalyse their growth in a competitive environment. This is likely to enhance the values of high growth businesses in areas such as AI, telemedicine and renewable energy. At the same time, deal-making is likely to be more challenging due to increased regulatory scrutiny and a “local first” approach to government policies. We watch with interest to see how companies respond to the new US administration’s much- anticipated interventions in trade. 

Preparing for 2025 and beyond 

There are, of course, a host of other known and (as yet) unknown developments that will impact the sector. As the regulatory and ethical landscapes evolve, businesses must remain proactive, transparent and adaptable. From addressing compliance requirements, changing trade rules and cybersecurity risks to integrating ESG priorities and respecting IP rights, companies face multifaceted challenges. However, these changes also present opportunities for innovation and growth. 

Businesses that embrace these trends and align their operations with societal expectations will not only avoid pitfalls but also position themselves for long-term success in an increasingly complex tech landscape.  

Our team of technology and legal experts is here to guide you through this rapidly changing environment. From ensuring regulatory compliance and enhancing data governance frameworks to crafting forward-looking strategies, we can help you succeed in 2025 and beyond.