According to Sifted, Nscale secured a £500 million investment from Nvidia less than two years ago and was positioned by the UK government to deliver the British version of the “Stargate” AI infrastructure project. The data centre startup is now central to Labour’s long-term AI strategy and is supposed to build the country’s biggest ever supercomputer. However, the company recently lost a copyright lawsuit against two former employees over software called “Paiton” and was ordered to pay nearly £7,000 in costs. Court documents revealed Slack messages where the ex-employees referred to an unnamed person as a “greedy little man.” Furthermore, Nscale publicly announced acquiring Kontena in a blog post, but CEO Jef Laurijssen now admits “Nscale does not own Kontena,” confirming the deal never went through.
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Stargate or house of cards?
Here’s the thing: when you’re building something as critical as a national AI supercomputer, you want your foundation to be rock solid. Nscale’s looks more like quicksand. They’re getting half a billion pounds from Nvidia and a central role in the UK’s tech future, but they can’t even manage a simple acquisition without it turning into a phantom deal. And losing a copyright lawsuit where the court basically said their claims didn’t make sense? That’s not the kind of track record that inspires confidence for a multi-billion pound project.
The phantom acquisition
This is just bizarre. Nscale put out an official blog post announcing they’d acquired Kontena, a leader in modular data centers. Industry press picked it up. Everyone moved on. Except the deal never actually happened. How does a company at this level mess up that badly? Either their internal communications are completely broken, or there’s a serious lack of oversight. When the CEO has to eventually admit “we don’t own them,” it makes you wonder what else they might be getting wrong.
Political fallout looming
Julia Lopez, the shadow secretary for science and innovation, is already asking the right questions. She told Sifted that companies in this space “should be scrutinised accordingly, especially when the future may rest in the hands of just a few major players.” She’s absolutely right. The UK is betting big on AI, and they’re placing a massive chunk of that bet on Nscale. But if the company can’t handle basic corporate governance, how can they be trusted with something as complex and strategically important as Stargate?
Nvidia’s bet looking shaky
Nvidia’s staying quiet for now, which is probably wise. But you have to wonder what they’re thinking. They poured £500 million into this startup, and within two years it’s embroiled in lawsuits with former employees and can’t execute basic business deals. This isn’t just about one company’s growing pains – this is about the entire UK AI strategy potentially being built on unstable ground. When the infrastructure backbone of your national AI ambition has this many cracks, maybe it’s time for someone to check the blueprints again.
