Future of work Archives | Digital Watch Observatory

OpenAI expands London research hub

OpenAI is turning its London office into its largest research hub outside the US, marking a strategic shift towards deeper engagement with the UK’s rapidly developing AI landscape. The move places the company in direct competition with Google DeepMind for scientific talent.

An expansion that strengthens OpenAI’s long-term presence in Europe by building a substantial research base rather than relying on satellite operations. The firm aims to attract researchers seeking strong academic links, regulatory clarity and access to the UK’s growing AI ecosystem.

The enlarged London team is expected to support frontier model development and experimental work that aligns with OpenAI’s international ambitions. Senior leadership framed the decision as a vote of confidence in the UK’s capacity to become one of the most influential centres for advanced AI research.

The announcement intensifies debate over global competition for expertise, as major labs seek locations that balance research freedom with responsible oversight.

OpenAI’s investment signals a belief that the UK can offer such conditions while positioning itself as a key player in shaping the next generation of AI capabilities.

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Nano Banana 2 brings Flash speed to Gemini image generation

Google has introduced Nano Banana 2, branded Gemini 3.1 Flash Image, combining Flash speed with advanced reasoning. The update narrows the gap between rapid generation and visual quality, enabling faster edits. Improved instruction-following enhances the handling of complex prompts.

Nano Banana 2 integrates real-time web grounding to improve subject accuracy and contextual awareness. The model supports more precise text rendering and in-image translation for marketing and localisation tasks. It can also assist with diagrams, infographics, and data visualisations.

Upgrades include stronger subject consistency across multiple characters and objects within a single workflow. Users can create assets in aspect ratios and resolutions from 512px to 4K. Google highlighted improvements in lighting, textures, and photorealism while maintaining Flash-level speed.

The model is rolling out across the Gemini app, Search, Lens, AI Studio, Vertex AI, Flow, and Google Ads. In Gemini, Nano Banana 2 replaces Nano Banana Pro by default, though Pro remains available for specialised tasks. Availability is expanding to additional countries and languages.

Google also reinforced its provenance strategy by combining SynthID watermarking with C2PA Content Credentials. The company said verification tools in Gemini have been used millions of times to identify AI-generated media. C2PA verification will be added to the app in a future update.

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European businesses gain AI-powered contract tools with local data hosting

Workday has rolled out its Contract Lifecycle Management (CLM) platform with EU-hosted data in Frankfurt, allowing European organisations to use AI contract tools while keeping all data within the EU.

German, French, and Spanish language support is live, with more languages planned. The update is part of Workday’s EU Sovereign Cloud strategy, targeting the CLM market, which is set to grow to $1.9 billion by 2033.

The platform uses AI agents to automate contracts. The Contract Intelligence Agent extracts terms, obligations, and renewal dates to create a searchable repository, while the Contract Negotiation Agent flags deviations, drafts redlines, and speeds approvals.

Multilingual support ensures smooth workflows across Europe’s largest commercial languages, improving compliance and efficiency.

GDPR compliance remains critical, with fines up to €20 million or 4% of global turnover. EU-hosted CLM removes offshore data risks, which are crucial for the finance, healthcare, and defence sectors. Workday combines AI efficiency with full legal compliance.

Decision-makers should focus on three priorities: EU data residency, leveraging AI agents to accelerate contracts, and integrating CLM with HR and finance systems to maximise value. Workday aims to capture market share in Europe against competitors such as Icertis and DocuSign.

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Pakistan’s digital transformation highlighted as UNESCO advances AI ethics

UNESCO used the Pakistan Governance Forum 2026 to highlight the need for a structured Ethical AI and Data Governance Framework as the country accelerates its digital transformation.

Federal leaders, provincial authorities and civil society convened to examine governance reforms, with UNESCO urging Pakistan to align its expanding digital public infrastructure with coherent standards that protect rights while enabling innovation.

Speaking at the Forum, Fuad Pashayev underlined that Pakistan’s reform priority should centre on the Recommendation on the Ethics of Artificial Intelligence, adopted unanimously by all 193 Member States.

Anchoring national systems in transparency, accountability and meaningful human oversight was framed as essential for maintaining public trust as digital services reshape access to benefits and interactions between citizens and the state.

To support the shift, UNESCO promoted its AI Readiness Assessment Methodology (RAM), which is already deployed in more than 50 countries. The tool helps governments identify regulatory gaps, strengthen institutional coordination and design safeguards against discrimination and algorithmic bias.

UNESCO has already contributed to Pakistan’s draft National AI Policy, ensuring alignment with international ethical frameworks while accommodating national development needs.

Capacity building formed a major pillar of UNESCO’s engagement. In partnership with the University of Oxford, the organisation launched a global course on AI and Digital Transformation in Government in 2025, attracting over nineteen thousand enrolments worldwide.

Pakistan leads participation globally, reflecting both the country’s momentum and growing demand for structured training.

UNESCO’s ongoing work aims to reinforce data governance, improve AI readiness and embed ethical safeguards across Pakistan’s digital transformation strategy.

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Financial crime risks are reshaped by the rise of autonomous AI agents

Autonomous AI agents are transforming finance by executing transactions independently and speeding up workflows in digital assets and programmable finance. Software can manage wallets and move funds across blockchains in seconds, narrowing detection windows.

AI agents don’t create new crimes but increase speed and complexity, making accountability essential. Responsibility rests with developers, operators, and beneficiaries, with investigators tracing control, configuration, and economic benefit to determine liability.

Weak oversight or misconfigured rules can lead to significant compliance and enforcement consequences.

Investigations face new challenges as autonomous agents operate across multiple blockchains, decentralised exchanges, and global jurisdictions.

Real-time analytics and automated tracing are essential to link transactions to accountable actors before funds move. Governance architecture and monitoring systems increasingly serve as evidence in regulatory or criminal actions.

Institutions and law enforcement are using AI monitoring, anomaly detection, and automated containment systems. Autonomous AI impacts sanctions and national security, emphasising the need for human oversight alongside automation.

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AI becomes central to biotech discovery and drug development

The biotechnology industry is moving from early AI experimentation to fully integrated discovery systems that embed AI into everyday research operations.

According to the 2026 Biotech AI Report from Benchling, leading organisations are reshaping data environments and R&D structures, making AI a core part of the drug development process.

Predictive models, such as protein structure prediction and docking simulations, are accelerating early-stage discovery, helping scientists identify targets faster and improve accuracy.

Challenges persist in generative design, biomarker analysis, and ADME prediction, where adoption lags due to fragmented or poor-quality data.

Organisations overcoming these hurdles invest in high-quality, well-annotated measurements and strong integration between wet and dry lab work. It creates a continuous learning cycle that drives faster insights and reduces experimental dead ends.

Talent strategies are evolving to place AI expertise directly in R&D teams. Many firms upskill existing scientific staff to act as ‘scientific translators,’ bridging biology, regulatory needs, and machine learning.

Embedding AI leadership within research teams or using hybrid models reduces handoffs and ensures AI tools remain practical in real-world experiments.

Biotech firms combine in-house development with commercial components, following a ‘build what differentiates, buy what scales’ strategy. Confidence in AI is rising, driving investment in infrastructure, modelling, and integrated AI workflows for research.

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AI use among students surges as chatbots reshape schoolwork

More than half of US teenagers use AI tools to help with schoolwork, according to a new Pew Research Center study. The survey found that 54% of students aged 13 to 17 have used chatbots such as OpenAI’s ChatGPT or Microsoft’s Copilot to research assignments or solve maths problems.

Usage has risen in recent years. In 2024, 26% of US teens reported using ChatGPT for schoolwork, up from 13% in 2023. The latest survey of 1,458 teens and parents found 44% use AI for some schoolwork, while 10% rely on chatbots for most tasks.

Researchers say AI assistance is becoming routine in classrooms. Colleen McClain, a senior researcher at Pew and co-author of the report, said chatbot use for schoolwork is now a common practice among teens.

Findings come amid an intensifying debate over generative AI in education. Supporters argue that schools should teach students to use and evaluate AI tools, while critics warn of misinformation, reduced critical thinking, and increased cheating.

Recent research has raised questions about learning outcomes. One study by Cambridge University Press & Assessment and Microsoft Research found that students who took notes without chatbot support showed stronger reading comprehension than those using AI assistance.

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EU faces renewed pressure to ease industrial AI rules

European governments are renewing pressure to scale back industrial AI rules rather than expand regulatory demands.

Ten countries, including Germany, France, Italy, Spain and Poland, have urged the EU to clarify how the AI Act overlaps with machinery law and to adopt more realistic implementation deadlines. Their position is even more surprising, given that the legislation already outlines its relationship with existing industrial frameworks.

Parliament’s centre and centre-right groups are pushing for deeper cuts. The European People’s Party wants all industrial sectors to move to a lighter regime, while Renew is advocating broad exemptions for industrial and business-to-business AI.

The European Conservatives and Reformers are also seeking reductions for non-safety-related systems. Together, the three groups edge close to a parliamentary majority, signalling momentum for a broader deregulation push.

No sweeping changes have been added to the AI omnibus so far, yet policymakers expect more adjustments ahead. The package must be finalised by August, so legislators are focused on meeting the deadline instead of reopening primary debates.

Broader revisions to industrial AI rules are likely to reappear in the Commission’s forthcoming Digital Fitness Check, which will reassess how multiple EU tech laws interact.

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Japan probes Microsoft cloud licensing

Japan’s Fair Trade Commission has launched an investigation into Microsoft in Tokyo over suspected antitrust violations. Authorities conducted an on-site inspection of Microsoft’s Japanese subsidiary in Tokyo on Wednesday, according to sources.

Regulators are examining whether Microsoft charged higher licensing fees to customers running Microsoft 365 and Windows on rival cloud platforms rather than on Microsoft Azure. The inquiry centres on concerns that software dominance may have restricted competition in Japan’s cloud market.

Microsoft’s Japanese unit said it would cooperate fully with the Fair Trade Commission in Tokyo. The watchdog is assessing whether pricing practices unfairly hindered rivals such as Amazon and Google, which also compete in Japan’s expanding cloud sector.

Japan’s Fair Trade Commission has intensified oversight of major technology firms in recent years. Previous actions in Japan include investigations into Amazon Japan and a 2025 order requiring Google to end certain preinstallation practices.

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Scotland considers new offence for AI intimate images

The Scottish government has launched a consultation proposing a specific criminal offence for creating AI-generated intimate images without consent. Existing Scots law covers the sharing of such photos, but ministers in Scotland say gaps remain around their creation.

The consultation in Scotland also seeks views on criminalising digital tools designed solely to produce intimate images and videos. Ministers aim to address harms linked to emerging AI technologies affecting women and girls across Scotland.

Additional proposals in Scotland include a statutory aggravation where domestic abuse involves a pregnant woman, requiring courts to treat such cases more seriously at sentencing. Measures to strengthen protections against spiking offences are also under review in Scotland.

Justice Secretary Angela Constance said responses in Scotland would inform future action to reduce violence against women and girls. The consultation also considers changes to non-harassment orders and examines whether further laws on non-fatal strangulation are needed in Scotland.

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