On March 18, 2026, the UK government published its report (the Report) and impact assessment on the use of copyright works in the development of AI systems, following the UK Government’s consultation on Copyright and AI which launched in December 2024.

The Consultation

The Consultation aimed to explore how copyright could best support the potential of AI while protecting the UK’s position as a “creative powerhouse.” It set out four policy options, and indicated that the UK government’s preferred proposal at the time of the Consultation was option 3:

  • Option 0: Do nothing (status quo): copyright and related laws to remain as they are.
  • Option 1: Strengthen copyright requiring licensing in all cases.
  • Option 2: A broad data mining exception (without an opt-out).
  • Option 3: A data mining exception with opt-out and transparency measures.

The Report

According to the Report, the UK government will not move ahead with immediate copyright reform for AI training and the broad exception to allow AI to train on copyrighted works, with an opt-out mechanism (option 3) is no longer the UK government’s preferred option. The Report states that the retreat from option 3 is due in part to the concerns raised by stakeholders — this pushback came most significantly from the creative industries, but technology developers also predicted that it would lead to high take-up of opt outs, undermining the purpose of the exception. The UK government instead proposes to gather further evidence on how copyright laws are impacting the development and deployment of AI across the economy, engage stakeholders on other potential policy approaches, and continue to monitor developments in technology, litigation, international approaches, and the licensing market. The status quo will therefore continue for the time being in the absence of any new legislation. In her statement, Liz Kendall (Secretary of State for Science, Innovation and Technology) said that the UK government “no longer has a preferred option.” However, option 3 also does not appear to have been clearly ruled out. 

Other key takeaways from the Report include:

  1. Broad exception to copyright without opt-out (option 2) will not be taken forward: Given the risks to the revenue of right holders, particularly those who have licensing agreements already in place (or seek to make them) and the continuing uncertainty in the international landscape, the UK government proposes not to take option 2 forward at this time.
  1. No amendments to copyright law in respect of AI systems developed outside of the UK at this time: Given that Getty Images v. Stability AI is still pending appeal and that there may be further clarification or changes to the law in this respect in the US and EU in the coming year, the UK government proposes not to take this forward at this time. Developments outside of the UK may also lead to some levelling of the playing field internationally as the legal landscape begins to settle.
  1. Alternative policy approaches will be considered: As part of their further investigation and evidence gathering, the UK government will consider alternative approaches to policy, including, e.g., exceptions to copyright law that permit data mining but only for scientific and research purposes or certain uses in the public interest (such as online safety and security), only to the extent the material is lawfully accessed (i.e., use of pirated copies would be prohibited), or with a statutory licensing scheme.
  1. Upcoming consultation on digital replicas: The UK government recognized that the patchwork of protections existing today may not fully cover the risks associated with digital replicas, including those related to data protection, criminal law, and violations of personal dignity. The UK government will launch a consultation in the summer to seek views on how to address these harms, including consideration of whether a new personality right may be appropriate.
  1. Review of mechanisms for creator control and transparency: The UK government will also publish a review of the mechanisms available for creators to control their works online, which will include standards, technical solutions, and best practice on input transparency. The UK government proposes to keep the need for regulation in the area of technical tools and standards under review, and will engage industry and other experts to develop best practices on input transparency to help right holders assert their rights. It will also monitor the effects of transparency rules outside of the UK.
  1. Taskforce for labeling of AI-generated content: The UK government will establish a taskforce to put forward proposals for government on best practice for labeling AI-generated content, with an interim report expected in autumn 2026.
  1. No intervention in licensing market; pilot of Creative Content Exchange: The UK government found insufficient evidence to intervene in the licensing market at this stage, though they will learn from past licensing deals, continue to monitor global developments (e.g., the government of India is considering a proposal for statutory licensing that would create a broad TDM exception that requires AI developers to pay royalties for the use of copyright works when AI systems are commercialized) and ongoing litigation, including how secondary liability may apply to imported AI models placed on the UK market. By summer 2026, the UK government will launch an operational pilot of the Creative Content Exchange, a marketplace for selling, buying, licensing, and enabling permitted access to digitized cultural and creative assets.
  1. No regulatory oversight of AI as it relates to copyright at this time: The UK government proposes to continue working with partners across relevant sectors, including law enforcement and the judiciary, to ensure the UK enforcement framework provides effective routes to redress. The UK government proposes not to introduce regulatory oversight in respect of transparency and other measures at this time.
  1. Propose that protection for computer-generated works (CGWs) be removed: Given the minimal evidence that protection for CGWs is actively relied upon or that it has a material impact on creativity and innovation, the UK government proposes that (after a period of further monitoring of evidence and market impact) it should be removed. Even if there is minimal evidence of reliance on this provision in the UK context, its presence has sparked substantial industry debate about its interpretation in the context of AI-generated works. Its removal is a potentially significant change to the UK copyright legislation and could result in divergence of UK copyright law from other jurisdictions that have similar CGW provisions.

UK House of Lords Committee Report and European Parliament Recommendations

The Report comes on the heels of two sets of recommendations from UK and EU legislative bodies. On March 6, 2026, the UK House of Lords’ Communications and Digital Committee published its own report on AI, copyright, and the creative industries, recommending that option 3 be ruled out and advocating for protections against unauthorized digital replicas, a mandatory transparency framework for AI developers and the development, and adoption of sovereign AI models, among other measures. On March 10, 2026, the European Parliament adopted a non-binding, series of recommendations to protect copyrighted creative work from use by AI, including fair remuneration for use of copyright material by generative AI tools, transparency of input data, creation of a new licensing market for copyright material, protections for press, and news media sector. 

Next Steps

Given the Report’s emphasis on gathering evidence from market-led developments and monitoring the impact of international regulation and litigation outcomes (both in and outside of the UK), how industry participants, policymakers and the judiciary worldwide engage and shape these key debates may significantly impact any eventual legislative outcome in the UK.