The European Commission has presented a package of new laws designed to give Europe greater control over its own technologies. The goal is clear: to reduce dependence on American technology companies in cloud computing, artificial intelligence, and chip manufacturing. The proposals come at a time when transatlantic relations are far from tension-free, and Washington has repeatedly criticized Europe’s approach to American technology companies.
The package consists of two main legislative pillars. The first is the so-called Cloud and AI Development Act, together with an updated Chips Act, known as CAIDA. The second concerns the open-source software strategy and digitalization in the energy sector. CAIDA aims to triple data center capacity in Europe within five to seven years. At the same time, it introduces strict rules governing who may provide cloud services to public institutions for sensitive projects. And this is precisely where things start to get tricky for companies such as Amazon, Microsoft, and Google.
The proposal sets out four levels of requirements for providers. The lowest requires data centers to be located and operated in Europe. Most American companies meet this requirement. But the higher the level, the stricter the conditions, culminating in full control over software, ownership, and more stringent cybersecurity certification. Only one percent of the most sensitive public contracts, for example in defense, would require compliance with the highest level.
Why is Brussels afraid of an American kill switch?
Henna Virkkunen, the EU’s digital chief, identified a concern that has been quietly simmering within European institutions for years: the risk of a so-called “kill switch.” In other words, a situation in which a foreign government, or a company acting on its orders, simply blocks or cripples digital services on which hospitals, energy grids, or public administration depend. “We want to be certain that in critical areas, we will always be able to control services and data in Europe,” Virkkunen told reporters.
There is also a specific legal issue. The U.S. law known as the CLOUD Act requires American providers to make data available to U.S. authorities upon request, even when the data is physically stored on European servers. For banks, hospitals, or energy companies, this represents an unacceptable risk. Brussels therefore wants both the software and hardware used for sensitive public contracts to be manufactured directly in the European Union.
“We cannot afford to depend on others for the technologies that keep our hospitals running, stabilize our energy grids, and ensure the security of our services,” said Commission President Ursula von der Leyen.
Amazon, Microsoft, and Google are adapting
The world’s three largest cloud service providers—Amazon, Microsoft, and Google—together control more than 60 percent of the global market. Naturally, none of them wants to lose lucrative European contracts, so they are seeking their own ways to comply with European requirements.
As part of its solutions, Microsoft, for example, supports projects such as Bleu, a cloud venture owned by the French companies Capgemini and Orange, and Delos Cloud, an SAP subsidiary using Microsoft Azure infrastructure. Both were created in response to European concerns about data sovereignty. “We offer secure and sovereign cloud solutions that give customers control, and we are ready to help build a strong and globally connected AI ecosystem in Europe,” Microsoft said in a statement.
Amazon, meanwhile, launched a cloud service this year that is operated exclusively on European territory and is physically and legally separate from the rest of its global infrastructure. “European organizations deserve access to the best available technologies from trusted providers,” said a spokesperson for the AWS cloud division.
Chips were not forgotten either
Alongside the cloud rules, Brussels is also introducing an update to the European Chips Act. The original 2023 version focused primarily on strengthening manufacturing capacity. The new version aims to support research and stimulate demand for chips manufactured directly in Europe.
The specific instrument is to be long-term contracts between manufacturers and customers, guaranteeing stable demand. The goal set by Brussels is ambitious: to double Europe’s share of global chip production to 20 percent by 2030. The COVID pandemic and geopolitical tensions of recent years have shown how fragile dependence on an Asia-dominated supply chain can be.
Data centers operating on European chips are also to receive priority access to the power grid and lower energy distribution fees. Approval for the construction of new centers would be fast-tracked.
What happens to the proposals next?
Both packages still face a long road ahead. They must undergo negotiations with the member states of the European Union and the European Parliament before they can become binding law. The final form of the legislation may therefore differ from the current proposals.
Washington is so far watching Brussels’ moves with displeasure. In recent months, American diplomats and government officials have repeatedly criticized European rules targeting American technology companies. This time, however, Brussels apparently does not intend to let that criticism go unanswered.
Sources: reuters.com and aol.com
