EU Proposes Landmark Cloud, AI and Chips Package to Break Big Tech Dependence

The European Commission on Wednesday proposed the most ambitious technology sovereignty package in its history — a set of laws designed to reduce Europe's reliance on U.S. Big Tech and establish the bloc as an independent powerhouse in cloud computing, artificial intelligence, and semiconductors.

The package, unveiled by Commission President Ursula von der Leyen, comprises two flagship legislative proposals: the Cloud and AI Development Act and Chips Act 2.0, alongside an Open Source Strategy and a Strategic Roadmap for Digitalisation and AI in the Energy Sector. Together, they aim to double the EU's share of global semiconductor production to 20% by 2030 and create a sovereign AI infrastructure that can serve critical sectors like banking, energy, and healthcare without depending on American cloud providers.

Cloud and AI Development Act

The Cloud and AI Development Act introduces strict sovereignty requirements for cloud services used in critical public contracts. Vendors must ensure that both software and hardware are designed, manufactured, and controlled within the EU — effectively excluding non-European companies from handling sensitive government data. The law also streamlines conditions for deploying data centers across the bloc, offering preferential grid access and reduced network charges for operators that use European-made chips and meet energy efficiency standards.

The move is driven in large part by concerns over the U.S. Cloud Act, which allows American authorities to compel U.S.-based providers such as Amazon Web Services, Microsoft Azure, and Google Cloud — who collectively control over 60% of the global cloud market — to hand over data stored anywhere in the world. EU tech chief Henna Virkkunen said the legislation is about ensuring that "in critical fields, we are always able to control the services and control the data in Europe."

Chips Act 2.0 and Semiconductors

Chips Act 2.0 builds on the original 2023 Chips Act with a sharper focus on cutting-edge semiconductor technologies. The updated framework encourages long-term purchasing agreements between European chip manufacturers and buyers, guaranteeing demand for locally produced chips. The goal is to insulate Europe's semiconductor supply chain from geopolitical shocks and reduce dependency on Asian fabrication plants.

"We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure." — Ursula von der Leyen, European Commission President

Big Tech Response

U.S. technology giants have already begun adjusting to the writing on the wall. Microsoft has launched locally controlled ventures including Bleu (owned by Capgemini and Orange) and Delos Cloud (a SAP subsidiary using Azure infrastructure). Amazon Web Services has established a physically and legally separate cloud infrastructure hosted entirely in Europe, investing billions to comply with anticipated sovereignty mandates. The proposals are expected to face intense negotiation with EU member states and the European Parliament in the coming months, as well as continued criticism from U.S. officials who view the rules as harmful to trans-Atlantic trade relations.

Source: Reuters, European Commission