EU Proposes Tech Sovereignty Package to Reduce U.S. Reliance

The European Union proposed new legislation on Wednesday aimed at reducing its reliance on foreign tech giants, particularly from the United States. The proposals target cloud computing services, artificial intelligence (AI), and semiconductor production.

According to The Guardian, the EU executive wants to ensure no foreign government or company has access to a 'kill switch' that could disrupt vital tech services across Europe. This move is part of an effort to cut dependencies on the U.S. and China, following vulnerabilities exposed last year when China stopped semiconductor exports.

The Cloud and AI Development Act (CADA) sets out sovereignty requirements for cloud providers in sensitive sectors such as banking, energy, healthcare, defense, criminal justice, and border management. As reported by Reuters, EU tech chief Henna Virkkunen warned of the risk of potential 'kill switches' that could disable or disrupt services.

The proposals require vendors to ensure software and hardware are made in the EU for critical public contracts, excluding non-European companies from controlling data and services. This move is driven by concerns over U.S. laws such as the Cloud Act, which requires U.S.-based providers to grant authorities access to data even if it is stored abroad.

The updated Chips Act aims to boost European-made chips by encouraging agreements between manufacturers and buyers to guarantee future purchases of a product. The EU wants to double its global market share of semiconductors to 20% by 2030, as reported by Reuters. However, experts like Olivier Darmouni from HEC Paris cast doubt on the feasibility of building advanced manufacturing facilities for cutting-edge AI chips within the required timescale.

The proposals will be negotiated with EU member states and the European Parliament in the coming months before they can become law. If approved, these measures could significantly impact U.S. tech giants like Amazon, Microsoft, and Google, which currently dominate the European market.

According to Reuters, the EU's technology sovereignty package is seen as a significant step but not an immediate solution for technological independence from U.S. Big Tech. The bloc trails far behind the U.S. and Asia in AI, chips, cloud services, and data centers.

Ralf Wintergerst, president of German digital industry group Bitkom, said measures like the proposed Chips Act 2.0 were a 'step in right direction', but Europe needed concrete action and a better investment environment from chips to AI infrastructure. 'It is now crucial that these efforts do not stop at mere announcements. Europe needs to move quickly,' he said.

EU tech chief Henna Virkkunen presented the package that restricts U.S. giants like Amazon, Microsoft, and Google from the most sensitive cloud tenders while encouraging a quick build-out of data centers that use at least some European hardware or software. On chips, the plan focuses on supporting existing strengths around leading chip equipment maker ASML.

However, with few regional champions, cutting reliance is not going to happen quickly. The bloc has no European version of Nvidia to design AI chips, no rival to Taiwan's TSMC to manufacture them, and no software giants comparable with the big U.S. firms able to drive demand through vast cloud platforms.

'We will continue to rely on Nvidia and AMD for GPUs and will need to cooperate with international partners on certain AI models. This is not a weakness, but realism,' said Achim Weiß, CEO of German cloud provider Ionos. 'It must be clear that sovereignty does not mean self-sufficiency.'

The EU plan also contains little new money, especially compared with huge U.S. investment and Chinese industrial support. That leaves the bill to member states already under budget pressure, while companies face high energy costs, labor shortages, and fragmented capital markets.