EU Unveils New Cloud, AI Rules to Reduce Reliance on US Tech Giants

The European Union is expanding its tech sovereignty agenda to further insulate the bloc from foreign dependence, with several new measures designed to ensure sensitive data is kept in the region.

At the core of the new measures, announced by the European Commission on Wednesday, is the Cloud and AI Development Act (CADA), which aims to triple data center capacity in the region by 2033 at the latest and ensure critical data is stored in EU-owned data centers.

The act builds on previous EU legislation, including the AI Act, Data Act, and Chips Act, by extending the bloc’s push for greater control over its technology infrastructure. 

With CADA, US cloud service providers such as Amazon Web Services, Microsoft Azure, and Google Cloud will face greater pressure to partner with EU companies to maintain access to high-risk and sensitive data storage markets.

Some have already moved in this direction. Google has partnered with Thales SA in France, while Amazon and Microsoft have both launched sovereign cloud solutions in Europe. However, those offerings do not entirely eliminate jurisdictional concerns about the US government’s ability to demand access to data.

Once CADA is enacted, cloud services operating in Europe will be subject to sovereignty risk assessments carried out by national government authorities. Each cloud service will receive a score out of four, based on how much of its operations are under EU control. Services that do not score highly will be restricted from providing cloud infrastructure for government projects and other high-risk data storage services.

The surge in data center buildout over the past three years has been enormous, rising to a record $61 billion investment in 2025, but also lopsided, with the US capturing much of the infrastructure development. The EU sees the dual offer of increased funding for data center construction and tougher sovereignty requirements as a way to accelerate buildout within the bloc.

Rebuilding Europe’s chip capacity

Another major part of the sovereignty push comes through Chips Act 2.0, a revamp of the 2023 legislative package that aimed to increase the EU’s share of global semiconductor production from less than 10% to 20% through €43 billion in investment distributed to national governments.

The revamp comes as the original act appears unlikely to meet its target. Its main addition is giving the European Commission more authority to invest directly in large-scale semiconductor manufacturing projects.

While no further funding has been agreed yet, the Commission has said that the EU would need about €120 billion in public-private investment to reach the 20% manufacturing target.

The EU has had limited success in attracting major chipmakers to the region. Nvidia has announced a €1 billion AI factory in Munich with Deutsche Telekom, but the vast bulk of semiconductor manufacturing remains concentrated in Asia, with Taiwan, South Korea, China, and Japan responsible for 75% of global wafer manufacturing capacity. 

It has pushed national governments to be more alert to potential threats to their chipmaking capacity, with the Dutch government seizing control of chipmaker Nexperia from its Chinese owners last October.

Data centers are not the only concern

The EU’s sovereignty push extends beyond data centers and infrastructure, with the bloc also pursuing several ongoing battles with US tech giants. It recently forced Meta to comply with rules requiring WhatsApp to open up to other AI assistants, and it is looking to apply similar interoperability requirements to Android.

The broader aim is to reduce the imbalance created by decades of US dominance in the tech industry. However, Europe still has relatively few major consumer technology platforms of its own, even in AI, where Mistral remains one of the only European companies competing at the frontier.

The legislation may force US tech giants to operate with a lighter touch in the region, particularly around data, infrastructure, and platform control.

For now, however, most European consumers still rely heavily on US-built apps and services, leaving the bloc’s sovereignty agenda focused as much on reducing dependence as on building homegrown alternatives.

Also read: EU regulators are pressuring Meta over WhatsApp access for third-party AI chatbots.