European Commission proposes tech sovereignty laws for cloud, AI and chips

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EU tech sovereignty laws proposed

Highlights

European Commission proposes the Cloud and AI Development Act and Chips Act 2.0, aiming to double EU semiconductor market share to 20% by 2030.
New sovereignty requirements mandate that vendors for critical public contracts use EU-made software and hardware, especially impacting cloud services in sectors like banking and healthcare.
The package introduces fast-track approvals, preferential grid access, and lower network charges for data centres using European chips, targeting Amazon, Microsoft, and Google's 60% market share dominance.

Legislative push for domestic technology capacity

As reported by Reuters, the European Commission on Wednesday proposes the Cloud and AI Development Act and Chips Act 2.0 as part of a broader drive to strengthen Europe's technological sovereignty and narrow the gap with U.S. and Chinese competitors. The package includes a goal to double the EU's global semiconductor market share to 20% by 2030.

Commission President Ursula von der Leyen says in a statement that the bloc cannot afford to depend on others for technologies that support hospitals, energy grids and secure services. EU tech chief Henna Virkkunen also warns of possible "kill switches" that could disable or disrupt services, saying Europe wants to retain control of critical services and data.

The proposal introduces sovereignty requirements for cloud providers in sensitive sectors including banking, energy and healthcare. The plan is partly 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 when it is stored abroad.

Implications for contracts, infrastructure and major providers

For critical public contracts, vendors will have to ensure that software and hardware are made in the EU, limiting the role of non-European countries in controlling data and services. Virkkunen says the requirement may cover only a limited share of services, but it is especially important in highly sensitive areas such as defence.

Amazon, Microsoft and Google currently dominate the global cloud market with a combined share of more than 60%. The Commission's package also includes a fast-track approval process for data centres, alongside preferential grid access and lower network charges for facilities that use European-made chips and improve energy efficiency.

The updated Chips Act seeks to lift production of European-made semiconductors by encouraging agreements between manufacturers and buyers that guarantee future purchases. Both proposals now go to EU member states and the European Parliament for negotiations in the coming months before they can become law.

In our earlier article on DeepSeek’s funding drive, we covered how the Chinese AI startup was nearing a multibillion-dollar round backed by major domestic investors, signaling Beijing’s support for scaling national AI champions. We also noted DeepSeek’s focus on foundational AI research and open-source models as it tries to close the gap with leading U.S. systems and intensifying competition both globally and within China.

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