Dive Brief:
- The European Union is taking steps to increase its technological strength. On Wednesday, the European Commission unveiled the European Technological Sovereignty Package, a set of proposals targeting cloud computing, AI, semiconductors and open source, in a bid to reduce reliance on U.S. tech giants. The package includes two legislative proposals — Chips Act 2.0 and the Cloud and AI Development Act — outlining objectives for the EU’s semiconductor industry and local cloud and AI providers.
- The Chips Act 2.0 proposal aims to improve regulatory processes to help EU companies become more competitive while the Cloud and AI Development Act introduces an EU-wide framework for assessing cloud and AI sovereignty. Both proposals will be negotiated by the European Parliament and Council of the European Union before adoption and enactment.
- “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, said in a press release. “This is about protecting our citizens, defending our interests and making our own choices.”
Dive Insight:
U.S. business will be affected by the technology package as EU leaders seek to prioritize European companies.
“Although it is a proposal, the impact is far reaching,” Lydia Clougherty Jones, a VP analyst at Gartner, told CIO Dive in an email. “Government procurement processes, for example, will increase reliance on EU entities, deprioritizing reliance on non-EU entities.”
The move to boost the EU’s technological ecosystem comes as leaders grapple with the EU’s dependence on outside tech suppliers, especially as compute demand accelerates amid rising AI use. A small group of companies, mostly U.S.-based, control a large amount of available compute power.
Leading hyperscalers will own 67% of data center capacity by 2031 as they invest heavily in building out infrastructure to support AI workloads, according to an April report from Synergy Research Group.
“Cloud and consumer-oriented digital services have been driving changes in data center deployment patterns for many years now, but over the last three years AI technology has accelerated those changes,” John Dinsdale, a chief analyst at Synergy Research Group, said in a press release accompanying the report. “The world is racing towards a situation where hyperscale operators are responsible for the bulk of data center capacity.”
Hyperscalers and other vendors are also providing their own sovereign offerings to European customers as the EU advances its plans for bolstering cloud and AI sovereignty. AWS and IBM both launched sovereign offerings at the beginning of the year.
The EU’s technology sovereignty package also marks a continuation of its AI continent action plan, which aims to build out AI computing infrastructure across Europe.
The Cloud and AI Development Act legislative proposal aims to triple data center capacity in the EU over the next five to seven years, as well as simplify permitting for data center builds and improve access to resources including energy, land and water. The proposal also defines cloud and AI sovereignty across four levels for public sector organizations’ risk assessments.
Sovereignty will be a key point of leverage for the EU to build its own technology ecosystem, Clougherty Jones said. Data sovereignty will allow increased control and restrictions on public data sharing to trusted EU partners. Talent sovereignty with a focus on engineers, researchers and infrastructure operators will also deepen the EU’s knowledge base and foundation for its long-term goals, she added.
“The impacts will be far and wide, progressing the EU’s investment in digital resilience and economic competitiveness,” Clougherty Jones said.
The Chips Act 2.0 proposal complements the Cloud and AI Development Act as it sets out to reduce reliance on external suppliers for semiconductors. The proposal establishes a business-to-business semiconductor supply chain platform and strengthens international partner cooperation on chips.
The technology package also includes the EU Open Source Strategy, which promotes European alternatives to non-EU products in critical technology areas, and a strategic roadmap for digitalizing the EU energy system.
