The European Commission on Wednesday proposed a pair of laws designed to strengthen the EU's domestic technology base and limit reliance on non-European providers for key digital services. The Cloud and AI Development Act and Chips Act 2.0 together constitute the bloc's bid to accelerate local cloud and AI capability and to expand semiconductor manufacturing.
At the center of the package is an explicit ambition to raise the EU's share of the global semiconductor market to 20% by 2030 - roughly double its current level. The Commission framed that objective as part of a wider push for technological sovereignty and a narrowing of competitive gaps with the United States and China.
Commission President Ursula von der Leyen stressed the stakes in concrete terms, saying, "the EU cannot afford to rely on other nations for technologies that support hospitals, energy grids and secure services." That sentiment underpins several of the draft provisions aimed at keeping control of core infrastructure and data-handling capability within Europe.
European Commissioner for Technology Henna Virkkunen flagged specific operational risks the proposals seek to address, including concerns about potential kill switches that could disable or disrupt services. She told reporters that the EU wants to "ensure control over services and data in critical fields."
The Cloud and AI Development Act would impose sovereignty requirements on cloud providers that operate in sensitive areas such as banking, energy and healthcare. Those requirements are in part a response to worries about foreign legislation - for example, the U.S. Cloud Act - that can compel U.S.-based firms to provide authorities with access to data irrespective of where the data are stored.
Under the proposals, critical public contracts would require vendors to guarantee that both software and hardware are manufactured within the EU. The intention is to make sure non-European countries cannot exert control over vital services and data, a point Virkkunen emphasized as especially relevant in defense-related fields.
To support a domestic cloud ecosystem, the legislation includes measures to speed up approvals for data centers and to grant them preferential access to power grids. Data centers using European-made chips and meeting energy efficiency standards would be eligible for reduced network charges.
The updated Chips Act focuses on expanding European chip output by encouraging binding arrangements between manufacturers and buyers that guarantee future purchases, helping to underpin investment in local production capacity.
Both proposals are initial texts that must be negotiated with EU member states and the European Parliament before they can become law. The package explicitly targets the concentration of cloud market share, where Amazon, Microsoft and Google together account for more than 60% of global provision.
Key takeaways
- The Commission introduced the Cloud and AI Development Act and Chips Act 2.0 to boost EU cloud, AI and semiconductor capabilities.
- Target set to raise EU semiconductor market share to 20% by 2030, doubling the current share.
- New sovereignty rules will affect cloud providers serving sensitive sectors including banking, energy, healthcare and defense.
Risks and uncertainties
- Legislative texts must still be negotiated with member states and the European Parliament, creating uncertainty around the final form and timing of measures.
- Requirements that critical public contracts rely on EU-manufactured hardware and software could disrupt existing procurement relationships and affect vendors tied to non-European supply chains.
- Market concentration in cloud provision - with Amazon, Microsoft and Google holding over 60% of the market - presents implementation and compliance challenges for the new sovereignty rules.