Europe is building a digital fortress — and US cloud giants may not get inside
The European Commission launched its Technological Sovereignty Package on June 3, 2026 — a sweeping set of rules designed to end Europe's reliance on American cloud providers and Asian chip manufacturers. The package includes a new Cloud and AI Development Act (CADA), an updated Chips Act 2.0, an open-source strategy, and an energy digitalization roadmap. For US and UK tech companies, the stakes are considerable.
The cloud problem
At the center of the package is CADA, which creates a four-tier sovereignty classification for cloud services. Level 3 — the tier required for critical public infrastructure — demands EU ownership and control. That structurally excludes AWS, Microsoft Azure, and Google Cloud in their current form.
The motivation isn't abstract. The US Cloud Act allows American law enforcement to compel US-based companies to hand over user data regardless of where the servers physically sit. A Microsoft lawyer appeared before the French Senate in July 2025 and could not guarantee that data stored in France would be shielded from US authorities. That incident accelerated political pressure for exactly the kind of hard ownership rules CADA now proposes.
AWS, Microsoft, and Google all launched "sovereign cloud" variants in late 2025 and early 2026, but critics argue these are rebranding exercises rather than structural fixes. Under CADA's Level 3 definition, partial ownership or contractual arrangements may not be enough.
Chips Act 2.0
The semiconductor half of the package shifts gear from the original Chips Act, which focused on closing a supply gap. Version 2.0 targets AI chip design and advanced manufacturing — the segment where demand is exploding. The European Commission wants new cutting-edge fabs built on EU soil, promising to streamline permit approvals to 12 months instead of the current two years.
Execution risk is real. Intel's planned €30 billion fab in Magdeburg, Germany — a flagship project under the original Chips Act — was cancelled in July 2025 after insufficient customer commitments. The EU's own Court of Auditors forecasts the bloc will reach only 11.7% global chip market share by 2030, well short of the 20% target. The US CHIPS Act, by comparison, had already disbursed $33.7 billion in grants by January 2025, against the EU's €13.75 billion in approved state aid by early 2026.
Sovereignty vs. isolation
Not everyone is convinced the package strikes the right balance. Keegan McBride of the Tony Blair Institute warns that a "Europe first" posture risks becoming a trap — genuine tech leadership requires exporting products globally, not just regulating imports. Europe has a strong track record on regulation; its commercial IT expansion is thinner.
The CADA trilogue between the European Parliament and Council is expected to open in Q3 2026, with final text unlikely before late 2027. Until then, the Level 3 ownership requirements remain a proposal — but one that US cloud providers are already lobbying hard against, with CCIA Europe filing formal criticism in June 2026. The direction of travel is clear even if the final rules are not.
