Moving Away from American Technology: The Reasons Behind the Shift
The dominance of the United States in the technology sector is facing increasing pressure. Not only is China seeking to break its dependence on US technology, but the European Union is now following suit.
On Wednesday (3/6) local time, the European Commission proposed regulations designed to boost domestic cloud, semiconductor, and AI industries. This move is an effort to sever dependency on US tech giants. This stance demonstrates the boldness of European nations in firmly opposing criticisms from the US government. Previously, the US has repeatedly threatened the EU with high tariffs if it continues to pressure its technology industry.
This criticism centres on the EU’s Digital Markets Act (DMA) and Digital Services Act (DSA), which aim to eradicate monopolistic practices by US giants such as Google, Apple, Meta Platforms, and Amazon. Due to these regulations, US tech giants must overhaul their services in the EU or face massive fines.
The EU’s latest regulations to reduce technological dependency on the US are outlined through the ‘Cloud and AI Development Act’ and ‘Chips Act 2.0’. This pursuit of technological sovereignty also aims to reduce the disparity between the EU, the US, and China in the tech sector.
The European Commission is targeting a global market share for European semiconductors of 20% by 2030, according to reports from CNBC International. “We cannot depend on third parties for the technology that keeps our hospitals operating, our energy networks stable, and our services secure,” stated European Commission President Ursula von der Leyen.
EU technology chief Henna Virkkunen warned of the risk of a “kill switch,” referring to the possibility that foreign governments or companies could deactivate or disrupt services that the EU relies upon. “We want to ensure that in critical fields, we can always control services and data within Europe,” she said.
The proposal establishes sovereignty requirements for cloud providers in sensitive sectors such as banking, energy, and healthcare. This is partly driven by concerns over US laws, such as the Cloud Act, which requires US-based providers to grant authorities access to data even if it is stored abroad.
For critical public contracts, vendors will be required to ensure that software and hardware are manufactured within the EU to prevent non-European companies from controlling data and services. “In highly critical fields such as defence, it is essential that technology is controlled by Europeans, from Europe, and that data remains here,” she added.
Amazon, Microsoft, and Google—the world’s three largest cloud service providers with a market share of over 60%—have found various ways to address European concerns. A Microsoft spokesperson stated, “Microsoft offers secure and sovereign cloud solutions that provide control to customers, and we are ready to help build a strong, resilient, and globally connected AI ecosystem in Europe.”
Microsoft has launched locally controlled cloud ventures such as Bleu, owned by France’s Capgemini and Orange, and Delos Cloud, an SAP subsidiary using Microsoft Azure infrastructure, in an effort to address European sovereignty concerns. Amazon has also launched a service this year that is fully hosted in Europe, physically and legally separate from its other global infrastructure, investing billions of euros in European cloud infrastructure.
The EU proposal also includes a fast-track approval process for data centres that use European-made chips and improve energy efficiency. The updated Chips Act aims to increase European chip production by encouraging agreements between manufacturers and buyers to guarantee future purchases. Both proposals will be negotiated with EU member states and the European Parliament in the coming months before they can become law.