The European Union has been suffering from a specific kind of technological inferiority complex for years. On the one hand, it aspires to be a global regulator, tempering the drive of digital giants with legislation such as RODO or the AI Act. On the other hand, when the lights go out in the Brussels conference rooms, European business and public administrations log on to the clouds provided by Microsoft, Amazon or Google anyway.
However, the European Commission has decided to change this by announcing an ambitious new strategy for a digitally sovereign Europe. The aim is clear: to become independent of Silicon Valley and build its own powerful technology ecosystem. However, the devil – as usual in Europe – is in the details, bureaucracy and susceptibility to lobbying. Are the EC’s four new pillars a solid foundation for a digital fortress, or merely an expensive renovation of the facade?
The four pillars of the EU edifice – an anatomy of promises
Brussels’ new strategy is not a minor course correction. It is an attempt to build an integrated value chain to bring the digital heart of the world back to the Old Continent. The Commission is serving us a technocratic menu of four key items:
- Chips Act 2.0: This is a painful but necessary admission of error. The first Chips Act of 2023 proved insufficient to put up a real fight against the Asian and American giants. The new version is expected to drastically improve investment conditions and – crucially – loosen state aid rules. Europe wants to legally pump billions into expanding the semiconductor supply chain.
- Open Source strategy: Brussels has finally recognised that the European software community has a gigantic contribution to make to global code. The plan is to give absolute priority to open alternatives to non-European software. The change is to start from the very top – i.e. the digitalisation of the EU administration.
- Digitising energy: Data centres are energy vampires. The EC wants to combine fire and water by digitising the energy sector faster with the help of artificial intelligence. The goal? To integrate server rooms with the energy infrastructure in such a way that digital factories support the stability of the grid, instead of scarring it.
- The Cloud and Artificial Intelligence Development Act: This is the main course and the foundation of the entire strategy. A legislative battering ram to force Europe to radically accelerate the expansion of its own cloud infrastructure, in direct response to the dominance of US hyperscalers.
The big triple whammy, or infrastructural leap into the deep end
The most striking figure in the Commission’s new plans is the need to at least triple the capacity of data centres in the EU over the next five to seven years. This is a mammoth logistical and engineering challenge. For this hussar charge to succeed, Europe must overcome two formidable barriers.
The first is the availability of clean energy. The AI industry is devouring electricity at a geometric rate. Unless the EU’s electricity grid undergoes a rapid transformation, the new data centres will at best be able to stand empty.
The second barrier is bureaucracy. Brussels promises to roll out the ‘red carpet’ for investors building server rooms. Authorisation processes, land allocation, access to infrastructure and water (needed to cool machines) are to be drastically simplified and accelerated.
This is where the warning light comes in red, however. In the USA, unlimited, aggressive growth in data centre capacity has led to water and energy crises in many regions, realistically reducing the quality of life for residents. Europe, while chasing the leaders, must not unreflectively copy these mistakes in the name of a blind pursuit of computing power.
Own AI: Mistral against the rest of the world
Large server rooms cannot just be empty halls filled with silicon. They must serve something, and that ‘something’ is to be European artificial intelligence. The European Commission has been vocal about supporting the development of new frontier models, sectoral AI and so-called ‘physical AI’ (robotics and industrial automation). Europe does not just want to be a customer buying ready-made subscriptions to advanced LLM models from the US.
The problem is that in the ring of advanced linguistic models, Europe today actually has only one heavyweight competitor – France’s Mistral AI. It’s a great, innovative company that builds reliable and secure models, but market realism would have you remember that giants like OpenAI and Anthropic still have much bigger budgets and technological sophistication.
To give the local players a run for their money, the Commission plans to create a single framework for assessing cloud and AI sovereignty. These are to form the foundation for large public tenders. Those who do not meet the EU definition of ‘sovereignty’ will not get a sniff of public money. And this is where we reach the point where this whole ambitious plan starts to creak at the seams.
The Achilles’ heel of the strategy: Who will define sovereignty?
The biggest problem with the EU project is that the European Commission is once again demonstrating a tendency to keep its doors open. There is, after all, already the Gaia-X project, an independent but EU-backed initiative that has developed an ingenious and transparent system of sovereignty labels. In order to get the highest level of security there (Level 3), the service provider must be physically based in the European Union. Simple? Simple.
But the Commission prefers to create its own tool: The Cloud Sovereignty Framework, based on 18 criteria. And this is where the lobbyists come into play. As CISPE (the organisation of European cloud providers) alerts, the proposed criteria have been so cleverly watered down under pressure from overseas that US hyperscalers will be able to get the green light and high sovereignty ratings without much difficulty.
There is a real risk that we will breed a monstrosity in the form of ‘sovereignty in name’. Microsoft, AWS or Google already offer so-called ‘sovereign clouds’ for Europe. If we triple the capacity of Europe’s server rooms, but they are physically dominated by local subsidiaries of US giants, the whole EU strategy will be in ruins. Instead of building European independence, taxpayers’ money will go to subsidise infrastructure for Silicon Valley.
Geopolitical clinch and empty pockets
In keeping with a long-standing European tradition – absolutely no one is happy with the current shape of the proposals.
Within the Community, there is a clamour that the Commission is treading too carefully. Critics point out that the rules leave too many loopholes for foreign capital and fear of upsetting Washington paralyses bolder decisions. From across the Atlantic, on the other hand, there are the traditional outraged voices of ‘European protectionism’. Which, by the way, is the height of hypocrisy, given the extreme protectionist and aggressive economic policy of the US administration under Donald Trump.
Finally, it is worth coming down to earth on purely formal matters. The document on the table is for the time being only a proposal, a declaration of intent. Long, gruelling negotiations in the European Parliament and the Council of the European Union lie ahead. By the time officials and member states come to terms, the technology market will have taken another three steps forward.
Moreover, the strategy as it stands suffers from a classic Brussels disease: a lack of clear funding. The plan to triple the number of data centres and challenge US AI requires hundreds of billions of euros. The Commission points the finger at the need for “major investment”, but does not specify where this money should physically come from. Member states, struggling with their own budget problems, are unlikely to be keen on writing blank cheques.
A house for their own or a hotel for guests?
The European Commission’s digital sovereignty strategy is a project with the right diagnosis but an uncertain therapy. It is good that Brussels recognises the need to expand infrastructure, tame the energy crisis and support projects such as Mistral AI.
But as long as EU officials bow to US lobbying pressure and dilute the definition of technological sovereignty, Europe will remain little more than a digital colony. For this plan to make sense, Brussels must stop calculating whether it will offend Washington. It is time to make a clear decision: are we building a safe house for our own business and innovation with the EU’s billions, or are we merely building a luxury hotel where profits will ultimately be settled by the US taxpayer anyway.
