The European Commission has presented its strategy for a digitally sovereign Europe. At its core is a legislative proposal to accelerate the expansion of data center infrastructure and the development of AI.
The European Commission presented its strategy for a digitally sovereign Europe last week. It is based on four pillars:
- The Chips Act 2.0: this builds on the first (inadequate) Chips Act of 2023 and its primary goal is to improve investment and competitive conditions for chip design and production. State aid will become possible to develop the semiconductor value chain within the Union.
- The Open Source Strategy: this component recognizes that the EU already contributes significantly to the open-source community. The EU therefore wants to prioritize open-source alternatives to non-European software, including within its own administration.
- The digitization of energy: the Commission wants the energy sector to be digitized faster, using AI among other tools. This should ensure, for instance, that data centers can be integrated into the energy infrastructure, providing both environmental and stability benefits.
- The Cloud and AI Development Act: this is the foundation of the entire initiative: with this legislation, Europe aims to accelerate the expansion of digital infrastructure in Europe so that the EU can provide an answer to the availability of data centers and cloud solutions from the US.
AI and data centers as the cornerstone
The Cloud and AI Development Act shows where the Commission’s true ambition lies. The first issue the legislation aims to address is the capacity shortage. Data center capacity within the EU must at least triple within five to seven years.
To make that possible, two hurdles must be overcome. The availability of energy is one of them. The energy digitization plans are intended to provide a solution. The other is the permitting process. The goal is for data center operators to obtain the necessary permits faster and more easily.
Red carpet
To some extent, this sounds like a good idea: the dependence on American hyperscalers is indeed driven by a lack of credible alternatives within the EU. On the other hand, the limitless expansion of data center capacity in the US threatens to have a major impact on the livability of various regions. It seems important that the EU does not repeat those mistakes.
The extent to which the European Commission intends to roll out the red carpet for new data centers with this proposal is not yet clear. Faster access to energy, land, money, and water are already among the measures.
Own AI
Those data centers must also serve a purpose. The Commission wants to support the development of new frontier models for AI. The ambition is not to be exclusively dependent on foreign players for the primary LLMs. Sector-specific AI is also high on the agenda, as is what the Commission calls ‘physical AI’.
The biggest asset Europe currently has is the French company Mistral. That company is the only one building credible frontier models, although the LLMs from Anthropic and OpenAI are currently still more capable.
Finally, the Commission wants to provide a framework to assess the sovereignty of cloud and AI. To achieve digital sovereignty, it is essential that everyone uses the same definition of sovereign. That framework will then serve as the basis for (public) procurement.
Points for sovereignty
The sovereignty framework reveals the project’s Achilles’ heel. The Commission plans to reinvent the wheel, but less effectively. Gaia-X, which is independent of the EU but supported by it, has already developed a labeling system for sovereignty that covers the requirements quite well. To achieve the highest label (Level 3), organizations offering services must have their headquarters in the EU.
Europe still wants to roll out its own framework, which will presumably be based on the European Commission’s sovereignty scores: the Cloud Sovereignty Framework. This is based on eighteen criteria and its development has not been free from lobbying. According to criticism from CISPE, US hyperscalers could easily get a good report, which contradicts the original intent.
Balancing act
This highlights the balancing act of the European Commission and the EU. On the one hand, lawmakers certainly want to issue regulations that promote sovereignty. In this context, sovereignty means greater independence, in practice from the US (and China). However, this cannot be stated in so many words, as it would anger the US. This opens the door for lobbying, which in turn jeopardizes the effectiveness of sovereign ambitions.
The danger is an expansion of data centers that are sovereign in name only. Think of the so-called sovereign clouds from Microsoft or AWS. If European data center capacity triples, but primarily through such sites, it will not be Europe that benefits. The entire sovereignty strategy falls apart if derivatives of American and Chinese players take on a key role.
Nobody’s happy
In European tradition, nobody is happy with the current proposal. Within the EU itself, the criticism is that the Commission does not go far enough. The plan is said to lack depth and leave too much room for non-European hyperscalers. From across the Atlantic, cries of protectionism reach European ears, though these could be called slightly hypocritical given the economic policies of the Trump administration.
In any case, this proposal is far from binding. Negotiations on the proposal are now starting with both the European Parliament and the Council of the European Union. Real legislation will only follow once parliamentarians and member states agree. Even if the proposal is approved, implementation is not a given. A large part of the plans depends on major investments, and it is unclear where those will come from.