The European Commission’s thrice-delayed European Technological Sovereignty Package was finally unveiled last week.
The ambitious package covers everything from cloud computing and semiconductor chips to open-source software and energy. The goal: to break Europe’s technology dependence on foreign providers, especially the United States and China.
However, the scattershot bundle of regulations, strategies and roadmaps have left analysts and lawmakers with more questions than answers. Most notably, the Commission deferred to member states on how the much anticipated ‘Made in Europe’ procurement rules would actually be enforced. It also failed to clarify where financing for such a shift would come from.
Critics such as MEP Axel Voss (EPP, DE) also said that the multi-year legislative procedure to finalize the package is far too long.
Others, such as competition economist and Eurostack Industry Initiative founder Cristina Caffarra, worried the Commission had buckled under U.S. pressure and watered down the package, which initially had a stronger mechanism for buying European.
“It’s an everything, everywhere all at once strategy that’s … flooding the zone,” said Maria Nowicka, a policy researcher for global chip dynamics at the European tech think tank Interface. “What’s missing is a very clear strategic direction on what exactly will be the final target of this package.”
Decoupling tech from the U.S. and China
Over 80% of Europe’s essential digital services are on foreign-owned platforms or infrastructure, according to the Centre on Regulation in Europe. The EU also spends an annual €264 billion on buying U.S. tech solutions — sending money to Silicon Valley that could be boosting tech solutions at home.
In a strategy document released alongside the legislation proposals, the Commission defined tech sovereignty — a term much bandied about in Brussels — as “Europe’s ability to develop, control and scale the critical technologies, infrastructure, services and data...”
However, the document goes on to underscore that sovereignty doesn’t mean “tech decoupling” or “isolation,” but is underpinned by fair market competition. As Commissioner for Tech Sovereignty Henna Virkunen said at a press conferance last week: “Europe remains grounded in openness.”
The muddled messaging has left analysts and lawmakers scratching their heads over how the made-in-Europe provision will be implemented and enforced — and signaled the Commission's lack of ambition in charting a clear path for member states.
“It takes digital sovereignty seriously and comes up with some real initiatives that can make a change if they’re implemented correctly,” said Signe Ravn-Højgaard, the director of the Digital Infrastructure think tank in Denmark. “But my concern is that each country will do it in their own way, and that it will not be enforced throughout the entire European Union.”
Not so ‘made in Europe’
The tech sovereignty package has four elements: the Cloud and AI Development Act, Chips Act 2.0, an open-source strategy and a roadmap for digitalization and AI in energy.
For now, analysts are split on whether the strategy does enough to incentivize buying European technology.
At the core of the package is the Cloud and AI Development Act which aims to triple Europe’s data center capacity in the next five to seven years. It also sketches four tiers of cloud sovereignty based on supply chain, location and ownership, in an effort to ease the dominance of U.S. cloud computing in Europe.
However, under the proposed regulation, only some 10% of cloud contracts will have a strong European sovereignty standard, according to Zach Meyers, the director of research at the Centre on Regulation in Europe, while the remining 90% will be open to all suppliers. Additionally, the Commission deferred to member states on the exact implementation of the standards.
“It’s slightly less protectionist than many had feared, and we see that a lot of discretion is still left to member states,” said Patrick Grady, a policy manager at Chamber of Progress, a center-left tech policy coalition, “However, the Commission has absolved itself from the responsibility of deciding” on the implementation of the standards.
The Commission could have gone much further in shaping a harder ‘Made in Europe’ position, according to Caffarra. “It’s very feeble,” she said. “They have watered it down further even relative to the leaked version a week before.”
She said the lack of “mandate” on made-in-Europe procurement “reflects a struggle to accommodate conflicting member states views but also trying to avoid as much as possible frictions with the Trump administration or anyone in the U.S.”
While some countries, including France, have long favored a European preference policy, more free-trade oriented countries such as Germany and the Nordics have resisted.
Evern so, Meyers said that even designating around 10% of all cloud contracts with strong European sovereignty standards was a significant change for the EU, which “has prided itself on following WTO and other international trade agreements.”
“I don’t think the EU is moving anywhere near the U.S. or China, but they are certainly taking a step towards it,” he said.
Closing Europe’s semiconductor gap
The other key legislative element of the package is the Chips Act 2.0, which plans to build on the 2023 Chips Act to further strengthen Europe’s advanced, but largely research focused, chip industry.
The new act focuses on the demand side of the chips ecosystem by working with the Cloud and AI Development Act to triple the amount of cutting-edge data centers. Europe’s current demand is mostly for rudimentary chips used in cars or washing machines, rather than the much more advanced chips that power AI applications. Without boosting that homegrown demand, any industrial policy to ramp up Europe’s advanced chips would merely generate supply for overseas buyers.
However, Ravn-Højgaard noted that the Chips Act 2.0 was unveiled just as the EU signed the Pax Silica agreement with the U.S., which seeks to create a broader U.S.-led international coalition against Chinese chips production. That could mean even greater integration within a U.S.-led semiconductor industry, rather than boosting European sovereignty.
Another vital component of the package is a strategy to leverage Europe’s edge in open-source software. Member states boost over 500 for-profit open-source software companies, and the Commission’s proposal encourages more governments to procure from European companies.
Funding questions loom
The biggest question is funding. According to the Commission, €120 billion is needed to boost the EU’s semiconductor ecosystem while ramping up sovereign data center capacity will require an additional €200 billion by 2036.
“Europe is facing a critical investment gap,” said Virkunen, at Wednesday’s press conference. “We urgently need private capital to step up.”
According to Caffarra, the sheer number of policy initiatives, as well as the overly bureaucratic strategy document, point to a lack of clarity about how to disentangle the EU from the U.S. tech stack — and how to do so with the necessary speed.
“We are in a situation where we need to act immediately,” said Voss. “We can die in beauty with all of our proceedings, but we always come last.”
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