- Upcoming Cloud and AI Development Act could change how hyperscalers win major contracts
- European development, data sovereignty and foreign government exposure could be considered
- Henna Virkkunen expected to unveil changes amid broader push for European sovereignty
The European Union is preparing a new set of rules under its upcoming Cloud and AI Development Act, and it could mean that US hyperscalers might not be able to win public-sector contracts so easily.
Europe's proposed rules could target sectors like banking, energy and healthcare, introducing more factors to consider beyond just price and technical limitations.
Under the changes, companies bidding for those big contracts could also be assessed on whether their software and hardware have been developed in Europe, on the basis of data sovereignty protections, their exposure to foreign government access requests and more.
New EU rules could make it hard for US hyperscalers to win big contracts
These revisions could drastically impact Amazon, Microsoft and Google's chances to expand across Europe – globally, they jointly account for around two-thirds of the entire cloud market.
One of the biggest influencing factors behind the changes, per exclusive Reuters reporting, is the US Cloud Act. Under these American rules, US companies could be required to share data with authorities even if the data is stored outside of the US – for example in a supposedly sovereign European location.
The EU has also been pushing digital sovereignty and independence in recent years, which includes reducing its reliance on American Big Tech. EU Technological Sovereignty, Security and Democracy EVP Henna Virkkunen has been an influential character behind the push to build a stronger domestic cloud market and AI industry.
It's expected that Virkkunen will unveil the new proposals tomorrow (June 3), before it gets put to the bloc's member states and Parliament for approval.
