Connecting the dots: Despite all being US-based ventures, cloud corporations now control the overwhelming majority of the world's sensitive data. However, Europe would very much like to change the status quo with a soon-to-be-approved regulatory package.
According to people familiar with the matter, the European Commission is preparing yet another unpleasant regulatory surprise for the current US administration. CNBC talked with two unnamed EC officials, who outlined the significant change that the upcoming "Tech Sovereignty Package" (TSP) might bring to the cloud computing market.
The EC – Europe's executive cabinet and one of its main governing institutions – is expected to introduce the new package later this month, providing some important measures to support the continent's digital self-reliance. Cloud computing is one of the most important tools sustaining today's digital economy, and the TSP will have a particular focus on the sector.
The EC insider sources told CNBC that the TSP could include a significant limitation for foreign cloud corporations when it comes to managing sensitive data. To put it simply, US cloud giants such as Microsoft, Amazon, and Google could be restricted in their ability to process specific data types on behalf of public organizations, including financial, judicial, and health-related data.
The sources noted that the new provisions will not impact private companies, which will be able to choose whatever cloud platform they like to manage their proprietary data. However, US corporations will likely be impacted by the change in a significant way.
One of the EC commissioners said that the TSP will be designed to bootstrap sovereign cloud offerings, giving EU-based corporations a new chance to flourish and bolster their institutional userbase. A reformed public procurement market should also promote a more "diverse" choice between cloud and AI service providers, the official said.
When asked for comment, a Commission spokesperson told CNBC the package was "about Europe waking up and getting its act together."
Members of the European Commission are currently discussing the most crucial aspects of the new cloud-related provisions. The Tech Sovereignty Package is expected to be a major part of Europe's regulatory push, alongside other important measures such as the Cloud and AI Development Act (CADA) and the Chips Act 2.0.
European authorities have been trying to establish a sovereign cloud market for some time now. At this point, Brussels and Washington are essentially on a collision course over digital market regulations. The current, unregulated expansion of the AI data center market happening in the US provides an interesting angle on the significance of these regulatory attempts in the long term.