EU advances technological sovereignty with Cloud and AI Development Act and Chips Act 2.0
EU advances technological sovereignty with new Cloud and AI Development Act and Chips Act 2.0 to expand datacentres, boost chips and cut foreign dependence.
The European Commission has unveiled twin proposals aimed at strengthening EU technological sovereignty by reducing reliance on foreign cloud providers and overseas chipmakers. The Cloud and AI Development Act and a revised Chips Act 2.0 are designed to spur domestic datacentre capacity, anchor public demand to European suppliers and accelerate semiconductor investment ahead of the 2030 deadline. Lawmakers in the European Parliament and the Council must now negotiate and approve the measures before they can take effect.
Commission proposes Cloud and AI Development Act and Chips Act 2.0
The two legislative texts place the public sector at the center of Europe’s industrial strategy, signaling a shift from supply-side subsidies toward demand-side incentives. The Cloud and AI Development Act focuses on building a federated European cloud ecosystem and a network of EU-based datacentres to host public data. Chips Act 2.0 adjusts subsidy rules and procurement practices to encourage investment along the entire semiconductor value chain from research through manufacturing.
Public procurement to anchor demand for European providers
Brussels plans to use public procurement as a lever to create “anchor customers” for European technology firms, a deliberate attempt to replicate the early domestic support US firms enjoyed through government contracts. Under the proposals, public contracts would favor suppliers that commit to storing and processing public data within the EU or meet other European standards of control. Officials say this demand-side approach should create a sufficiently large and stable market to attract private capital without imposing explicit “Made in EU” requirements.
Four-tier framework for storage of sensitive public data
The Commission has proposed a four-level classification for public-sector data that determines where and by whom it may be stored and processed. Around 70 percent of public data would fall into the first tier and only need to be stored within the EU, while higher tiers add restrictions on third‑country access or require providers to be EU-based or approved by the Commission. The highest tier would cover roughly one percent of data deemed most sensitive and would require full EU control over storage and processing, a measure designed to mitigate legal access risks posed by foreign jurisdictions.
Ambitious datacentre expansion target to 60 gigawatts by 2030
Brussels is targeting an increase in European datacentre capacity from about 12 gigawatts today to 60 gigawatts by 2030, a fivefold expansion that the Commission estimates will require some €200 billion of investment. Most of that financing is expected to come from private sources, supported by coordinated public tenders and streamlined permitting in designated regions across member states. Every EU country would be asked to identify at least one area eligible for accelerated approvals to encourage geographically balanced growth and energy planning.
Chips Act 2.0 shifts emphasis to demand-side incentives and looser subsidy conditions
The updated semiconductor strategy departs from the first Chips Act by loosening conditions for state aid and emphasizing procurement-weighted incentives that reward investments with European supply‑chain benefits. The original Chips Act is credited by the Commission with catalyzing roughly €52 billion in investment and creating about 15,000 jobs, yet Europe’s share of global chip production remains near 10 percent. The 2.0 proposal lowers the bar for public support in order to attract a broader set of projects while aiming to reach a 20 percent global production share by 2030.
Open-source promotion and growing geopolitical sensitivity
To reduce software dependence, the Commission plans to promote and financially support European open-source solutions, and to prioritize them in public projects where feasible. Brussels estimates annual spending of around €264 billion on US software and IT services today, a figure that underpins the push to diversify suppliers and technologies. The legislative package has already provoked diplomatic unease, with US officials warning against measures that could disadvantage American providers, and Brussels stressing that the aim is strategic resilience, not protectionism.
The proposals respond to recent incidents that exposed supply vulnerabilities in critical sectors, such as last autumn’s stoppage of key components after a supplier block, which highlighted the wider systemic risk of overdependence on single providers. Negotiations in the European Parliament and Council are expected to be politically contested and could yield modifications on procurement rules, data tiers and state aid conditions. If adopted, the laws will set a multi-year trajectory of public contracting, investment incentives and regulatory guardrails meant to reshape Europe’s digital infrastructure and semiconductor capacity before 2030.
