EU-US rift triggers call for made-in-Europe tech

BRUSSELS — The European Union is under pressure to step up its tech game and wean itself off a heavy reliance on United States digital infrastructure and services as transatlantic ties hit a new low.

That’s going to come with a heavy price tag.

European data is primarily stored on U.S. cloud services, with companies like Amazon, Microsoft and Google owning over two-thirds of the European market. Europe accounts for just 10 percent of the global microchips market. U.S.-based companies like OpenAI and Anthropic are leading the artificial intelligence revolution. 

Europe’s U.S. tech addiction has long been brushed aside as a fait accompli. 

That’s now in question as Germany’s incoming chancellor warned that Europe needs to “achieve independence from the USA” as U.S. President Donald Trump threatens tariffs and withdraws support from Ukraine.

Efforts to make Europe more technologically “sovereign” have gone mainstream. The European Commission now has its first-ever “technology sovereignty” chief, Henna Virkkunen. Germany’s incoming ruling party, the center-right Christian Democratic Union, called for “sovereign” tech in its program for the February election.

“Mounting friction across the Atlantic makes it clearer than ever that Europe must control its own technological destiny,” said Francesca Bria, an innovation professor at University College London and former president of Italy’s National Innovation Fund.

Stacked

Over the last year, some influential tech policy people — Bria included — have gathered around the idea of a EuroStack. They claim that to build a European tech infrastructure, three layers of core technologies stacked on top of one another must be addressed and tackled simultaneously. 

The first is infrastructure, such as microchips; the second is intermediaries, such as cloud platforms, a digital ID, or the digital euro; and the third is applications, connected and driven by artificial intelligence. 

Sovereignty runs through the three layers: chips designed in Europe to power data centers and cloud services that store data locally, on which European AI models are trained. 

Cristina Caffarra, a competition economist, told POLITICO in January that the point is not to eliminate U.S. Big Tech in those layers but to at least “create some space for European technology.” 

Bria argues that a more European sovereign infrastructure ensures that “no external power can pull the plug on the EU’s digital backbone,” a risk if relations with the U.S. and China cool. 

Europe has had promising pilot projects in all layers, but they have either failed to scale or were unsustainable in the long term. 

The cloud is Europe’s biggest weakness. Cloud services act as the backbone for many public and business services and store sensitive data.

Despite the Franco-German Gaia-X push to convince European companies to store data locally with European providers, the share of European cloud providers has consistently declined in recent years. 

EuroStack advocates see that the tide can be turned only with sustained investment, guaranteed government demand, and unified rules on transferring and securing data. 

Sebastiano Toffaletti, secretary-general of the Digital SME Alliance and one of the authors of a study on the EuroStack, claims that a Buy European Tech Act could be a decisive step toward a European cloud. 

“Europe has plenty of industrial capacity that just needs to be federated,” he said. 

“If the European companies were reassured that governments would buy from them, then they would immediately invest and overcome the fragmentation,” he said. The same goes for AI, he added.

Sarah Knafo, a French far-right European lawmaker, suggested in a draft report for the European Parliament that governments should favor sourcing from European companies in some “strategic markets.” The Commission has separately recommended a “buy European” push for governments purchasing climate-friendly products.

Cybersecurity entrepreneur Bert Hubert, who has advised the Dutch government, said “it is madness to continue transferring the running of European societies and governments to American clouds,” according to a February blog post.

Axel Voss, a German center-right member of Parliament, echoed this, telling POLITICO that “we do not have a reliable U.S. partner any longer” and that Europe should develop its own “sovereign AI and secure cloud” in response.

Price tag

The EU executive has started picking up the pleas for more sovereign European tech, especially in AI.

Boosting AI computing capacity in Europe has been one of the Commission’s key objectives. Virkkunen in December announced up to €2 billion in investment in seven European sites.

The U.S. immediately dwarfed that amount by promising a $500 billion AI hardware plan in January.

In response, the EU made an attempt in February to mobilize €200 billion for AI hardware from private investors, companies, EU countries and its own funds.

The size of the investment needed is likely the biggest hurdle for building a European tech infrastructure. AI hardware is only one of the three layers needed for a sovereign European tech infrastructure.

Bria points to a €300 billion price tag for building out the EuroStack over the next 10 years, as estimated in a recent study commissioned by the Bertelsmann Stiftung think tank.

U.S. trade group Chamber of Progress, which includes several U.S. Big Tech companies, estimates that the full cost would be much higher, over €5 trillion.

That could be too heavy a burden on the EU budget and financial capacity at a time when hundreds of billions of euros are already flowing to boost defense capacity.