Authored by Zach Meyers, CERRE Director of Research.
In the digital space, all eyes are on the European Commission’s recent Tech Sovereignty Package. The package aims to protect Europe from geopolitical risk while supporting European tech firms, particularly in cloud computing.
The Cloud & AI Development Act proposal – a centrepiece of the strategy – represents a significant change in tone for the Commission, which has maintained its ‘open market’ credentials long after the US and China abandoned them. Nevertheless, it strongly reflects the recommendations in my recent CERRE issue paper that any ‘European preference’ should be applied carefully and narrowly. Rather than broad-sweeping ‘buy European’ rules, the package reserves a small portion of the most sensitive public sector cloud contracts for EU players – leaving most of the market open to foreign cloud companies, so long as they take steps to protect European interests.
At CERRE, we welcome the EU addressing Europe’s weak position and taking a more unified approach to digital sovereignty. It is pleasing that – unlike attempts a few years ago to introduce ‘sovereignty’ rules through a backroom process – the EU’s co-legislators can now have an open, transparent, and (hopefully) evidence-based discussion about what sovereignty means. It is also pleasing that the Commission is promoting open-source software as a less contentious way to give public sector customers more choices and greater control.
Still, many questions remain. The package seems to allow different Member States to adopt different approaches – and to postpone difficult decisions. A clearer set of rules that have been politically agreed from the outset might be preferable. Policy-makers will want to ensure that the tough requirements on public authorities that use cloud computing will not have a counterproductive effect – slowing down much-needed digitisation. It is also unclear how easily even European firms will be able to meet the toughest sovereignty requirements, at least without incurring significant costs, so the requirements may need a reality check.
Perhaps recognising the trade-offs with competitiveness, some proponents of a “European preference” have shifted away from talking about geopolitical risk mitigation. They now argue that the purpose of European preferencing is primarily to help Europe capture more of the value in the ICT sector. This is a noble goal. But will reserving a share of public sector contracts for European cloud companies be enough to help them succeed, scale, and attract more capital and customers? Time will tell. One thing is for sure: the package – and the current Commission’s entire performance – should be assessed not on whether Europe can carve out a position in today’s technologies, but on whether it helps Europe launch the next generation of disruptive and indispensable innovations.
Subscribe to CERRE’s newsletter here.
