EU targets Big Tech dependence with 'made-in-Europe' drive

By Foo Yun Chee

BRUSSELS, June 3 (Reuters) - The European Commission proposed laws on Wednesday to boost domestic cloud, AI and semiconductor industries and cut reliance on U.S. Big Tech, defying U.S. government criticism of the bloc's crackdown on its industry.

The Cloud and AI Development Act and Chips Act 2.0 form part of Europe's push for technological sovereignty and its efforts to close the gap with U.S. and Chinese rivals. The Commission wants to double the EU's global market share of semiconductors to 20% by 2030.

"We cannot afford to depend on others for the technologies that keep our hospitals running, our energy grids stable and our services secure," Commission President Ursula von der Leyen said in a statement.

EU tech chief Henna Virkkunen warned of the risk of "kill switches", referring to the possibility that a foreign government or a company at the behest of authorities could disable or disrupt services.

"We want to be sure that in the critical fields we are always able to control the services and control the data in Europe," she told reporters.

The proposal sets out sovereignty requirements for cloud providers in sensitive sectors ​such as banking, energy and healthcare, driven in part by concerns over U.S. laws, such as the Cloud Act, that require U.S.-based providers to grant authorities access to data even ​if it is stored abroad.

U.S. BIG TECH SEEKS WORKAROUNDS

For critical public contracts, vendors will be required to ensure that software and hardware are made in the EU, excluding non-European companies from controlling data and services, Virkkunen told reporters, confirming a Reuters story.

"In very critical fields like defence for example, it is very important that the technology is controlled by Europeans from Europe and also data is staying here," she said.

Amazon, Microsoft and Google, the world's three biggest cloud providers with a market share of over 60%, have come up with various ways to address EU concerns.

"Microsoft offers secure and sovereign cloud solutions that put customers in control, and we stand ready to help build a strong, resilient and globally connected AI ecosystem in Europe," a Microsoft spokesperson said.

Microsoft has launched locally-controlled cloud ventures such as Bleu, owned by France's Capgemini and Orange, and Delos Cloud, an SAP subsidiary using Microsoft Azure infrastructure in an effort to address Europe's sovereignty concerns.

Amazon, which this year launched a service that is hosted entirely in Europe, physically and legally separate from its other global infrastructure, said it has invested billions of euros in European cloud infrastructure to help companies grow. 

"European organizations deserve access to the best technology available from trusted providers, chosen on the basis of security, performance, verifiable controls, and value," a spokesperson for Amazon's cloud unit AWS said.

The EU proposal also includes a fast-track approval process for data centres that will get preferential grid access and reduced network charges for using European-made chips and improving energy efficiency. 

The updated Chips Act aims to boost European-made chips by encouraging agreements between manufacturers and buyers to guarantee future purchases of a product.

Both proposals will be negotiated with EU member states and the European Parliament in the coming months before they can become law.

U.S. officials have in recent months criticised EU rules aimed at reining in Big Tech and forcing them to better police their platforms for illegal and harmful content.

(Reporting by Foo Yun Chee, additional reporting by Bart Meijers; Editing by Elaine Hardcastle and Barbara Lewis)