Exclusive-EU cloud rules to curb Big Tech's access to strategic tenders, draft document shows

By Foo Yun Chee and Toby Sterling

BRUSSELS/AMSTERDAM, June 1 (Reuters) - The European Union plans to propose strict criteria for cloud computing services in highly critical state tenders that could exclude Amazon, Microsoft and Google from such projects, according to documents seen by Reuters.

The proposal is part of the European Commission's Cloud and AI Development Act, which EU tech chief Henna Virkkunen will unveil on Wednesday as part of a package aimed at reducing the bloc's dependence on U.S. tech and promoting EU businesses.

The push for sovereignty requirements in sensitive sectors such as banking, energy, and healthcare is driven by concerns over the dominance of U.S. tech giants, as well as concern over laws such as the Cloud Act, which requires U.S.-based providers to grant authorities access to data even if it is stored abroad.

The EU proposal, previously unreported and that could face late changes, also introduces mandatory "non-price" criteria for public tenders, including requirements for software and hardware developed within the EU, which would disadvantage U.S. Big Tech.

The EU executive's plan, which needs backing from the bloc's 27 countries and the European Parliament in the coming months, could draw backlash from Washington, which is already critical of EU laws aimed at reining in Big Tech and ensuring that they police their platforms for illegal and harmful content.

The European Commission declined to comment on details of its plans though it said that its tech sovereignty package was "crucial for strengthening Europe's own technological capacities, for Europe's competitiveness and security".

Amazon and Microsoft declined to comment.

Other criteria for selecting cloud vendors for critical state tenders are the level of data protection, third countries' control over the data and services of these providers, and how open their respective markets are for cloud services.

The Commission also proposed that it act as a central purchasing body for EU countries and institutions to procure data centre services, cloud computing services, software and AI systems for itself and for the latter groups.

FAST-TRACK APPROVAL FOR DATA CENTRES

The draft also sets out a streamlined fast-track approval process for data centres which will get preferential grid access and reduced network charges for using European-made chips or cutting their energy costs.

Last week Reuters reported on the package's Chips Act 2.0, which will broaden the range of companies that can receive state funding in strategic technologies.

Amazon, Microsoft and Google together have a combined global market share of over 60% in cloud services.

The three companies have sought to address sovereignty concerns in various ways. Amazon this year launched a service that is hosted entirely in Europe, physically and legally separate from its other global infrastructure.

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.

Google has sought to remain eligible for sensitive European cloud work through S3NS, a Thales-controlled cloud joint venture, and a separate partnership with French provider OVHcloud.

(Reporting by Foo Yun Chee in Brussels and Toby Sterling in Amsterdam; Editing by Adam Jourdan, Louise Heavens and Emelia Sithole-Matarise)