The European Union is preparing yet another initiative aimed at reducing its reliance on American technology.
The effort comes at a time when the United States and China are competing for technological supremacy in artificial intelligence, with both countries pouring hundreds of billions of dollars into the infrastructure needed to win a contest that will shape economic and geopolitical power for decades to come. Under those circumstances, one might expect Europe to welcome and support investment from its closest ally.
Nevertheless, the European Commission’s “tech sovereignty” package includes measures designed to restrict American cloud providers, software, AI systems, semiconductors, and data centers throughout the region.
In fact, Senior Commission officials have been unusually candid about the objective. One recently warned that Europe risks becoming a technological “colony” unless it develops alternatives to foreign technology, “particularly American cloud providers” and urged the bloc to pursue more “sovereign” procurement policies.
U.S. officials should keep this development in mind as they weigh a Section 301 investigation and possible retaliation over the EU’s digital trade practices, particularly as rumors suggest European officials are attempting to stall progress under the guise of “dialogue” with the United States.
I previously argued in National Review that the administration has ample grounds to examine whether Europe’s pattern of digital regulations unfairly discriminates against American companies and warrants action under Section 301. That remains true despite whatever European officials may say in closed-door meetings with the administration, because their policy choices continue to point in only one direction.
As Steve Forbes put it, the Europeans are masters at stalling through endless talks with no intention of ever concluding an agreement. If the EU was genuinely interested in backing away from its digital-sovereignty agenda, it probably wouldn’t keep announcing new ways to expand it.
Indeed, earlier this year, the European Commission announced a €180 million tender for sovereign cloud services, reserved solely for EU institutions, bodies, and agencies as part of a broader effort to “reinforce strategic control” over critical technologies and infrastructure.
This is hardly the posture of a partner looking to find reasonable common ground.
It also follows years of EU digital policy that has prioritized investigating, regulating, and punishing a small group of American technology companies while insulating domestic competitors. Through the Digital Markets Act, for example, European regulators have subjected a small number of so-called “gatekeepers” – nearly all of them American firms – to a unique and burdensome set of regulatory obligations. Unsurprisingly, since the DMA took effect, the European Commission has investigated only U.S. companies for alleged violations of the law.
The Digital Services Act and data rules known as GDPR have similarly asserted broad authority over nearly every other facet of American digital services, from content moderation and data use to search, app distribution, and reporting requirements, and they have exercised that authority aggressively.
Since 2018, roughly $5.3 billion in data-privacy penalties have been levied against American companies, accounting for 83% of all such fines, with eight of the 10 largest GDPR actions landing on US firms. Technological innovation has been jeopardized as well. Companies like Apple, Meta and Microsoft have all been forced to delay product launches and ship watered-down versions of their services inside the EU.
These policies are not only unfair and out of step with what one would expect from an ally, but also strategically counterproductive. They have increased transatlantic tension and undermined American technological innovation at a moment when it is vital to Western economic strength and national security. Policies that consistently disadvantage US firms carry serious consequences for the broader alliance, including opening the door for Chinese companies that pose significant security threats to European digital infrastructure.
If European officials approach the United States with claims of renewed openness to engagement on digital trade, particularly in response to the prospect of a Section 301 investigation and possible retaliation, US policymakers should remind them of this new “tech sovereignty” package and ensure that these serious issues receive commensurate attention.
We cannot allow Europe to crush American companies while the EU regulators twiddle their thumbs idly in faux negotiations with the United States. Absent clear evidence that Europe is prepared to move toward a more balanced approach, the United States should proceed with a clear understanding of the system it is confronting and be prepared to respond accordingly.
