- The EU’s proposed Cloud and AI Development Act (CADA) aims to triple regional data center capacity and boost sovereignty
- The plan would favor EU-owned and controlled providers for the most sensitive workloads
- Hyperscaler-backed industry group CCIA argued the proposal is discriminatory and unworkable
A new European Union (EU) plan to triple data center capacity and boost cloud and AI sovereignty has come under fire from critics who say the proposal sets an impossible – and discriminatory – standard for international providers.
The EU’s newly introduced Cloud and AI Development Act (CADA) is designed to tackle two key goals: first, dramatically increase data center capacity available across member states in the next five to seven years and second, protect critical applications and data.
To achieve the former goal, the act seeks to harmonize and streamline permitting processes for data center construction. It would calls for member states to tap Europe’s extensive research and development capabilities to build energy efficient compute infrastructure and advanced AI technologies, and increase autonomy across the cloud stack.
The latter goal is covered by the proposed implementation of a new four-level, EU-wide cloud and AI sovereignty framework. Level 1 simply requires that data is processed and stored in infrastructure located in the EU. But Level 3 specifies that “providers must be owned and controlled from the EU” while Level 4 demands that providers face “no interference from a third country.” The act would require member states to assess which use cases should be served by each of the four sovereignty levels to ensure proper protection.
CADA's introduction follows the passage of the U.S.'s Clarifying Lawful Overseas Use of Data Act (CLOUD Act) in 2018, which created friction around data sovereignty, and comes in the context of growing concerns of a "kill switch" risk which could cut Europe off from critical cloud services.
Practically, adoption of the act would curb the influence of U.S.-based and other international cloud providers. That effect is intentional. The text of the act notes that “three non-EU hyperscalers control over 70% of the European cloud market,” which is a problem given that these providers are subject to third-country laws that may conflict with EU rights and data protection requirements.
“We live in a world where geopolitics and technology are inseparable. Those who champion technological innovation will shape the future—and we must ensure that Europe plays a leading role in this,” European Commission EVP for Tech Sovereignty, Security and Democracy Henna Virkkunen stated. “It is time for Europe to be in control of its data, of its supply chains, and of its future in a clean and sustainable way.”
Pushback and challenges
But Dell'Oro Group Research Director Alex Cordovil noted some of CADA's provisions won't be easy to implement.
"Notably, Brussels wants a rating scheme so new capacity is built into Europe's energy system sustainably, not just bolted on. The harder question: paperwork reform helps, but tripling capacity is a power problem first, and it won't conjure megawatts where the grid connection is the real constraint," he wrote on LinkedIn.
Meanwhile, the Computer and Communications Industry Association – which counts cloud providers Amazon, Google, Meta and Nscale among its members – wasted no time hitting out at the proposal. The group argued the act would set “impossible” sovereignty standards.
“The Cloud and AI Development Act is a direct recipe for fragmented discrimination across Europe in 27 different ways,” CCIA SVP and Head of Office Daniel Friedlaender said in a statement. “By pairing a strict mandate with unrealistic standards that the EU itself cannot meet, the Commission is effectively giving national capitals carte blanche to shut out trusted global vendors from every major technology-producing nation outside the Union.”
The proposal, though, doesn’t automatically mean CADA will become law. It must first be negotiated by the European Parliament and the Council of the European Union.