Under the guise of protecting European data and values, the European Commission has produced one policy proposal after another cracking down on big American tech companies and imposing strict “sovereignty requirements” for new technologies.
France and its dynamic (some would say divisive) French European Commissioner Thierry Breton drove this “digital sovereignty” vision. Their goal is to create a “European” digital ecosystem with high (virtual) walls. This means storing all data within the European Union, limiting market access for large foreign (translation American) tech companies, and increasing control over its digital infrastructure.
But this protectionist philosophy might be on the decline. Fierce pushback greeted recent proposals on financing for internet infrastructure and cloud services. Breton’s future is unclear. He publicly criticized European Commission President Ursula von der Leyen on social media and France has not yet chosen its candidate for a new term.
After Commissioner Breton took office in 2019, the former French finance minister and business executive crusaded to shield Europe’s industry from crippling energy prices, American subsidies, and “naive” EU free traders. The French penchant for state intervention found receptive ears — and early successes.
EU’s strong rules prohibiting market-distorting state aid were weakened. An expensive European Chips Act, allowed governments to subsidize the semiconductor industry. A “fair share” proposal sought to have American companies pay for European telecommunications infrastructure. A Cloud Certification Scheme would limit market access to foreign cloud companies under the guise of cybersecurity concerns. The recently enforced Data Act significantly restricts access to European data for large US companies.
To be fair, Washington’s own tech policies have helped fuel Europe’s digital sovereignty drive. The Inflation Reduction Act provides tax credits for US-made electric cars and support to American battery supply chains — infuriating the French and other Europeans. The US CHIPS & Science Act was even more generous than the European equivalent.
This is far from the first time that American tech frightened Europeans. During the 1990s, threatened by the transition from physical to “electronic mail” (before it became email), the European Commission considered a “bit tax” on every piece of information sent over the Internet.
Europe never did end up imposing a bit tax and pushback against French-style protectionism seems to be mounting. Small EU countries pushed back against the Cloud Certification Scheme, and the most recent version removed most data localization and sovereignty requirements. The “fair share” network fee has been squelched, at least for now.
France itself seems to be having some second thoughts. Its most successful tech company Mistral AI, recently valued at €2 billion, convinced French President Emmanuel Macron to soften the EU’s AI Act. Cédric O, a former French digital minister, is a Mistral co-founder. When Mistral recently announced a deal with US tech giant Microsoft, the French government remained silent, despite outrage from Brussels.
But without a clear alternative, the French may keep pursuing digital sovereignty. Breton’s “fair share” program popped back up under a different name in a recent Commission telecom White Paper. No “regulatory pause” looks in sight, even as the EU struggles to digest its recent wave of new tech legislation.
It remains unclear who could fill this leadership vacuum. Finland and other Nordic countries hope for a more open, less protectionist digital strategy. They have openly criticized French-led European digital policy proposals.
New tech leadership requires a large EU member to join them. An obvious candidate is Germany. But its coalition government often is divided on tech policy. Poland is another candidate. Its new pro-EU government has tech high on its list of priorities. But Poland’s previous nationalist government left a bitter taste in Brussels.
Europeans go to the polls in June to elect a new European Parliament. The US votes in November. With the far right likely to make significant gains in Brussels, and a potential change in administration across the Atlantic, appetite for protectionist tech policies could rise, and la souveraineté numérique might come roaring back.
Clara Riedenstein is a researcher at CEPA’s Digital Innovation Initiative and an Oxford University graduate.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.
