The Case Against the EU’s Tech Sovereignty Package

On June 3, 2026, the European Union (EU) unveiled its "Tech Sovereignty Package”— an ambitious legislative effort to reduce dependence on American technology and strengthen Europe's "digital autonomy and resilience." However, Europe’s primary economic challenge is its anemic tech-driven productivity growth, not its use of American technology. Embracing protectionism will do nothing to remedy this failure, nor will it miraculously create new European technology champions, but it would further slow digital adoption. If Brussels does not embrace collaboration with the United States, it risks deepening the very technological lag it seeks to escape.

It is true that Europe is dependent on U.S. technology. For example, U.S. cloud companies account for 70 percent of the European cloud market, and American firms operate much of the hyperscale infrastructure that supports it. In addition, the EU produces only 10 percent of the world's semiconductors and remains almost entirely dependent on the U.S. and East Asia for the most advanced chips. However, stopping European firms from using foreign providers is not helpful when there are no good European alternatives.

For example, the Cloud and Artificial Intelligence (AI) Development Act aims to bolster the union's cloud computing capacity by barring non-European providers from securing contracts involving sensitive government data. However, by excluding trusted international providers based on the location of their headquarters, the legislation would force public bodies to choose from a narrow pool of European alternatives. Building domestic cloud infrastructure at the scale and sophistication of U.S. technology firms will take years to materialize, leaving Europe's immediate needs insufficiently met.

The Commission itself acknowledges that only one percent of European public services are sensitive enough to warrant the exclusion of foreign providers. Using this as a premise for building large-scale domestic cloud capacity is a disproportionate response—one that risks foregoing the efficiencies, innovation, and synergies that come with U.S.-EU technological cooperation.

Or consider Europe’s proposed Chips Act 2.0, the successor to the original 2023 effort. Building on the first initiative's push to enhance semiconductor supply, it now prioritizes demand generation—connecting European chipmakers directly to domestic industrial users. However, Europe's largest chip customers—AI companies and hyperscale cloud providers—are overwhelmingly American. The investment case for a competitive European semiconductor industry relies on the very demand the EU is trying to reduce its dependence on. This makes the EU's goal of technological independence in chips inherently contradictory.

The EU also envisions a major expansion of data center capacity, aiming to triple output within five to seven years. To support this, the Strategic Roadmap for Digitalization and AI in the Energy Sector sets out a complementary framework that introduces provisions to expedite construction permits, ensure reliable access to electricity, and mobilize government funding to carry out these efforts sustainably. However, the firms best equipped to expand data center capacity at the speed and scale Europe envisions are American. No domestic alternatives exist capable of delivering the buildout Europe's ambitions demand. Given that sustainable infrastructure sits at the core of this pillar—an area where U.S. firms are at the forefront—Europe's goals will likely remain unfulfilled unless it partners with the United States.

The Tech Sovereignty Package is the latest in a pattern of protectionist EU policies and may further strain an already fraught U.S.-EU relationship. It risks derailing ongoing negotiations to finalize a trade pact, and runs counter to the EU's recent decision to join the Pax Silica framework—a U.S.-led initiative aimed at building a trusted AI supply chain—while simultaneously introducing a package that systematically seeks to oust American firms from the European technology ecosystem.

Displacing American technology firms from European markets would not only harm Europe but also undermine efforts to build a transatlantic technology ecosystem capable of withstanding techno-economic competition from China. U.S. firms benefit from access to European markets, and European firms benefit from access to the world’s leading technology. The only winner of European protectionism is China.

China is waging a state-orchestrated campaign to dominate advanced industries—pouring hundreds of billions into semiconductors, AI, and cloud infrastructure. Every euro Europe spends building alternatives to American technology is a euro not invested in competing with China. European domestic capacity in frontier technologies cannot scale fast enough to fill the void left by the proposed exclusion of American firms. The industrial base and technology champions simply do not exist. At this crucial juncture, transatlantic collaboration is a necessity.

With China’s rise, Brussels cannot afford to fracture the partnership with Washington that has underpinned decades of shared prosperity—in pursuit of autonomy it cannot sustain. Instead, it should recognize the real risk it faces from China, strengthen its relationship with the United States, and reject proposals that amount to little more than digital protectionism.