EU Trends and Developments Contributed by: Ekaterina Bronsky, Yuriy Brisov, Alexandra Zviagintseva and Yasmin Komshilova, Digital & Analogue Partners
This trend matters for businesses because it affects not only compliance obligations, but also market access, technology choices and long-term investment decisions. Requirements that differ across jurisdic - tions may influence where data can be stored, which AI models can be deployed, and how digital products must be adapted for local markets. From a regulatory perspective, this development is likely to result in stricter data localisation obligations, restrictions on the use of foreign AI models, enhanced transparency requirements, and increased scrutiny of algorithmic bias and cultural sensitivity. AI , cloud and strategic autonomy Europe’s response to this trend is shaped by a par - ticular structural challenge: its dependence on foreign digital infrastructure. According to data cited by the Centre on Regulation in Europe, the EU relies on for - eign providers for more than 80% of its digital prod - ucts, services, infrastructure and intellectual property. Cloud computing provides a striking example: three non-EU hyperscalers reportedly account for over 70% of the European cloud market, whereas the largest European providers, including SAP and Deutsche Tel - ekom, each hold only around 2%. As AI becomes increasingly reliant on computing power and cloud services, questions of technologi - cal sovereignty are becoming closely intertwined with questions of economic competitiveness and security. Lessons learned The EU’s response is becoming increasingly system - atic. A notable example is the Commission’s use of the Digital Markets Act (DMA) to address dependency in cloud infrastructure. In November 2025, the Com - mission opened three market investigations on cloud computing services, assessing whether: • Amazon Web Services should be designated as a gatekeeper (DMA.100033); • Microsoft Azure should be designated as a gate - keeper (DMA.100032); and • the DMA can effectively address practices limit - ing fairness and contestability in cloud computing markets (DMA.100236).
The underlying logic is that greater interoperability and lower switching costs could reduce dependence on a small number of dominant providers. The Commission is also beginning to apply the DMA to AI-related markets. In January 2026, it opened a specification proceeding (DMA.100220) under Article 6 (7), DMA on Android interoperability for AI services. Though early-stage, it reflects a lesson from the plat - form era: intervene before dependencies entrench, not after. A new framework for tech sovereignty Another indication that the EU is moving towards AI localisation is the European Technological Sovereignty Package, presented by the Commission on 3 June 2026. The package consists of four initiatives: two legisla - tive proposals – the Cloud and AI Development Act (CADA) and the Chips Act 2.0; and two policy initia - tives – the EU Open Source Strategy and a Strategic Roadmap for Digitalisation and AI in Energy. At the centre of the package is CADA (COM (2026) 502), which introduces a sovereignty framework for cloud and AI services used by public-sector bod - ies. The proposal establishes four assurance levels based on factors such as control over infrastructure and supply chains, data processing arrangements, cybersecurity, and exposure to third-country interfer - ence. While non-EU providers are not excluded from the framework, the highest assurance level imposes requirements that may be difficult for providers subject to foreign legal regimes to satisfy. The proposal also aims to increase the market share of European cloud and AI computing providers to 30% by 2035 and to significantly expand European data-centre capacity. The Chips Act 2.0, built on the 2023 Chips Act, strengthens support for Europe’s semiconduc - tor industry through a new Chips Fund, centres of excellence, joint technology projects, and measures to accelerate the development of advanced and AI- related chips. The remaining pillars are the EU Open Source Strat - egy, aimed at promoting open-source technologies
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