European Commission Ramps Up Digital Sovereignty Laws, Seeking to Increase Local Competition and Protection

June 26, 2020 — Panelists on a Thursday webinar hosted by the Atlantic Council discussed Europe’s search for digital sovereignty and its potential effect on transatlantic relations, following the launch of a related issue brief by fellow Frances G. Burwell and non-resident senior fellow Kenneth Propp.

When the new European Commission took office under President Ursula von der Leyen, enhancing digital capabilities across the European Union immediately emerged as a top priority. Von der Leyen called for European “technological sovereignty in some critical technology areas.”

COVID-19 has only proven to accelerate the discussions within the European Union around digital policy.

While the term digital sovereignty has been heavily utilized by the Commission in recent months to the point that panelists recommended “toning down the rhetoric”, panelists could not pinpoint a singular clear definition of the phrase.

“The term seems to imply a ramping up from its use in past EU policy,” Burwell offered.

According to the brief, the German economy minister Peter Altmaier equates digital sovereignty with data localization, the effort to store the data produced in a nation on servers stored physically within the nation. Altmaier equates storage of European data abroad by US cloud-services companies to be a loss of sovereignty, panelists said.

This definition reveals a deeper universal tension, often underscored by populism or nationalism, between nation states and global digital corporations. In fact, many of the EU initiatives seem to be intended to counter the strong position of US and Chinese digital companies in the European market.

The Commission appears to be moving to restrict the activities of non-EU firms within Europe, in order to foster both competition and protection.

In the industry of cloud computing, three large US companies dominate the market, currently supplying the overwhelming share of cloud-computing services used in Europe. Ninety-two percent of the Western world’s data is stored in the United States.

No EU companies rival these huge U.S.-based cloud computing platforms. Apple alone is valued at $1.42 trillion, which is more than the combined value of Germany’s leading 30 companies.

Europe is seeking homegrown alternatives to the services offered by global tech companies, panelists said.

“I think Europe is waking up too slowly in the digital field,” said Axel Voss, a member of the European Parliament. “We’ve been too focused on protectionism to innovate. Europe is seeking a way in a global space dominated by China and the US.”

France and Germany have already attempted to create domestic alternatives to global corporate services, independent of the EU. In October 2019, the two governments, in conjunction with national industrial companies, announced GAIA-X, a project to connect cloud providers around Europe.

“Digital sovereignty is an issue where the US and the EU can make their way forward together,” said Burwell, calling for the creation of a platform for dialogue to keep the Atlantic community as close as possible.

Representing U.S. tech firms, Karan Bhatia, an attorney for Google, concluded by championing a message of convergence.

“We absolutely understand the desire for policymakers to make sure that there is robustness and resilience in their economies, though the essence of global economy implies that there is a degree of interaction,” he said. “Let’s continue to build off the record of the last few months, which has been so promising.”