EU considers limiting U.S. cloud platforms for handling sensitive government data: CNBC sources

• U.S. cloud providers (Amazon, Microsoft, Google) currently dominate the European market, but scrutiny has grown over the 2018 U.S. Cloud Act, which allows U.S. law enforcement to request user data from American companies regardless of where it's stored
• The restrictions would apply only to public-sector organizations processing sensitive government data, not private-sector companies, and would require high levels of sovereign cloud infrastructure for financial, judicial, and health data
• The proposals require approval from all 27 EU member states and are part of broader efforts including a 180 million euro tender awarded to European sovereign cloud projects in April 2026

EU Considers Restricting U.S. Cloud Platforms for Sensitive Government Data

Key Summary

The European Commission is preparing to propose regulations that would limit EU member governments' use of U.S. cloud platforms for processing sensitive public-sector data. The measures are part of the "Tech Sovereignty Package" expected to be presented on May 27, which includes the Cloud and AI Development Act (CADA) and Chips Act 2.0.

Main Details

Scope of Restrictions:

• Proposals would not completely ban U.S. cloud providers from government contracts but would restrict their use based on data sensitivity levels
• High-sensitivity sectors identified include financial, judicial, and health data processed by government and public organizations
• Restrictions apply only to public sector; private companies would not be affected
• All 27 EU member states must approve the package

Market Context:

U.S. cloud providers currently dominate the European market, with Amazon, Microsoft, and Google holding the largest market shares. Under the 2018 U.S. Cloud Act, American law enforcement can request user data from U.S. companies regardless of storage location, raising EU sovereignty concerns.

Recent Developments:

• In April, the Commission awarded a €180 million tender to four European sovereign cloud projects
• France announced "Visio," a government-developed video conferencing tool to replace Microsoft Teams and Zoom by 2027
• European governments increased budgets for digital sovereignty initiatives in February

Market Implications

The proposals signal Europe's strategic shift toward reducing dependence on U.S. technology platforms for critical infrastructure, potentially opening opportunities for European cloud providers while challenging major U.S. tech companies' government revenue streams in the region.