Europe must reduce its reliance on foreign tech giants without shutting itself off from global players, says Diego Solier (ECR/ES), the European Parliament’s rapporteur for the Cloud and AI Development Act. Speaking to EU Perspectives, the lawmaker argues that the EU needs to combine regulatory simplification, faster infrastructure development and stronger public demand to help European cloud providers scale up and compete internationally.
The Cloud and AI Development Act (CADA) aims to boost Europe’s data centre capacity and reduce its reliance on foreign cloud providers. It seeks to do so by streamlining permits, creating demand for European cloud services through public procurement and introducing security requirements for public entities.
Solier’s appointment as rapporteur raised eyebrows in some quarters: a first-term lawmaker, he nevertheless brings a strong IT background to the role.
First of all let’s start with the basics: What are the main objectives of CADA? What are the new sovereignty requirements that the Commission proposes, and how do they differ based on risk levels given that this was presented as part of a wider package?
As you say, the Commission has presented different types of proposals, and the focus of CADA is the infrastructure where all AI and cloud services will run. Right now in Europe, between 70 and 80% of all cloud services run on hyperscalers, which are big companies somehow controlled by third countries. The Commission has raised this concern, so one of the objectives of CADA is to help build a European technology industry that can develop more capacity and sovereignty within Europe.
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New regulation doesn’t mean overregulation
You have said that you see “too much regulation and too many barriers” as Europe’s primary technology problem. How do you square this with designing a new law in CADA?
Setting a new law doesn’t mean that we are going to overload companies with additional regulation. We need to simplify. We need to understand how this legislation can, for example, help companies shorten the time between making an investment and seeing it start to pay off. Introducing new legislation doesn’t necessarily mean adding an extra layer of regulation. What CADA aims to do is simplify different regulations that already exist, including at the national level.
Right now in Europe, between 70 and 80% of all cloud services run on hyperscalers, which are big companies somehow controlled by third countries.
— Diego Solier
To what extent do wider geopolitical tensions influence the development of digital policies in Europe? How do you as a lawmaker view this?
I think we all know that geopolitical tensions have made Europe more aware of the technological dependencies that we have – ruling over businesses, our services, our public services – in an environment that until now has been really stable. Everything was working fine, but when the geopolitical tensions start to appear, we realised the problems.
As I was explaining before, we are now in a situation where we have a really high dependency on third companies coming from third countries, and we need to move away from that dependency. But sovereignty for us doesn’t mean isolation. Europe still needs to partner. We still need to work in stronger alliances with these key players of the industry because that is what is going to help us to grow the European market: alliances with key players in the technological industry.
How does public procurement drive demand for EU cloud services, and what challenges might arise in its implementation? Specifically, what role does public procurement play in leveraging the technologies so that there is more investment available to them?
With CADA, the idea is for the investors in Europe to keep investing. But that is not going to be enough. We actually want to see how we can bring international investors to invest in Europe.
One of the key things here is timing. When you invest, you want your money to start working for you as soon as possible. For example, building a data centre could take twelve to eighteen months. But problems with grid access or permits could delay the return on investment by years. So with this regulation, what we are trying to do is reduce delays and grow public demand to help local industries scale up and grow.
The idea is for the investors in Europe to keep investing. But that is not going to be enough. We need to see how we can bring international investors to invest in Europe.
— Diego Solier
Otherwise, obviously, we are going to stay as we are. But if we start to shift some public demand towards European-based industries with European stakeholders, that will help the European industry begin to close the gap with international companies.
In the medium term, we want European hyperscalers. But how can we achieve that? How can we help them? For me, shifting demand isn’t enough. We also need to help them build capacity. Hopefully, at some point, the European industry will be closer to international competitors and able to capture more services and data assistance from international players. Public procurement can help a lot, but we need to approach it sensibly. We cannot shift everything through public procurement given the current situation, because European industry is not yet ready. The level of services and systems it can provide is not yet mature enough.
Almost 90% of our companies are SMEs, so we need to help them scale up sustainably. Not just by increasing contracts but also by building the capacity needed to manage them.
Top research, not enough top companies
The European Commission chose to exclude hardware from the sovereignty requirements. What does this say about its overall strategy?
The hardware or infrastructure running AI is not under our control, and that is unlikely to change in the next few months. If we limit CADA to the highest level of security assurance, no company will be able to provide the necessary computing systems. That is why the Commission has excluded hardware at this stage.
To be honest, my hope, and this is something I’m hearing from industry, is that within less than two years we will have companies capable of producing chips as good as, or even better than, those made by Nvidia.
We cannot shift everything through public procurement given the current situation, because European industry is not yet ready.
— Diego Solier
One thing we do have in Europe, the jewel in the crown of the chip industry, is ASML, the company that produces the machines used to manufacture microchips. Having such an important company in Europe will be key to supporting a European chip industry. This is why the upcoming Chips Act II is also going to be so important. In fact, I have already heard that a consortium of European companies is working on an initiative that could enable them to produce these kinds of chips in less than two years.
We always use ASML as an example when talking about European success stories. But here in Europe, we also have really talented people, excellent institutes, research centres and universities. We are producing key people who manage technology globally. The problem is that we cannot provide them with the right companies to develop their ideas, so they have to leave. Sometimes they take their ideas and small start-ups elsewhere because the conditions in Europe are not good enough for them to scale up and grow. This is something we need to change. We need to reform our regulations, simplify things and give them access to financing so they can scale up here in Europe, because I don’t know anywhere better to live than Europe.
No doubt you are being lobbied by big tech companies. How have different sectors of the industry responded to CADA? And what are the main concerns raised?
At the moment, we are in the listening stage of the process. We need to listen to everyone. To also hear from the major hyperscalers, which have been doing business in Europe for many years and still want to do so. We are also listening to SMEs and medium-sized companies in Europe, as well as sitting down with the other rapporteurs in Parliament, the Committee of the Regions and others.
What I would say is that we need to produce rules that are achievable from day one. This is important because otherwise, we risk losing companies’ motivation. Our door is open. We are listening. We are gathering input and information from everyone, analysing it internally within the team, and sitting down with the co-rapporteur to understand their point of view. Our aim is to produce legislation that will make a real difference. Fortunately, the Commission is also listening and not working in a bubble.
My hope is that within less than two years we will have companies capable of producing chips as good as those made by Nvidia.
— Diego Solier
That’s why I say we need to work on two fronts in parallel. On the one hand, we need to reduce bureaucracy, simplify things and make Europe more attractive to investors. At the same time, we need to provide the support that scale-ups need to grow, while building strong alliances with key industry players to help our industry develop.
Data centers accross Europe
Can you elaborate on the concept of data center acceleration zones and their expected impact on infrastructure development in Europe?
For me, this is one of the key things. If acceleration zones are going to work, they will work 100%. What this means is that every member state has been asked to designate an acceleration zone within its territory. An acceleration zone means that access to permits, access to the grid and the availability of electricity can all be provided seamlessly. The idea is to simplify all the different steps that a company looking to invest in building a data centre has to take.
This will minimise the time between making an investment and having the machines running in the data centre, producing computing power for the industry.
Obviously, not all countries have the same appetite for data centres. In Ireland, for example, where big tech companies have been establishing themselves, they are almost exhausted with data centres. But there are many other countries – France, Spain and Poland – where the industry hasn’t really evolved, and which will want to have data centres.
Ultimately, we don’t want all the data centres to be concentrated in just one region. We need to spread them across Europe to ensure sufficient computing capacity and, in a worst-case scenario, to be able to move systems and services between different areas.
