Changes from report parliamentary committee draft to plenary report

The European Union is currently heavily dependent on foreign technologies. This reduces its capacity for strategic action and its economic competitiveness. It also exposes its sensitive data, in particular due to US extraterritorial laws. Given the ambitions of the new Trump administration, which has announced 500 billion dollars for the key sector of artificial intelligence (AI) between now and 2029, this situation looks set to continue.

However, the EU has indisputable assets, a high capacity for research and an ecosystem of start-ups and innovative companies, as highlighted by the AI Action Summit held in Paris in February 2025.

This report analyses the main weaknesses in European strategic infrastructure. It goes on to make recommendations for rapidly achieving technological sovereignty based on competitiveness and the protection of strategic markets.

The concepts of technological sovereignty and digital infrastructure

Technological sovereignty aims to guarantee our independence and security by protecting our strategic infrastructure and reducing our dependence on non-European technology providers.

It is defined by our ability to design, develop, produce, control and protect our digital infrastructure, i.e. all the hardware and software used in data centres, high-performance computers, quantum computing, the cloud, AI, semiconductors, cybersecurity and communication networks.

1. The EU is dependent on foreign technologies, which means it faces significant risks.

1.1. With the majority of data stored and hosted outside its territory, the EU remains heavily dependent as regards the cloud.

The European cloud market is unquestionably dominated by US companies: Amazon Web Services, Microsoft Azure and Google Cloud hold approximately 69 % of cloud infrastructure market share in Europe. European suppliers such as OVHcloud and Deutsche Telekom hold only 13 %. Finally, 92 % of the West’s data are stored in the USA, in infrastructure owned and operated by US providers.

This concentration poses two problems:

• Infrastructure dependence: the EU is not able on its own to meet its growing needs.

• Legal vulnerability: the FISA law allows intelligence agencies to access US technology companies’ data. The Cloud Act allows US authorities to access data hosted by US companies, even if those data are physically stored outside the USA.

1.2. Weak investment and too much regulation are causing the EU to fall further behind on AI.

In 2021 the Union accounted for only 7 % of global investment in AI, compared to 40 % for the USA and 32 % for China. In 2023 Europe invested approximately 5 billion euros in AI, compared to 20 billion euros for the USA. The US Stargate Project plans to invest 500 billion dollars over four years.

The AI Action Summit in Paris showed that the EU was seen as a blocking factor because of its regulations.

1.3 Semiconductors: a strategic industry lagging behind.

Europe lacks cutting-edge factories capable of producing advanced semiconductors (<10 nm). Europe produces only 10 % of the world’s semiconductors, well below the 54 % manufactured in Taiwan (mainly by TSMC) and the 16 % produced in China. In parallel, according to the IndustriALL trade union federation, the EU consumed 16 % of global production in 2021. This dependence exposes the EU to geopolitical tensions and supply disruption.

The European Chips Act paves the way for offering substantial aid to foreign companies to establish production units in Europe. If Europe is simply an industrial base for technologies designed and controlled elsewhere, this will not guarantee technological independence or the acquisition of know-how.

1.4. Control of communication infrastructure is essential to facilitate and protect data circulation.

Europe’s weaknesses are apparent in three key segments:

• Terrestrial: In its White Paper of 21 February 2024, the Commission notes the inadequacy of fibre optic coverage and the delays in rolling out standalone 5G networks.

• Subsea: Cables carry 95 % of international communications. Europe has a leader, Alcatel Submarine Networks (ASN), which holds approximately one third of global market share, but the disruptions that occurred in the Baltic Sea demonstrate a lack of resilience.

• Space: Whereas US company Starlink already has more than 4,000 satellites in orbit, Europe is still in the design phase with its LEO constellations.

These dependencies make the EU vulnerable to cyberattack, sabotage and foreign interference. One in eight businesses were affected by cyberattacks in 2020 and this figure is only increasing. In 2023, according to the Hiscox report, it reached 58 % in Germany and 53 % in France.

1.5. Quantum computing and high-performance computing (HPC): the EU has indisputable assets.

The EU has launched its Quantum Flagship programme with a budget of one billion euros over ten years, and in parallel 32 EU countries have launched the EuroHPC initiative with a budget of seven billion euros. The aim is to make it easier for European companies to access advanced computing capabilities.

In Europe the Dutch company ASML produces lithography technologies used in high-performance computing (HPC) and advanced applications, including quantum computing. It means that the EU remains a vital link and maintains a strategic position in the production chain.

2. The EU can regain its technological sovereignty by focusing on research, R&D and investment.

2.1. Instead of public subsidies, priority should be given to private investment in R&D and the development of European companies.

The EU sprinkles public money across thousands of companies through a variety of small State aid mechanisms. Scattering subsidies among too many different projects means that none of them can reach a genuine critical mass. Strategic mergers and acquisitions should be promoted to enable strong European players to emerge by explicitly including strategic mergers and acquisitions in the framework of important projects of common European interest (IPCEIs).

It is private capital that has enabled the USA and Asia to dominate the semiconductors sector. European pension funds represent 3,000 billion euros of assets but, according to the European Central Bank, they allocate only 0.02 % of their assets to venture capital, compared to 2 % in the case of US pension funds.

Recommendation 1: Private institutional investors should be encouraged to invest in a diversified portfolio of European technology companies with strong potential by simplifying the regulatory framework of the European Long-Term Investment Fund (ELTIF 2.0), by promoting mergers and acquisitions and, where the EU has competence, by offering tax incentives.

2.2. Make public procurement a tool for developing Europe's technological sovereignty by reserving a share of public procurement for European companies.

Public procurement, already used in sectors like defence, is a strategic lever for stimulating R&D by creating a competitive environment. In China all public procurement contracts in strategic sectors go to national companies. In the USA the figure is 70 %. By comparison, in some EU Member States only 8 to 12 % of public procurement procedures benefit European companies.

The Buy American Act and the Small Business Act as yet have no equivalent in the EU. The Draghi report therefore recommends introducing an ‘explicit minimum quota’ for local production in public procurement procedures to act as a ‘launch customer’ for new technologies.

Recommendation 2: European public procurement should be reformed to allow Member States to restrict their strategic procurement procedures to European companies that meet sovereignty criteria.

In the case of sensitive data, a European cybersecurity criterion should be introduced that takes sovereignty into consideration. The European Cybersecurity Certification Scheme for Cloud Services (EUCS), still under discussion, does not include sufficient guarantees on the hosting of sensitive European data, even for its ‘high’ certification level. To ensure hosting providers are not subject to extra-European legislation, the EUCS should be aligned with the guarantees required by the French SecNumCloud certification on data ‘immunity’ criteria in relation to extraterritorial laws and corporate control laws.

Recommendation 3: The ‘high’ level of EUCS certification should be aligned with the SecNumCloud certification requirements.

2.3. Reduce the use of public funding by encouraging public-private partnerships.

As highlighted by the Letta report, public-private partnerships can be used to mobilise private investment while limiting the impact on public finances. Unfortunately, the Solvency II Directive on pension funds and the IORP II Directive on life insurance impose prudential rules that are too strict regarding strategic and emerging sectors.

Recommendation 4: European regulations that make assets considered to be risky and emerging less attractive by imposing high capital requirements and a prudential principle that is too strict should be reformed.

2.4. A simplification drive should reduce the regulatory burden.

Regulation is ‘an obstacle to investment’ for over 60 % of EU companies, and 55 % of SMEs identify regulatory burdens as their greatest challenges. The recent Draghi and Letta reports highlighted the same problem.

Recommendation 5: Two regulations should be removed for each new regulation created in strategic sectors, based on the model of the US ‘One-In, Two-Out’ Executive Order.

2.5. Strengthening digital infrastructure requires a sustainable and competitive energy policy.

Sustainable and competitive energy is essential to attract investment in digital infrastructure, which is highly energy-intensive.

Recommendation 6: The European electricity market should be reformed by putting an end to the merit order mechanism, which aligns prices to the most expensive resources, and by re-establishing a context in which nuclear can supply competitive and stable electricity.