The European Union is preparing to extend its regulatory reach beyond consumer-facing platforms to target cloud computing and AI, pushing its efforts to curb large US tech companies into a more assertive stance.
In a new report, the European Commission said its Digital Markets Act (DMA), in force since May 2023, has improved competition in areas such as app distribution and data portability. The DMA regulates US giants like Amazon, Microsoft and Alphabet. Officials now intend to apply similar scrutiny to infrastructure layers of the digital economy, particularly cloud services and AI systems.
The Commission is assessing whether certain AI offerings, including virtual assistants, should fall under the same gatekeeper designation applied to digital platforms. Ongoing investigations are examining whether leading cloud providers should be formally classified under DMA rules, which would impose obligations aimed at preventing anti-competitive behavior.
The EU’s new initiatives to curb cloud and AI companies are part of its long-term resistance to influence of American tech firms, an effort that promotes EU sovereignty as a top priority.
“Europe’s digital economy doesn’t just use American tech, it’s structurally dependent on it,” Dion Hinchcliffe, VP of CIO Practice at the Futurum Group, told Techstrong.it. “So every sovereignty push runs straight into decades of architectural lock-in. However, where Europe truly excels is reg-tech: turning privacy, compliance, and governance into enforceable apps and infrastructure at scale.” This focus on regulation has helped support a second tier of European cloud and SaaS players, including OVHcloud, Deutsche Telekom, Mistral AI, and Nextcloud, he said.
“But make no mistake: A clean break from U.S. hyperscalers isn’t going to happen for a while. Instead, it’s a long, uneven build toward selective autonomy and will have many twists and turns before their goals are achieved.”
Fair Competition vs Innovation
Over the past two years, the EU has imposed more than $7 billion in fines on US tech companies under competition and digital services laws. American officials denounce these actions as disproportionate, claiming they risk undermining innovation.
European policymakers maintain that enforcement is necessary to ensure fair competition and protect consumers. Officials point to behavioral changes by companies following regulatory intervention, including adjustments to data practices and interoperability features.
AI is coming to the forefront in this debate. US leaders have warned that excessive AI regulation could limit Europe’s ability to participate fully in this emerging sector, particularly given its reliance on external providers for cloud infrastructure. European leaders have made it clear they see regulation as a prerequisite for building a sustainable and competitive digital ecosystem.
Furthermore, European regulators say the DMA framework was designed to evolve alongside emerging technologies. Their emphasis on cloud and AI suggests concern that control over compute and data pipelines could entrench market dominance more effectively than traditional platform models.
Public Opinion Favors Regulation
European public sentiment appears to support regulation, at least in principle. Recent polling across major EU countries shows that a majority of respondents favor reducing dependence on American tech providers, including cloud storage and communications platforms. Yet respondents were divided on whether such a transition is practical, highlighting the gap between political ambition and technical reality.
While EU leaders are pursuing digital sovereignty, the region shows few signs of shedding its reliance on US-based cloud and AI services, in fact it may even be growing as American AI firms rapidly develop. Still, the EU’s expanding regulatory framework may help it compete by shaping market behavior without fully displacing essential providers.
