The Balanced Economy Project (BEP) welcomes the opportunity to submit its views on the Cloud and AI Development Act. BEP supports CADA’s aim of reducing Europe’s dependence on a small number of dominant providers. Our submission sets out amendments to ensure that the advantages CADA confers do not reinforce the concentration that causes that dependence.
The Balanced Economy Project is a civil society organisation whose purpose is to hold powerful corporations to account and reclaim the ability of present and future generations to continually restructure our economies by collectively constraining corporate power. We support legal and public policy frameworks that regulate business activities to ensure that they do not undermine human rights and the public interest.
The Commission has identified a serious dependence on a small number of non-European cloud providers. Three non-EU hyperscalers account for more than 70% of the European cloud market, while the share held by European providers fell from 29% in 2017 to 15% in 2022, and remained broadly at that level. CADA also identifies a separate problem of limited and geographically concentrated computing capacity in Europe.
The proposal addresses these problems in different ways. Its data centre provisions are designed to make capacity quicker and easier to deploy, including through acceleration zones and shorter permitting procedures. Its sovereignty and procurement provisions are intended to reduce reliance on non-European providers and strengthen the European cloud and AI market. The Commission describes CADA as combining supply-side measures to increase domestic capacity with demand-side measures intended to drive adoption.
CADA treats concentration as a symptom of Europe’s dependency on a small number of providers. BEP considers concentration to be one of its principal causes, whereas the proposal mechanisms are built around the first view. Europe’s dependency on the hyperscalers is the product of more than a shortage of data centre capacity. The largest providers also benefit from scale, established infrastructure and customer bases, access to capital, and high switching costs.
CADA addresses the expansion of capacity much more directly than it addresses the distribution of control over that capacity. There is therefore a risk that Europe adds substantial new computing infrastructure, further exposing itself to the risks of investment overconcentration, while leaving the existing concentration of ownership and control largely unchanged. BEP rejects an approach that monitors the effects of expansion after the event. Where conditions on contestability, ownership transparency and wider benefit are not in place, CADA should confer no accelerated or strategic treatment that risks reinforcing the market structure behind Europe’s existing dependency.
CADA is an internal market and industrial policy instrument, and BEP’s recommendations work within that structure. CADA must not reinforce the concentration that contributes to Europe’s dependency on a small number of dominant cloud providers.
Where CADA accelerates data centre development, confers strategic status or uses public procurement to influence the market, those measures should be designed with that objective in mind. The recommendations outlined in our response therefore focus mainly on who owns and controls new capacity, how that capacity is allocated, and whether customers have realistic alternatives to the largest providers.
They also address the evidence for additional infrastructure. CADA should have a clearer basis for deciding what further capacity is needed and where, taking account of existing capacity and utilisation, expected demand and relevant grid and resource constraints.
Public procurement must prioritise interoperability, switching and credible exit arrangements to reduce dependence on any single provider.
You can read Balanced Economy Project’s full feedback submission here.