Ireland is the cautionary tale for Europe’s Cloud and AI Development Act
Sovereignty according to whom?
This week, the European Commission published its long-awaited Tech Sovereignty Package. A central strand to this package is the Cloud and AI Development Act (CADA). CADA aims to triple European data centre capacity by 2035 to facilitate continental development and deployment of AI and cloud services. The Act’s stated goal is to break Europe's dependence on US-based technology firms and stop the continent becoming, in the words of one Commission official, a technology "colony”.
The problem is that Europe’s US big tech firm dependency did not emerge because of a real economy demand for data centre infrastructure located on the continent to boost EU productivity and innovation. The AI data centre boom is the answer to a question that nobody asked – except for financialised markets. It’s a manufactured market, built by concentrated financial capital in alliance with dominant tech companies. In this alliance, they lock in ownership at every level of the supply chain – both up- and downstream. This dependency is then kept going by governments willing to trade regulatory scrutiny for the appearance of growth. Merely tripling capacity of data centres won’t change that dependency with the upcoming CADA package. Without addressing who owns, operates and controls the infrastructure being built, Europe risks transferring its dependency from one set of dominant firms to a slightly different one draped in the blue and yellow of the EU.
Why Ireland is a cautionary tale
Ireland is the proverbial homestead to a lot of the data centres, already with one of the highest concentration of data centres across Europe. Ireland is not an observer to this debate. It is the case study, and it should serve as a cautionary nightmare of the political, economic and ecological contradictions that emerge when you hitch your wagon to the mirage of AI-driven economic growth, of what building infrastructure accountable to no-one actually looks like.
Twenty-two percent of Ireland’s grid capacity is now being hoovered up by data centres – the highest per capita in the world. New research published last week by Friends of the Earth Ireland and Beyond Fossil Fuels puts a precise figure on what that has already cost ordinary households: between 2015 and 2023, Irish households paid a combined €715 million in additional energy costs, an average of €360 per household. On current trajectories, the research modelled by Dr. Seán Fearon, projects that figure will rise to between €1.4 and €1.6 billion over the next ten years. A separate Friends of the Earth Ireland study projects that by 2027 data centre power demands will exceed those of all Irish households combined. That is what the current landscape looks like, before the tripling.
Ireland did not arrive here by accident. Preferential and non-preferential tax regimes, IDA incentives of foreign direct investment (FDI), planning flexibility and EU single market access made it the preferred landing zone for rapid hyperscaler infrastructure expansion. The European Commission’s CADA proposal seeks to replicate that model – incentives, fast-tracked approvals, tripled capacity – but at a continental scale. Europe should be clear about what it is scaling up.
The industry consuming 22% of Ireland's grid employs less than 1% of the Irish workforce. The economic development case for subsidising data centre infrastructure does not survive contact with Irish experience.
An ever-deepening dependency
Europe’s reliance on a handful of hyperscalers is both a sovereignty problem and a concentrated monopoly power problem. Amazon Web Services (AWS), Microsoft Azure, and Google Cloud collectively hold around two-thirds of the global cloud infrastructure market – a share that, according to multiple analysts, is increasing rather than decreasing as AI infrastructure requirements favour providers with the deepest pockets and the most established networks.
As we detail in our latest paper, Licensed to Loot: Big Finance, Big Tech and the AI Infrastructure Grab,concentrated market power operates at every layer of the AI data centre build-out. Big Finance and Big Tech move in lock-step, contriving to dominate AI infrastructure supply chains (from the chips, the compute, to the data centres) where a small handful of giant firms are concentrated in the market, with high barriers to competitors. They reinforce their market shaping dominance throughout the system. Blackstone disclosed in 2024 that it held over $70 billion in data centre assets, with a further $100 billion in its pipeline. The CEO of Blackstone forecast that total global capital expenditure on data centres could reach €2 trillion over the next five years, while the combined investment of Amazon, Microsoft and Google into data centres was higher than of the US’s oil and gas industry in 2023. The same asset managers financing the current concentration will finance the new buildout - a European announcement about AI infrastructure expansion changes little structurally about who profits, who controls and who the infrastructure ultimately serves.
The Commission’s proposal, published this week frames this as building “strategic counterweights” rather than the ‘protectionist’ labels being peddled from across the Atlantic. But counterweights embedded within a deep system of dependency, in a market structured to favour incumbents, do not shift the underlying power structure.
Tripling data centre capacity through public subsidy incentives and fast-tracked approvals sets out an ambition as high as that of the Irish government. But, as Leitmotiv colleagues have rightly pointed out, even the European Commission cannot give an exact number of the current data centre capacity in Europe. So how do we expect to triple it? What is also unclear is whether the infrastructure will be interoperable or whether it will be built on open-source technology.
Made in Europe mirage
To provide a sovereign seal-of-approval, the Commission is proposing a four-tier sovereignty ranking system. On paper, the tiers escalate from requiring data to be stored in Europe, through protections against foreign state access, to full EU ownership and control. In practice, each tier contains a loophole wide enough to drive a hyperscaler through. But each level contains structural exceptions that hollow out the guarantee, given that at tier one most US hyperscalers already have locations on European soil (looking at you, Ireland). Tier 2 dictates no foreign actors can have access to public data, except the workaround has already been solved by dominant providers backing European entities - the Commission’s own "Sovereign Cloud” contract (worth €180 million) was awarded to four firms, one of which, S3NS, is a joint venture of Google. Regarding ownership stipulated in the third tier, non-EU providers can be considered “equivalent” and for the fourth tier, no European provider currently has full control of the stack, from hardware to software.
The sovereignty rankings attached to infrastructure still financed, built and operated by the same concentrated pool of asset managers and hyperscalers are a labelling exercise. The tier system’s criteria are weak on ownership structure and open-source requirements, and silent on interoperability obligations.
Europe has seen this before, Ireland is living it.
CADA does not ask who owns the infrastructure it subsidises, what obligations attach to public support, or how Europe avoids the Irish outcome at scale. These are the questions that determine whether this strategy delivers genuine sovereignty or simply replicates, at vastly greater cost, an Irish model built on fast approvals, concentrated private ownership, and energy bills paid by working households.
Ireland’s grid is being consumed by an industry, dominated by five players, including Amazon Web Services, Microsoft. The Irish Government’s case for this arrangement is predicated on the myth that data centres and AI are an engine of growth. Underpinning their case is the recent study by KPMG on job creation, a firm supporting the delivery of Echoleon data centres in Ireland. Its figures inflate employment by counting temporary construction jobs and indirect roles, then applying a multiplier that assumes each position generates up to six additional jobs, none of which represent long-term direct employment. The public, it seems, is not convinced: polling shows a majority opposes AI-driven efficiencies at the cost of jobs.
Civil society in Ireland and across Europe should be pressing for answers. What ownership and governance conditions attach to any public subsidy or fast-tracked approval under CADA? What mandatory interoperability and open-source obligations will apply? What energy conditionality will protect households from bearing the grid costs of private infrastructure buildout? And what does the sovereignty tier certification actually mean, given that ownership structure plays no part in it?
The EU is asking us to subsidise infrastructure over which they have insufficient control, built for returns that will pass the public by, at costs the public will bear regardless. Ordinary working people are paying the price during an ever-sharpening cost-of-living crisis. If current projections hold, that accelerates before the Commission’s tripling adds to it. Europe has seen what this looks like. Ireland is already living it.