EU Proposes €120B Tech Sovereignty Package

What did the EU propose on June 3, 2026?

The European Commission proposed the European Technological Sovereignty Package on June 3, 2026 — a four-part legislative push to cut the EU's dependence on non-EU technology providers. The package spans semiconductors, cloud infrastructure, AI, open source software, and energy. According to Jones Day's analysis of the proposal, it marks a significant shift in how the EU approaches digital autonomy.

What are the four parts of the package?

The package has four distinct initiatives. Here is what each one covers:

What is the Chips Act 2.0?

Chips Act 2.0 is the EU's proposed update to its semiconductor policy. It targets €120 billion — roughly $138 billion — in investment by 2035. The proposal would cap permitting at a maximum of 12 months and introduce "Grand Challenges" for AI chips. It also creates "Demand Accelerators" to connect EU chip producers with industrial buyers, as Jones Day reports.

What is the Cloud and AI Development Act?

The Cloud and AI Development Act (CADA) is a proposed EU regulation that creates a single sovereignty framework for cloud services, with four assurance levels. It requires member states to conduct sovereignty risk assessments. Public authorities would face new obligations: sensitive data would need to be hosted on services controlled by EU entities. The European Commission's CADA page states the act also aims to make it faster to deploy sustainable cloud and data center infrastructure across Europe.

You might also like

Nadella Warns Microsoft Staff: Stop Tokenmaxxing

Bezos Launches Prometheus AI at $41B Valuation

Huawei HarmonyOS 7 Launches With 2,000 AI Agents

Meta's Applied AI Team: 6,500 Engineers in Revolt

The Commission points to two core problems CADA is meant to fix. Long permitting procedures, limited energy access, and financing gaps make it hard to scale digital infrastructure. Over-reliance on non-EU cloud providers also poses a risk to Europe's digital resilience.

What does the EU Open Source Strategy commit to?

The EU Open Source Strategy positions open source software as a structural tool for digital sovereignty. The Commission commits €2 billion — about $2.3 billion — over seven years. It introduces a "Free Software first" principle for public cloud and AI procurement. The strategy targets 30 million active users of open source collaboration tools by 2030. This could affect public procurement rules and the competitive position of proprietary software vendors.

What is the energy roadmap about?

The Strategic Roadmap for Digitalisation and AI in Energy addresses the power demands of digital infrastructure. It proposes tripartite agreements between data center operators, energy stakeholders, and public authorities. It also calls for a pan-European AI model for power grid management. Data center operators in the EU may face new compliance obligations under this initiative.

Who does this affect?

The package directly targets companies in semiconductors, software, cloud, and data centers operating in Europe. Public authorities face the most immediate obligations — particularly around where sensitive data is hosted. Procurement rules would shift to favor providers with EU-based design, manufacturing, or operational control.

Here's what we know so far: the proposals are still legislative drafts, not final law. Significant amendments are possible as the package moves through the European Parliament and Council under the ordinary legislative procedure.

The EU's push for cloud AI sovereignty connects to broader questions about how regulators are treating AI infrastructure globally. For context on how European courts are already acting on AI accountability, see the German court Google AI ruling. On the US side, Anthropic's IPO filing shows how AI companies are navigating their own regulatory and competitive pressures.

Builders thinking about AI deployment in regulated markets should also watch how Perplexity's hybrid local AI model fits into emerging sovereignty frameworks — the CADA's assurance levels could shape which AI services public-sector clients are allowed to use.

When will the package become law?

The package now proceeds to the European Parliament and Council under the ordinary legislative procedure. Jones Day notes that a timeline of 18 to 24 months to final adoption would not be unusual for proposals of this scope. Significant amendments are possible during negotiations.