A sign of the times as Europe belatedly wakes up to the degree of its reliance on US tech platforms and much more, and the potential ramifications of a hostile White House
Today Microsoft’s President, Brad Smith, has committed to building out its data centre capacity in Europe on a diplomatic mission to Brussels. He is seeking to calm rising European fears about what happens if the US’ mercurial President decides Big Tech must withhold access to its platforms.
Smith, who is also Microsoft’s most senior lawyer, said the company would contest any such moves by the US government including going to court if necessary to ensure “continuity of access”. Europe accounts for about 25% of Microsoft’s business.
The Make America Great Again (NAGA) movement has a deep-seated antipathy towards Big Techcos, although the President likes their billionaire founders and leaders to pay court. President Trump’s action on tariffs has shown his absolute disregard for the stability, never mind prosperity, of the global investor community. His strategy of issuing many executive orders at once makes it is hard to keep up with them, never mind contest them.
In other words, if President Trump decides to massively weaken Big Techcos, it is hard to assess if Microsoft would be able to uphold its promises.
Increasing US-owned capacity is the answer?
Smith acknowledged the shock waves across Europe when the US Administration abruptly suspended military aid and intelligence support for Ukraine in early March after a fiery, televised exchange with Ukraine’s leader, President Zelensky the previous month.
Further, Smith pledged that Microsoft will increase its data centre capacity by 40% over the next two years and expand operations in 16 European countries, although the signals coming from Microsoft regarding build-out of data centre capacity in Europe seem somewhat confused.
In March, Reuters reported that Microsoft appeared to being rowing back on its data centre expansion plans in the Europe (and the US) based on concerns about exceeding the capacity that AI requires and questions being asked about Microsoft’s $14 billion or so investment in AI tech.
Smith also said Microsoft’s cloud infrastructure and operations in Europe will be overseen by a European board of directors and operate under European law.
Cost and speed versus sovereignty?
The European Commission wants to triple the EU’s data centre capacity over the next five to seven years, as part of its wider strategy to stay abreast of AI developments globally and also to have sovereign ownership of that infrastructure to lessen its reliance on foreign providers.
In the face of threats and criticism from the US Administration, including Vice President Vance who kick started this new era in February, there have also been calls to exclude American companies from public sector contracts.
Unlike some of the other Big Techcos, which have taken a adversarial approach to the European Union’s regulatory activities – designed to address what the European Commission sees as anti-competitive and otherwise unfair or illegal behaviours – Smith is holding out the olive branch. He stressed that Microsoft is keen to be the “voice of reason” promoting “stable” ties across the Atlantic, according to a Politico report.
Other vulnerabilities
The EU-US Data Transfer System is looking increasingly meaningless in the current climate. This legal framework is intended to regulate the transfer of personal data from the EU to the US: the two jurisdictions have very different legal requirements regarding data privacy.
Under EU law, exporting personal data from the EU has been restricted since 1995 unless the receiving country offers “essentially equivalent” data protection to that of the EU. The US has legislation such as the Foreign Intelligence Surveillance Act Section 702 (FISA702) and Executive Order 12.333 which give the government extensive government access to data stored by major US tech firms like Amazon, Meta, and Google.
Hence in EC introduced an agreement in 2023, the Transatlantic Data Privacy Framework (TADPF) which allows EU-based businesses to transfer data freely to US providers through the mechanism of executive orders and assurances from the US government. The arrangement is overseen by the Privacy and Civil Liberties Oversight Board (PCLOB).
However, the TADPF safeguards never been passed into US law and according to Digital Samba, at the end of January 2025, President Donald Trump dismissed three Democratic members of the PCLOB which has heightened concerns about its efficacy.
In contrast to these weak agreements designed to safeguard the privacy and security of Europe’s data, the US passed the CLOUD Act in 2019 which gives American enforcement authorities the power to request data stored by most major cloud providers, even if it is outside the US, which potentially clashes with the EU’s General Data Protection Regulation (GDPR).
It is hard to see how GDPR can prevail if push comes to shove on the other side of the Pond.
