Cadenabbia Memorandum on the European Cloud Policy

Cloud computing is essential to Europe, not simply as a technology sector, but as the foundation of the data economy. Thus, it is interconnected with every sector. Leadership in emerging technological areas, such as AI, depends on robust and resilient European cloud providers. Europe’s cloud services sector, however, has been allowed to become dominated by a small number of very large overseas players – hyperscalers. Significant barriers exist to rebalancing this situation and ensuring a competitive market for these essential cloud services. These include fragmentation, insufficient access to capital, and unintended consequences of EU regulation. As a result, many European cloud service providers, usually SMEs, are unable to fully compete with hyperscale rivals. In addition, certain hyperscalers leverage dominance acquired in adjacent markets, such as productivity software, to further disadvantage local vendors and thus undermine a competitive market for cloud services in Europe. Underenforcement of traditional competition law at the EU and nation state level, as well as missed opportunities with the Digital Markets Act (DMA), currently leave dominant legacy firms free to continue to use unfair software licensing practices to distort cloud competition. Moreover, European investment initiatives are often not sufficiently targeted to deliver opportunities to European cloud service providers.