Brussels debate lays bare tensions over sovereignty, scale and CAIDA

As the European Commission prepares the Cloud and AI Development Act (CAIDA), Brussels is already grappling with a fundamental question: what should European digital sovereignty actually look like?

That question dominated discussions at Building Europe’s AI Backbone: What Should CAIDA Deliver?, a closed-door roundtable hosted by The Watcher Post EU on 5 May in Brussels. Policymakers, infrastructure operators, cloud providers, consumer advocates and technology companies gathered to debate how Europe can strengthen its AI and cloud ecosystem at a time of intensifying geopolitical and technological competition.

Sovereignty and Europe’s strategic dilemma

One of the sharpest fault lines centred on the meaning of “cloud sovereignty” itself. For some around the table, sovereignty should primarily be understood as resilience and strategic optionality, ensuring that European users and institutions are not dependent on a single provider or technological ecosystem.

Others rejected that interpretation, arguing that reducing sovereignty to market choice risks entrenching the dominance of existing hyperscalers rather than reducing Europe’s structural dependencies. From this perspective, sovereignty requires Europe to actively develop and prioritise its own industrial and technological capabilities.

The exchange reflected a broader debate already taking shape in Brussels policymaking circles: should CAIDA focus mainly on preserving open market conditions, or should it explicitly support the development of European-controlled infrastructure?

Europe’s difficulty in scaling digital infrastructure businesses across the Single Market emerged as another major point of contention. Fragmentation across regulation, taxation, permitting procedures and investment frameworks was repeatedly identified as one of the main obstacles to competitiveness.

Without a genuinely integrated Digital Single Market, the argument went, European companies will continue to struggle to compete globally in cloud and AI infrastructure.

Possible solutions discussed included accelerating permitting procedures, advancing the Capital Markets Union, harmonising investment conditions and attracting more long-term infrastructure financing into Europe.

At the same time, some voices cautioned against allowing structural debates about fragmentation to overshadow the more immediate challenge facing policymakers: designing practical and workable instruments within CAIDA itself.

Regulation, investment and Europe’s AI ambitions

The discussion also exposed growing concerns over Europe’s investment climate for AI and digital infrastructure. Regulatory uncertainty featured prominently, particularly regarding the cumulative impact of existing digital legislation, including the AI Act.

Questions were raised about whether compliance complexity and regulatory unpredictability risk discouraging investment or slowing innovation at a moment when global competition is accelerating.

At the same time, the Commission’s recent shift towards a more investment- and innovation-oriented narrative was broadly welcomed. Still, many stressed that political messaging alone will not be enough without concrete implementation.

The conversation extended beyond regulation to include energy pricing and availability, the maturity of Europe’s SaaS ecosystem, talent retention and Europe’s attractiveness for both domestic and foreign investment.

Data centres were increasingly framed not simply as digital assets, but as strategic infrastructure tied directly to Europe’s industrial capacity, energy system and geopolitical resilience.

Underlying the debate was a broader strategic dilemma facing the European Union: can Europe strengthen technological sovereignty and resilience without fragmenting markets, discouraging investment or weakening innovation?

By the close of the roundtable, the tone had sharpened. Europe, several attendees argued, can no longer afford to approach digital infrastructure from a defensive position or continue seeing itself as a secondary player in the global technology race.

If CAIDA is to succeed, the conclusion emerging from Brussels was unmistakable: Europe’s ambitions will need to match the scale of the technological and geopolitical challenge ahead.