Issue #22 - June 12, 2026
The EU Sovereignty Package and the lost quest for the EU Single Market
Sébastien Louradour
6/12/20263 min read
After almost 2 years of the start of the European Commission's mandate and a reckoning that Europe must do better on innovation, and technology, the EC presented last week the EU Tech sovereignty package, as a political response and a blueprint for shaping the EU's approach on technology.
The package comprises four buckets, each covering a specific tech issue: (i) the Cloud and AI Development Act (CADA), (ii) the Chips Act 2.0, (iii) the Strategic Roadmap for Digitalisation and AI in the Energy Sector, and (iv) the Open-Source Strategy. All combined, the four buckets aim at proposing an industrial strategy at the age of GenAI, identifying the issue of sovereignty as a weakness in a world dominated by the US and China as tech leaders. The strategy focuses on cloud/compute/chip manufacturing capacity, acknowledging the massive need of EU investments to keep up with the ongoing and future demand on AI, anticipating the potential vulnerabilities of relying on foreign technology for sensitive activities, and anticipating the low-carbon emission requirement to sustain such developments. Public procurement is identified as a pump that would lift demand on EU solutions, and overtime create a market for EU-made technologies, and open source AI is identified as a lever to reduce vendor lock-in and mitigate market concentration. Overall the strategy is to build data centers in Europe, promote the adoption of European tech solutions by the public sector and sensitive activities (defense, justice, law enforcement, etc.) and through open source technology. Compared with the advocacy work done by Mistral over the past few months, the EC proposal reads as a validation of its push towards less reliance on US tech, and more investments in Europe, though we could argue that the solution for the EC to bring the capital investment that Mistral has asked for to succeed remains the big question mark.
But at last, Europe has an innovation strategy plan, with key technologies in mind to develop, an objective of not relying too heavily on foreign assets and a European vision to execute it: low-carbon and open source. That being said, the proposal represents a stretch from Draghi and Letta reports, and could ultimately overshadow their initial goal which is strengthening the single market to reach stronger competitiveness where sovereignty is understood as positioning the EU as a tech leader. According to them, Europe has first to do its homework of harmonising its rules, its capital market, and simplifying the conditions for Europe to invest in its own success. One could argue that the EU is also making progress on those, through the EU Inc proposal for example, though startup advocacy groups have flagged significant gaps, notably on legal predictability and enforcement harmonisation.
Another element that might quickly prevail is what sovereignty means in practice. Europe has been built on free-market rules, and on the assumption that globalisation and not protectionism is the way forward. Over the past months, France has made significant headway convincing its neighbors that “strategic autonomy” is the way forward, and many dependencies remain for Europe to safely build its own future, starting with its structural reliance on gas and oil. This recent political reckoning has put the question of tech sovereignty at the top of the agenda. But some member states such as the Baltics, the Netherlands or the Nordics have thrived thanks to globalisation and there is little chance they consider the ongoing push for sovereignty as something to be fully embraced. In such a context, member states should agree first on what is worth making sovereign - is this making sure capital investments from EU citizens grow within the EU market and not fly to the Nasdaq, or is it building a digital wall between geographic regions, each one having its own datacenters, services and hardware providers? There are indeed many ways of understanding the meaning of sovereignty, from France pushing for domestic adoption of Mistral, to Estonia focused on exporting its tech champions globally.
Overall, given the difficulty of gathering member states around further single market integration, the Commission has opted to lead with sovereignty — something that appears at first sight more urgent and politically achievable. With three years left in its mandate, the EC still has time to refocus on the single market. But there is a scenario where the sovereignty package comes to be seen as the adequate response to it, much as the previous Commission framed the DSA and the DMA as building blocks of the digital single market — with deeper integration again deferred. If that course holds, the single market could end up being once more the lost cause of Europe.