The European Union is reportedly getting ready to tell its member governments to think twice before handing over sensitive data to American cloud providers. According to a report from CNBC, the European Commission is working on a "Tech Sovereignty Package" set to be unveiled on May 27, and part of that package could include rules that limit the use of U.S. cloud services for managing sensitive public-sector information.

Two Commission officials, who asked not to be named, said the main idea is to identify which sectors absolutely need to be hosted on European cloud capacity. That could mean companies offering cloud solutions from outside the EU—including the U.S.—might find themselves locked out of certain government contracts. But it's not a total ban. The proposals would only restrict foreign providers from handling sensitive data in public sector organizations, depending on how classified or sensitive the information is. And the rules wouldn't apply to private companies at all—the package is focused solely on government use.

The European Commission didn't immediately respond to requests for comment, so we'll have to wait for the official details.

This isn't happening in a vacuum. The EU has been tightening the screws on big tech for a while now. In December, Italy's competition authority fined Apple Inc. (AAPL) €98.6 million (about $115.53 million) for allegedly abusing its dominant position in the mobile app market. Around the same time, the European Commission launched antitrust investigations into Meta Platforms Inc. (FB) and Alphabet Inc. (GOOGL) over their business practices.

But the cloud issue is a different beast. Amazon.com (AMZN), Google, and Microsoft Corp. (MSFT) together controlled 70% of the European cloud market in the fourth quarter of 2025, according to Synergy Research. That's a lot of market share, and any move to limit their access to government data could hit their bottom line. Right now, EU public sector bodies rely heavily on these U.S.-based providers to handle sensitive data like health and financial records, as long as they follow regulatory rules. But concerns have been growing since the U.S. Cloud Act of 2018, which allows American authorities to access data held by U.S. companies even if it's stored in Europe. That's made European governments nervous, and they're starting to explore domestic and open-source alternatives, pouring more money into digital sovereignty.

Then there's the political backdrop. Transatlantic relations are strained under President Donald Trump's second term. Trump has repeatedly voiced his displeasure with Europe and NATO members, accusing them of not pulling their weight. Last week, he said the EU was violating a trade agreement and announced plans to slap 25% tariffs on European cars and commercial vehicles. He also ordered the withdrawal of U.S. troops from Germany, hinting that Italy and Spain could be next. So the EU's push to move away from U.S. big tech isn't just about data security—it's also about geopolitics.

For investors, this is worth watching. If the EU follows through, it could reshape the cloud market in Europe, opening doors for local players and forcing U.S. giants to adapt. But the details are still being hammered out, and nothing is final yet. Stay tuned.