The alliance of tech CEOs with US President Donald Trump is producing both benefits and drawbacks for American tech companies in Europe.
As leaders and businesses try to make sense of the US’s rapid geopolitical realignment and a never-ending influx of tariffs, tech companies seem to have equal potential to be friend or foe for European leaders.
Go deeper with GlobalData
For the UK, these firms seem to be a bargaining chip that could earn Prime Minister Keir Starmer tariff reprieves. For the EU, the years-long pursuit of antitrust litigation cases has now taken on a defiant tone, with the bloc at risk of provoking further actions from the US.
While their governments may differ, UK and EU businesses seem to agree that this new landscape is rife with uncertainty. A growing number of companies are switching away from American cloud providers, as worries about data sovereignty become more pertinent for their customers and themselves.
Despite being only a few months into his term, Trump’s administration (particularly vice-president JD Vance) has made it clear it holds no good faith toward Europe. What we’re seeing now is likely just the beginning of the effects this animosity will have on American tech companies with investments on both sides of the Atlantic.
Bargaining chip in tariff battle
By now, it’s no secret that the biggest American tech companies have closely allied themselves with Trump. Meta CEO Mark Zuckerberg, Amazon executive chairman Jeff Bezos, Google and Alphabet CEO Sundar Pichai, and Tesla and X CEO Elon Musk all had front-row seats at Trump’s inauguration in a display many have dubbed the ‘broligarchy’.
These companies operate at scale in most European countries, giving European governments a lever to pull to get Trump’s attention. As 2 April (the day when Trump’s reciprocal tariffs will be announced) looms closer, leaders are negotiating behind closed doors, trying to minimise the damage.
The UK, for one, is still holding out for a bilateral deal with the US. Despite being affected by Trump’s 25% tariffs on steel and aluminium, the government has still not retaliated (although it says it is not off the table).
UK Chancellor Rachel Reeves maintained that stance when Trump announced 25% tariffs on all imported vehicles recently.
“We are not at the moment at a position where we want to do anything to escalate these trade wars,” Reeves said last Wednesday (26 March).
“We are looking to secure a better trading relationship with the US. I recognise that the week ahead is important. There are further talks going on today, so let’s see where we get to in the next few days.”
Rather, Reeves has suggested that the Digital Services Tax (DST) could be altered to prevent the US from imposing more tariffs on the UK. The DST was put in place in 2020 and imposes a 2% tax on search engines, social media companies, and online marketplaces that gain profit from UK users, regardless of where their headquarters are based. It brings in approximately £800m ($1bn) to the country’s coffers. The suggestion to reduce taxes on tech companies at the same time the government is cutting benefits has been politically unpopular.
UK Business Secretary Jonathan Reynolds also recently refused to rule out completely scrapping the DST, saying the tax wasn’t set up to “never change”.
GlobalData strategic intelligence principal analyst Laura Petrone warns that the UK government is “walking a tightrope”.
“On the one hand, the government can invoke Big Tech tax changes in the name of the national interest, to save the UK from a raft of tariffs from Trump that could seriously damage the UK economy,” Petrone outlines.
“On the other hand, UK regulators will soon start to enforce the Online Safety Bill, which aims to assign more responsibilities to Big Tech in policing online content, with onerous requirements and potentially heavy fines.
“Changing the DST could set a dangerous precedent of making exceptions to or watering down this legislation for Big Tech, with the Online Safety Bill potentially being added to the block in negotiations between the US and the UK.”
It would also create reputational damage, particularly given the “broad consensus among the public that Big Tech needs to be held accountable for the toxic and harmful content it spreads to children and vulnerable people,” Petrone adds.
EU doubles down on antitrust probes
Trump’s tariff threats do not seem to have dissuaded the EU from cracking down on technology companies. The European Commission (EC) recently accused Apple and Alphabet of breaking the Digital Markets Act (DMA), which was passed in 2022 and is aimed at preventing monopolistic behaviour and creating a fairer digital business environment. It only applies to companies it deems ‘gatekeepers’ to the markets in which they operate. Breaches can lead to a 10% fine of worldwide revenue or 20% if an entity reoffends.
The cases against Amazon and Alphabet have spurred strong criticisms from Trump. Last month, the US president signed a memo promising to defend American companies from “overseas extortion”, and cited the DMA as an example.
Vance has also railed against European tech regulations. Earlier this year, he criticised the DMA and the Digital Services Act, telling the audience at the Paris AI Summit that these were “onerous international rules” that were damaging innovation. Soon after, at the Munich Security Conference, he addressed EU policies aimed at tackling misinformation, calling officials who enforced them Soviet-era “commissars.”
More deadlines are incoming for the EU, with years-long noncompliance investigations against Meta, Apple and Google wrapping up.
“[The DMA] does not target US companies,” European commissioners Teresa Ribera and Henna Virkkunen recently said to a US lawmaker. They added that the EU’s goal “is to ensure compliance – not issue fines”. Of the seven ‘gatekeeper’ companies to which the DMA applies, five are American.
The EC’s ultimate goal with the regulation is to increase the EU’s competitiveness by creating a better environment for smaller players. However, if continuing to crack down on Big Tech prompts Trump to further increase tariffs, that goal would be undermined.
Data sovereignty concerns
For both EU and UK businesses, this political uncertainty has heightened data sovereignty worries.
In 2018, Trump passed the Clarifying Lawful Overseas Use of Data (CLOUD) Act. The law gives US law enforcement the ability to request data from tech companies (even if stored overseas) to investigate serious crimes. While the government argued it would allow for more cross-border cooperation on criminal investigations, many companies and users highlighted privacy concerns with the policy and suggested it could set a dangerous precedent that other countries might want to follow.
Now, worries about the CLOUD Act being misappropriated are in the spotlight once again. Multiple European cloud services told Wired that some customers had cited the policy as a concern that informed their decision to turn away from American firms.
These worries are shared by the Dutch parliament, which overwhelmingly voted to decrease overreliance on American tech companies. Dutch MP Barbara Kathmann, who wrote four of the motions, highlighted that shifting to European providers simultaneously creates an opportunity for local businesses as well as improving data sovereignty.
“The motions reflect some real concerns about US cloud services in the Netherlands and other European countries,” says Petrone.
“These concerns are not new but have been amplified and made more urgent by the Trump administration’s hostile stance towards Europe and the protectionist US regime.
“However, there’s always been an issue of a lack of viable European alternatives, and I don’t think this will be addressed anytime soon. But there’s momentum now for starting a debate around Europe becoming less dependent on US digital infrastructure.”
Rupert Bedell, managing director at UK hosting and internet service company Fasthosts, tells Investment Monitor via email that his company has seen an uptick in entities looking to move away from US service providers “as the growing concern over data sovereignty continues to rise”.
“In the last few months, businesses handling sensitive data have prioritised local hosting providers that align with both the EU and UK’s regulations,” he explains.
“The industry has also seen a significant rise in online enquiries about EU data hosters, with the total number of visitors to sites such as european-alternatives.eu rising by more than 640,000 since December 2024.”
Bedell highlights that over one hundred industry leaders sent a letter to the EU calling for the creation of a ‘EuroStack’ of technology to counteract the continent’s overreliance on US firms.
“In response, European cloud heavyweights Aruba, IONOS and Dynamo have introduced Sovereign European Cloud API (SECA), paving the way for truly sovereign infrastructure in the future,” he adds.
SECA is a new open-source infrastructure management application programming interface made to increase interoperability between European cloud providers.
Bedell also highlights the CLOUD Act as a point of contention for European businesses, particularly since it is at odds with European regulations.
“While the General Data Protection Regulation (GDPR) emphasises the protection of data and the requirement of consent for its use, the US Cloud Act grants US authorities access to data regardless of consent,” he says.
