COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for strengthening Europe's cloud and AI ecosystem (Cloud and AI Development Act)
Date: 2026-06-03
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: EU initiative, artificial intelligence, cloud computing, competitiveness, computer centre, ecosystem, innovation, provision of services, public sector, technological independence

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   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 503 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT REPORT  Accompanying the document Proposal for a  REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for strengthening Europe's cloud and AI ecosystem (Cloud and AI Development Act) {COM(2026) 502 final} - {SEC(2026) 502 final} - {SWD(2026) 502 final}  
 
 
Identification of the problem and EU-level dimension  

Cloud computing and AI have become driving forces reshaping industry, public services, and 
daily life. They are powered by computing capacity located in data centres. The availability of 
computing capacity in the EU is limited and geographically concentrated, negatively affecting 
competitiveness.  Moreover,  the  EU  is  dependent  on  cloud  and  AI  computing  services 
supplied  by  non-European  providers.  This  can  result  in  risks  of  control  over  data  and 
operational autonomy.    

The  deployment  of  computing  capacity  in  the  EU  is  currently  characterised  by  national 
policies, leading to fragmentation. The dependence on non-European providers of cloud and 
AI  computing  services  has  the  same  root  causes  across  the  EU,  affecting  the  public  and 
private sector in all Member States.  

Aim of the initiative 

The Cloud and AI Development Act (CADA) aims to  ensure the functioning of the internal 
market  for  cloud  and  AI  computing  services  and  to  secure  the  conditions  necessary  for  the 
Union’s competitiveness and strategic autonomy. It sets out to:  

• 

Increase  computing  capacity  deployed  in  the  EU  through  innovative  and  sustainable 
technologies 

•  Ensure attractive conditions for such deployment 
•  Reducing the overall reliance on non-sovereign cloud and AI computing services  
•  Contribute to the protection of public order by enhancing the resilience of supply of cloud 

and AI computing services, in particular in the public sector 

Value added at EU-level 

To  boost  computing  capacity,  an  EU-level  action  provides  a  common  approach  enabling 
coherent  planning  and  deployment  of  capacity  in  a  geographically  balanced  way,  while 
avoiding  a  race  to  the  bottom  and  making  the  regulatory  environment  clearer  for  relevant 
businesses. To reduce the dependence on services supplied by non-European providers, EU-
level action delivers benefits beyond what Member States can achieve individually by pooling 
resources and creating economies of scale.  

It  also  strengthens  the  Union's  strategic  autonomy  of  digital  infrastructures,  safeguarding 
digital  sovereignty  against  risks  related  to  the  use  of  non-sovereign  services  and  external 
dependencies. By fostering a robust internal market for cloud and AI computing services, the 
EU  can  secure  vital  digital  assets  and  boost  its  global  competitiveness.  CADA  supports  the 
development of a resilient and secure ecosystem conducive to innovation via EU-level R&D 
funding  challenges  targeting  the  development  of  highly  innovative  Cloud  and  AI  enabling 
technologies,  offering  a  stable  environment  to  attract  investments  and  to  nurture  growth. 
Ultimately,  it  can  enhance  the  collective  bargaining  power  of  Member  States  in  the 
international arena. 

Options evaluated & Preferred option  

The document evaluates six policy options, grouped into two categories: three addressing the 
limited and geographically concentrated availability of computing capacity in the EU (PO1) 
and three tackling the dependence on cloud and AI computing services supplied by non-EU 
providers (PO2). 

PO1-A  enhances  the  existing  collaborative  framework  between  Member  States,  EU 
institutions and relevant industries to support data centre expansion. PO1-B provides rules and 

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financial support for faster data centre deployment, implemented nationally. PO1-C shifts this 
implementation to the EU-level. 

PO2-A  contains  supporting  measures  to  increase  transparency  and  visibility  of  sovereign 
cloud and AI computing services. PO2-B creates a voluntary framework for advancing such 
services and proposes the federation of resources among the public sector to boost efficiency. 
PO2-C  establishes  an  EU-coordinated  procurement  and  mandatory  support  framework  for 
strategic  autonomy  and  sovereign  services.  In  this  later  aspect,  it  provides  measures  for  the 
public sector as well as for private sector essential entities operating under the sectors listed in 
Annex I of NIS2. 

The preferred option is the combination of PO1-B, PO2-C and two individual policy measures 
of PO1-C, related to the funding for the development and deployment of novel technologies 
for  sustainability  along  the  cloud  value  chain  (PM8,  PM9).  This  package  achieves  the  best 
balance  of  costs  and  benefits,  while  providing  a  good  balance  in  terms  of  social  and 
environmental impacts and respecting subsidiarity and proportionality principles. 

Stakeholders’ support  

Data centre operators  and cloud  service providers  have voiced  support  for PO1-B and PM8 
and  PM9,  aiming  to  facilitate  quicker  deployment  of  data  centres  by  reducing  red  tape  and 
encouraging  investments,  particularly  those  that  promote  sustainable  technologies.  They 
welcome this package as a streamlining of administrative processes to deploy data centres. 

Cloud  and  AI  computing  service  providers  have  expressed  support  for  PO2-C,  notably  the 
joint public procurement mechanisms it puts in place; the marketplace, which allows smaller 
providers  to  scale  and  be  more  visible  towards  incumbents;  and  the  audit  mechanism  for 
sovereign  services,  which  would  end  sovereign-washing.  They  welcome  these  measures  as 
they enhance transparency and visibility of service offers, including  from smaller providers, 
and they result in opportunities to distinguish their services. Non-EU service providers have 
repeatedly  stressed their  interest  in  retaining  an open European market,  including  for public 
procurement. 

Public  sector  bodies  support  PO2-C,  notably  the  public  sector  federation  of  cloud  and  AI 
computing  resources  as  this  would  increase  utilisation  rates  of  idle  resources.  They  also 
favour the coordinated approach to public procurement and the clarity it provides on how to 
safeguard data confidentiality and ensure operational autonomy for highly critical use cases.  

Benefits and costs of the preferred option  

The preferred policy package (PO1-B, PO2-C, PM8 and PM9) is expected to have benefits in 
the short and medium term that outweigh the generated costs over the assessment period for 
different stakeholders. Data centre operators would benefit from streamlined processes, fast-
track  permitting  and  administrative  simplification,  while  cloud  and  AI  computing  service 
providers would benefit  from  cost savings  stemming mainly from  the ability to  get  a single 
audit  for  sovereign  services,  valid  throughout  the  EU.  This  is  relevant  for  the  public 
procurement  of  services  for  highly  critical  use  cases  across  the  whole  EU.  National  public 
authorities  are  also  expected  to  benefit  from  cost  savings,  mainly  through  increased  use  of 
open  source,  joint  public  procurement  and  the  federation  of  capacity.  This  combination  of 
options also entails implementation and transition costs. There are mainly linked to adapting 
systems  and  procedures,  familiarising  stakeholders  with  the  new  requirements  and  ensuring 
compliance.  Most  of  these  costs  are  one-off  or  transitional  in  nature,  while  several  of  the 
expected benefits are recurring over time. This combination of options is expected to deliver a 

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positive balance of costs and benefits, while achieving the objectives in a proportionate and 
cost-effective manner.  

Impact on SMEs and competitiveness 

The impacts on SMEs and competitiveness are predominantly positive, as the comprehensive 
EU-level intervention aims at enhancing the cloud and AI computing landscape. The preferred 
package  is  designed  to  facilitate  access  to  cloud  and  AI  computing  resources  for  SMEs 
looking to innovate or expand their digital capabilities. By fostering a more unified and open 
market, EU-based SMEs can leverage a harmonised regulatory environment which simplifies 
business processes and enhances market opportunities. 

For  competitiveness,  the  intervention  aims  to  boost  the  EU’s  internal  market  by  reducing 
dependency  on  non-European  service  providers.  This  shift  creates  opportunities  for  local 
service providers and SMEs, which they can leverage to compete globally.  

Other significant impacts 

If implemented, CADA is expected to lead to both environmental and social impacts related 
to increased data centre capacity. 

While  expanding  data  centre  capacity  results  in  increased  resource  use,  key  environmental 
benefits  include  the  use  and  development  of  novel  energy-efficient  technologies  in  data 
centres.  By  supporting  such  advancements,  CADA  is  expected  to  help  the  EU  alleviate  the 
carbon footprint  of its data centre industry.  This  will contribute to  the EU's broader  climate 
goals  and  commitments,  aligning  digital  infrastructure  expansion  with  sustainability 
principles and fostering environmentally responsible growth in the tech sector. 

Socially, CADA is expected to support innovation and create employment opportunities in the 
tech sector, leading to high value job creation and skills development. Additionally, sovereign 
cloud  and  AI  services  are  expected  to  enhance  resilience  and  security  for  public  sector 
operations, protecting sensitive data and ensuring service reliability for citizens.  

Follow up 

The Commission should carry out an evaluation five years after the adoption date to assess to 
which extent the objectives of the initiative have been reached. 

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