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EU-US data transfers gone for good?
US Supreme Court decided FTC independence is unconstitutional. This invalidates EU-US DPF and also SCCs and BCRs which in practice rely on impact assessments.
EU treaties require independent supervisory authorities and those are unconstitutional in US. To make this compatible it would take changing or reinterpreting US constitution or changing EU treaties which requires an unanimous vote of all EU Member States. Both of those are unlikely to happen any time soon, thus the title.
Comments
Hi,
i so much hope that this is true :-)
This never had a chance anyway, it was clear from start that it will violate basic laws in both areas and no one will reinterpret the US constitution and you definitely do not get a full EU vote on a law that benefits the US in this climate.
What is the EU still missing that everyone flocks to American companies?
I'm not sure if that's a serious question?
Still can ping some US servers, so I believe the data transfer is working.
Innovation in IT and general hardware design for example. Its not like we cannot design an EU mobile phone manufactured at least partially local (like India does, and we had Nokia) its just simply not cost effective and we lack creative minds. We are in a weird middle phase now, not really industrial anymore but also not finance oriented. EU is becoming more of a tourism + transit hub and safe haven from overreaching governments to incorporate or store your wealth.
Other point is plain energy cost holding us back, sure you have countries with basically free power (Iceland) but you pay for that in extra transport/transit, shipping etc, most of EU is around 30-50c/kwh while Florida and Texas are just 14cents... (and with gas turbines and fracking you can drop this even lower, see the xAI datacenters).
In my opinion bureaucracy is also often times a pretty bad hurdle (not so much at a bigger scale - established companies will just throw money at any kind of compliance or regulatory problem and pretty much be done with it even if the costs will obviously still be passed on and further fuel rising prices - but at the small to mid level). Practically everything comes with a ton of red tape.
Of course levels in part somewhat differ between the various member states and one can usually somehow get through but there's still some very real cost attached to dealing with all the checkboxes, gotchas and you-can'ts.
The EU is simply quite overregulated by now it usually hits exactly those people that have some kind of ambition to build up and move forward. A certain level of pragmatism would be a nice a change but...
I meant in the context of servers, cloud storage, etc. They're not lacking in that, they actually have quite good competition. Some of the long-time favourites like Hetzner are European. AWS isn't, but AWS is overpriced garbage anyway.
Well, yes, we can compete - also in pricing, even with higher power costs - in the hosting etc. space but we need to rely on a US supply chain for that and we will never resolve that.
I kinda doubt you could just replace the big cloud services and infrastructure providers with Hetzner and maybe OVH. Even if you could chances are the screwed up energy supply will make it even more non-competitive than it already is rather sooner than later. I mean, datacenters are already regularly bottlenecked on energy. More and more AI is pushing in competing for energy/datacenter space. It doesn't take some scientist to predict what will happen to prices. There's also no real fix available since you can't just hex energy into being.
The whole Europe first thing is a nice idea but as is Europe lacks the very fundamental capabilities to actually pull through with this in any kind of meaningful way and i don't really see much of a chance of this changing any time soon. It basically fails at the very first step: The EU actually acknowledging that there's massive problems instead of pushing pipe dreams.
Hetzner is toast. Maybe OVH. Maybe Scaleway. Both got a long way to go but Hetzner is way too conservative in offerings and move too slow.
German tax law is also not very much helping here, as innovative (if not critical infra) company nearly any country would offer incentives at least on land and corporate tax but nothing here.
France is really not much better, just easier access to massive power amounts (some OVH datacenters are built next to nuclear plants, this is not a simple process).
Its just too expensive to operate a legit company in 2026 even if we ignore the worker shortage and costs.
Other countries like Bulgaria do better with flat tax in the 20-25% area which also saves a lot of gov work but they are at best a secondary market at this time - Sofia ain't Frankfurt.
But there’s some signs that EU is getting a bit more serious
Future Mistral AI models will be as I understand it will be exclusively trained and hosted in France & Sweden
Partly in https://ecodatacenter.tech/data-center/ecodatacenter2
EU is of course very much behind, but the future is interesting. Especially interesting to see if this push for soverign ownership of data keeps on even after Trump
As I understand it though, OVH gets very good loan terms from EIB
And also see stuff like https://corporate.ovhcloud.com/asia/newsroom/news/ovhcloud-digital-euro-ecb/
So OVH is both financed and used by EU organs widely
Getting low % loans for datacenter infra is right now not an issue anywhere, the banks and especially private equity expects more and more AI need so they just throw cash at you. At the current scale OVH and Hetzner are too big to fail anyway, financially, hell OVH had an entire datacenter burn down and people still run to them...
Them taking money from the EIB and not private equity or by issuing more stock tells me the terms are way more favorable than open market because of this push for data to be soverign
The terms might actually be worse and its a political statement, it being France i also dont doubt there could be government money involved to offset any difference.
But yes, PE long term would ruin it, though normal bank loans are usually fine and dont ask too much.
Long term at least Hetzner should IPO anyway, at least i hope so (though hosting stocks traditionally suck, datacenter infra is somewhat ok, transit/transport 50/50).
I highly doubt it. EIB is EU, not France. Stock owners wouldn’t pick a bad loan. I can check
The disclosed EIB tranches were: €100m fixed at 3.703%, €60m fixed at 3.814%, and €40m floating at 3-month EURIBOR + 1.105%.
The closest private-market loan comp in OVH’s 2025 refinancing was its €450m senior unsecured term loan, where the margin was EURIBOR + 2.25% at OVH’s disclosed pro-forma leverage of 2.84x.
So EIB did indeed give them much better terms than the private markets did
Do you know what led them to chose Sweden as 2nd location?
My presence probably
I think part of it is:
Source: https://ecodatacenter.tech/data-center/ecodatacenter2
As well just probably politics. Probably a good idea to spread out important EU infra and not have it all in France & Germany
Climate most likely, as power is cheaper in France (though i doubt the gov pays any of the transport costs or connection fees and taxes for an EU dual use project).
100kW+ cooling per rack at 40C in Paris (even outside) is not really feasible without major noise issues and rewiring half an industrial park to even get "just" 1MW power.
This kind of datacenter MUST be built next to an existing power plant, a HVDC power line to tap into or a natural gas pipeline for turbines (that are literally sold out for the next 5 years).
Yes. Time to secure power is years. Fastest in China, then the US, Europe last
But in Europe, nordics is amongst the ”least bad”
Like how Gravelines is next to a Nuclear power plant.
Sadly Iceland and Norway could not really be considered as just EFTA members, Iceland also has the problem that it needs to rely entirely on submarine fiber so even free cooling and US power pricing makes it not attractive.
Private AI companies will sooner or later all come down on Iceland, Norway, Sweden, Finland, parts of Canada, Alaska and few other areas as yea well 100kW+ liquid loop cooling is not like the 5kW hot aisle AC 15 years ago anymore, having outside air under 20C will save them millions.
@oloke @William
Very much recommend this a watch, it’s in Swedish but you can set subtitles to english, unique insights from someone working with financing nordic DC’s for AI
Canada will be an interesting one given its access to abundance of resources. They've been talking about building a datacenter in Alberta next to a big natural gas plant that can provide 900mw.
Yeah, i figure a lot of decision makers would just love to return to the status ante of "Hello USA, sir. What shall we do next?"
I guess if it hadn't been for Trump pretty much shitting on them at every opportunity and somehow managing to become even more massively unpopular than he already was they would have tried very, very hard to play business as usual. It's mind blowing to me how Europe for decades basically rejected even just exploring what some kind of sovereign policy could look like.