By Edith Hancock

Microsoft plans to expand its cloud and artificial-intelligence operations in the European Union, including with a network of new data centers, as businesses in the bloc pressure policymakers to protect EU tech sovereignty.

The U.S. technology giant said Wednesday that it plans to increase its data-center capacity within the EU over the next two years, with a view to having cloud operations in more than 200 data centers across the region.

"Like electricity and other general purpose technologies in the past, AI and cloud data centers represent the next stage of industrialization," the company said in a blog post.

Speaking at an event in Brussels on Wednesday, Microsoft's President Brad Smith tackled growing concerns across the bloc around using cloud software produced by U.S.-headquartered companies since U.S. President Trump took office. Some are worried that, should a trade war between the EU and U.S. escalate, Trump could retaliate by ordering U.S. firms to cut off their services in the region. "I regard that as exceedingly unlikely to ever happen," Smith said but added that the company is prepared to challenge any government that asks it to suspend its cloud services in the EU. "Our business relies on the trust of our customers, without that it starts to decline and dissipate," he said.

Microsoft said it already partners with smaller European cloud providers and is developing new technology and licensing solutions tailored for them and the markets they serve.

Businesses in the bloc are increasingly seeking ways to wean off depending on cloud services provided by dominant firms like Amazon, Microsoft and Google amid rising tensions with the U.S. and potential data-security risks.

A group of close to 100 European companies including Airbus and French cloud provider OVHCloud wrote to European Commission president Ursula von der Leyen and tech chief Henna Virkkunen last month calling for the EU executive to formally oblige public-sector bodies across the region to buy from European-led sources when investing in new technologies.

"Given recent geopolitical volatility, we recognize that European governments likely will consider additional options," Microsoft said. The company's European data-center operations will be overseen by a board of directors made up of European nationals, Microsoft's blog post said.

Speaking a press conference after the event, Smith argued that tech sovereignty shouldn't necessarily mean all tech services being provided only by European companies. "There are different approaches to how to save the protection of technology sovereignty," Smith said. While one would be to rely on a European company for tech solutions, another says "there is technology sovereignty if it is governed by European laws and rules," he said. "Fundamentally, we're big advocates of the second approach," he said.

Write to Edith Hancock at edith.hancock@wsj.com

(END) Dow Jones Newswires

April 30, 2025 08:42 ET (12:42 GMT)

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