Europe signs off on up to €1.2B in state aid for homegrown cloud project

The European Commission is to provide up to €1.2 billion in public funding for the IPCEI Cloud project and expects a further €1.4 billion from the private sector. Both pots of money are to be used to promote local interests in a regional computing sector controlled by US giants.

IPCEI – or Important Project of Common European Interest – "may represent a significant contribution to economic growth, jobs, the green and digital transition and competitiveness for the Union industry and economy," according to the European Commission. Previous examples include microelectronics and batteries.

The public funding - from taxpayers in seven European member states including Germany, France, Hungary, the Netherland, Italy, Poland and Spain - comes as AWS, Microsoft and Google continue to dominate the provision of cloud services in Europe. Stats from Synergy Research published a year ago showed the trio had a local market share of 72 percent.

The EC's cloud project is concerned with data processing and an approach intended to combine cloud and edge products from a variety of different local providers. Four workstreams are planned. The first, dubbed "Cloud-Edge Continuum Infrastructure," is intended to develop interfaces for existing infrastructure. The second, "Cloud-Edge Capabilities," will come up with a reference architecture to allow different providers to be connected.

In remarks made in Brussels on December 5, Commissioner Didier Reynders said: "For instance, a project will create an open source software that will let businesses create Private Clouds across several sites by integrating resources from various datacenters."

Other workstreams comprise "Advanced Smart Data Processing Tools and Services" and "Advanced Applications," intended to bring everything together.

Reynders highlighted the example of SAP and its reference architecture for cloud-edge infrastructure. The commissioner said: "This reference infrastructure will be the basis for future software development and a prerequisite for a pan-European cloud edge infrastructure.

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"This project is expected to deliver its first results around the end of 2027."

One thousand jobs are expected to be created in AI, cybersecurity, data, cloud, and software engineering. A further 5,000 new jobs are expected once the project reaches its commercialization phase.

There is a catch to all the potential state funding. The cash will cushion the blow from market failures, but companies developing open source software are expected to grant permissive, non-restrictive licenses to any interested party. In addition, 20 percent of the capacity of facilities funded by state aid must be made available.

And if things go really well, a claw-back mechanism is in place to force companies to return part of the state aid.

The research, development, and deployment phases are expected to run from 2023 to 2031, and 19 companies are involved, including SAP and Orange in the Cloud-Edge Capabilities workstream and Deutsche Telecom in the Cloud-Edge Continuum Infrastructure workstream.

Europe does not have the best of track records when it comes to cloud and IT projects. Gaia-X, a project to provide a federated and secure infrastructure, was proposed in 2019. As of 2023, it remains a work in progress. ®