EU Commission allows state aid for pan-European cloud project

The EU executive gave the green light to public spending up to €1.2 billion by seven member states for their common research interest project on interoperable cloud and edge computing for multi-providers.

Seven EU countries notified the Commission of an Important Project of Common European Interest (IPCEI) called Next Generation Cloud Infrastructure Services in April 2022.

IPCEI are transnational projects whose strategic value justifies derogating from the EU state aid rules. However, it took over a year and a half for the Commission to green-light the process.

Euractiv understands that this delay was because Margrethe Vestager, formerly in charge of the EU competition department, was not fully convinced by the project.

However, her portfolio was taken over by Justice Commissioner Didier Reynders in September, as Vestager took unpaid leave to compete as a candidate for the top post of the European Investment Bank.

This project will allow in the future to support innovative applications such as “automatic vehicles or real-time remote patient monitoring” and “will reduce the need to transmit large volumes of data to centralised servers”, Reynders said on Tuesday (5 December).

In other words, the European Commission has validated this project as it is expected to have concrete outcomes for the EU data strategy and support the EU’s innovation, addressing market failures in the cloud market.

France, Germany, Hungary, Italy, the Netherlands, Poland and Spain will pool up to €1.2 billion in state subsidies, which is hoped to help leverage an additional €1.4 billion in private investments. How much each country is chipping in is not publicly known.

In addition, Reynders announced the project’s total cost will require 30% lower public funding than previously calculated.

Moreover, companies benefiting from the subsidies will have to reimburse part of the money received if the project happens to be more fruitful than expected, thanks to the “claw-back” mechanism.

Private actors reactions

Euractiv understands that private companies believe there has been a discrepancy between the timing of innovation and the timing of allowing European funding.

Yet, Orange “strongly welcome[d]” the decision on Tuesday 5 December and so did Deutsche Telekom on Wednesday 6 December, stating that this project will “establish a common set of technical standards” in EU edge-cloud technology. 

Indeed, this cloud-edge technology will allow EU actors to start developing common standards for next generation services, such as standardised software allowing communication with automatic vehicles in all 27 countries of the EU Single Market.

In addition, the Commission’s decision goes in the direction of the Digital Decade targets of having 10,000 edge nodes in the EU by 2030 and European Strategy for Data, which expects that 80% of the volume of data processed will be through edge nodes by 2025, against 20% in 2021.

Workstreams

The project aims to prove its capacity to provide real-time and low-latency digital services.

Thanks to edge computing, a technology where data is stored in a decentralised manner and close to the end user through numerous and small data centers, latency is shortened, between devices and the cloud.

Four working streams have been defined.

Firstly, Deutsche Telekom and Telefónica España will lead the development of infrastructure software between edge and cloud stack.

Atos, SAP and Telecom Italia, among others, will work on a common architecture for operating and updating the cloud and edge system.

Hungarian 4iG and Polish CloudFerro will, on the third stream of research, look into providing platform services on the cloud and edge system.

Meanwhile, Siemens and Fincantieri will be responsible for developing sector-specific proofs of concept, such as in the health or energy sectors.

Next steps

The IPCEI project is expected to last until 2031, with the first results expected by 2027.

Reynders stated he expected the creation of 1,000 highly qualified direct and indirect jobs and an additional 5,000 by the time of commercialisation.

[Edited by Luca Bertuzzi/Nathalie Weatherald]

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