European firms face US legal risk over cloud data transfers

European companies increasingly view reliance on U.S. hyperscalers as a geopolitical vulnerability. U.S. statutes such as the CLOUD Act, FISA‑702 and Executive Order 12333 permit American authorities to demand data from U.S. providers regardless of where the servers are located, exposing European firms to foreign legal reach.

EU regulations NIS2 and DORA now require continuous auditability and responsibility across the entire supply chain, prompting calls for sovereign cloud architectures and European‑based data centres. Leading German and French business associations warn that a recent U.S. Supreme Court decision curtailing the FTC’s independence threatens the legal basis of the EU‑U.S. data‑transfer framework, creating heightened compliance costs, liability risks and uncertainty for transatlantic digital services.