Allied For Startups' Position on the Cloud and AI Development Act

Allied for Startups’ Position on the Cloud and AI Development Act (CAIDA)

Allied For Startups welcomes the opportunity to contribute to the European Commission’s initiative for a Cloud and AI Development Act (CAIDA). Startups rely on cloud and AI services to build innovative products, scale across borders, and compete globally. This legislation is a timely opportunity to ensure they can access the infrastructure they need: affordably, openly, and without artificial barriers.

What is CAIDA?

CAIDA is a forthcoming legislative proposal by the European Commission, announced as part of the AI Continent Action Plan and listed among the EU’s strategic digital policy priorities in the 2025 Competitiveness Compass. Its main goal is to address the EU’s critical shortfall in cloud and AI infrastructure. This includes boosting research and innovation for greener compute infrastructure, facilitating private investment to triple Europe’s data processing capacity over the next 5 to 7 years, and expanding secure EU-based cloud services capable of supporting sensitive public and private sector use cases. The initiative stems from the recognition that advanced computational capacity is essential to Europe’s data economy and global competitiveness in AI.

To achieve these goals, the Commission plans to remove key barriers to infrastructure expansion, such as fragmented permitting procedures, access to natural resources, and capital intensity. CAIDA will also promote sustainable development of data centres and foster the emergence of a competitive, secure European cloud ecosystem. It is being prepared with a full impact assessment, stakeholder consultations, and public feedback processes. The legislative proposal is expected between Q4 2025 and Q1 2026.

What AFS proposes

Access to flexible and high-performing cloud services remains a challenge for many startups, particularly those developing data-intensive AI applications. High costs, limited availability of computing resources, and vendor lock-in are still too common. We believe the EU must focus on:

• Openness and interoperability: Avoiding restrictions like data localisation and addressing unfair licensing practices that reduce choice.
• Digital infrastructure investment: Accelerating deployment of modern data centres and electricity grids, and streamlining permitting.
• Procurement and testing environments: Making public tenders more startup-friendly and supporting regulatory sandboxes to boost early-stage innovation.
• Legal clarity and alignment: Ensuring consistency with existing rules like the Data Act, and favouring incentive-based sustainability measures over rigid requirements.

Startups thrive in competitive, interconnected markets. CAIDA can help unlock Europe’s innovation potential, but only if it puts flexibility, openness, and startup access at its core.