EU clears up to 1.2 billion euros of aid for cloud computing

FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium September 20, 2023. REUTERS/Yves Herman/File Photo

BRUSSELS (Reuters) -The European Commission approved on Tuesday up to 1.2 billion euros ($1.30 billion) of state aid for a European cloud computing project to try to boost the involvement of EU business in a field dominated by U.S. companies.

The project, called IPCEI Next Generation Cloud Infrastructure and Services (IPCEI CIS), was backed by seven European Union states, namely: France, Germany, Hungary, Italy, the Netherlands, Poland, and Spain.

Those countries will provide up to 1.2 billion euros in public funding, which in turn is expected to unlock 1.4 billion euros in private investments, the European Commission said.

Didier Reynders, the EU commissioner in charge of competition policy, said the IPCEI project would create around 1,000 direct and indirect jobs initially for data scientists or AI specialists, with a further 5,000 jobs later.

"Our assessment has also shown that the projects are truly innovative to ensure that public money is used to make our economy innovative and efficient," he added.

If the project is so successful it generates extra revenue, the companies will have to return part of the aid.

The first results are expected around the end of 2027.

The European Union's IPCEIs are designed to bring together research, finances and business to boost EU economic growth and competitiveness and drive its green and digital transitions.

Since 2018, the Commission has approved six IPCEIs in batteries, hydrogen and microelectronics and communication technologies.

The European cloud technology project features 19 companies, including French companies Atos and Orange, Deutsche Telekom and Germany's SAP, Telecom Italia and Telefonica Espana.

The three biggest players in cloud computing are Amazon, Microsoft and Google.

($1 = 0.9228 euros)

(Reporting by Sudip Kar-Gupta and Piotr Lipinski; editing by Philip Blenkinsop and Barbara Lewis)

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