France set to regulate cloud market more than EU

by Theophane Hartmann

A comprehensive bill aiming to secure and regulate the internet in France aims to strictly respect the new digital European regulations and, when it comes to cloud regulation, will go even further.

The bill is set to be debated at a plenary session of the National Assembly on 3-4 October after it was presented by Digital Minister Jean-Noel Barrot on 10 May and passed the Senate on 27 June.

“We aim to regulate while supporting French cloud providers, enabling them to grow in Europe, and fostering the creation of French cloud champions”, Anne Le Henanff, a member of the French Parliament from centre-right Horizons, who is the rappporter for the bill, told Euractiv.

“The ambition I hold as rapporteur for this bill, […] is to align the text as closely as possible with the EU Data Act.”

Barrot told the Parliament on 19 September that the bill should strictly follow the landmark new EU digital laws on illegal content moderation and market concentration: the Digital Services Act (DSA) and Digital Market Acts (DMA).

Yet, the bill’s provisions are going a step further in cloud regulation before the official approval of the EU-level legislation relating to the cloud market named the Data Act.

Cloud credits

“Cloud credits” are the practice whereby a cloud provider offers its services to its new customers at a preferential rate for a set period.

French lawmakers seem prone to regulate this practice, which is not foreseen at the EU level, in the current negotiations of the two co-legislators, the European Parliament and the Council of the EU representing the member states.

Some consider this practice unfair as the prices set by the three major American cloud providers, nicknamed “hyperscalers” (Microsoft, Google and Amazon), are considered too advantageous and the period too long, therefore distorting competition with European cloud providers.

Franco-French debate

The Senate version of the text stipulates that cloud credits could not exceed a year and could not be “subject to any form of exclusivity requirement”.

While a special commission analysed the text at the National Assembly last week, parliament member Philippe Latombe (MoDem, Renew Europe) tabled an amendment to regulate this practice further, suggesting setting a price cap for cloud credits.

He suggested that in six months, the French competition authority would have to analyse cloud credit practices by hyperscalers. Then, by virtue of this report, the government would set a price cap by decree.

Yet Latombe’s amendment did not pass, and the Senate provision was watered down. The National Assembly Special Commission’s text maintained that cloud credits should be non-exclusive and not exceed a “restricted time frame” without specifying one.

French lawmakers were concerned that restricting cloud credits for hyperscalers would also hinder the development of national cloud providers.

“French cloud players see an increase in their revenues, but their market share is decreasing. Indeed, the financial and technological firepower, coupled with monopolistic dominance by major American cloud providers, comes at the expense of our domestic players,” Le Henanff told Euractiv.

Cloud security level
The Senate also provisioned that all data related to public health and “national security, maintaining public order, and protecting the health and lives of individuals” should be stored by public administrations in specific French data centres following the highest French level of security: the SecNumCloud certification.

Yet, this provision was deleted during the commission’s debate.

Le Henanff said she welcomed the Senators’ disposition but explained that it faced three obstacles:

“Firstly, it was not technically feasible at the moment. Secondly, it was not desirable amid negotiations on the European Cybersecurity Certification Scheme, and eventually, it would have slowed down the growth momentum of French cloud providers, which aim to develop at the scale of the European market.”

Latombe and another parliament member, Christophe Blanchet (MoDem, Renew), opposed the rapporteur’s view and suggested the exact same amendment the Senate had provided.

Le Henanff said she would instead welcome French data governance based on a “risk analysis for each ministry dataset to set up a clear roadmap to adequately protect central administration’s data.”

Latombe, however, told Euractiv his position was “fairly distant from the rapporteur on this topic” and that he was determined to renew the tabling of his amendments and convince his colleagues, as he considers his modifications to be the closest to the current negotiated version of the EU’s Data Act.

*first published in: Euractiv.com