Data Privacy
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Data Security
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Geo-Specific
New York-Based Kyndryl Can’t Buy Amsterdam-Based Solvinity Group
The effort to bolster European technological sovereignty took a notable step in the Netherlands as authorities decided to reject the proposed acquisition of a crucial secure cloud company by an American firm. This incident reflects a growing sentiment in Europe to exercise greater control over its technological landscape, especially in light of increasing geopolitical tensions with the United States.
Solvinity Group, based in Amsterdam, operates a vital infrastructure platform that is foundational to the DigiD identity verification system. This system plays a critical role in accessing government services for Dutch residents via the MijnOverheid portal. The proposed acquisition by Kyndryl, a New York-based IT infrastructure giant that was spun off from IBM five years prior, was initially publicized in November. However, the Dutch investment screening authority, known as the BTI, intervened, leading to the sale being halted.
On May 26, Dutch state secretary for the digital economy and digital sovereignty, Wilhelmina Aerdts, provided clarity on the decision during a parliamentary announcement. Aerdts stated, “The BTI advised me to proceed with a complete prohibition of this acquisition. I have endorsed this advice and have adopted it.” The urgency of her announcement was underscored by the indication that the closure of the transaction was imminent — prompting swift action to safeguard public interest.
Aerdts emphasized that this decision was “country-neutral,” asserting that the framework applied to all investors irrespective of their national origin. Yet, the context of her remarks indicates that the motivations behind the ruling were influenced by broader geopolitical trends, particularly the perceived threats from the United States under the Trump administration.
In recent years, Europe has ramped up efforts to mitigate its reliance on U.S. technology giants. The European Commission is expected to release a Tech Sovereignty Package aimed at enhancing local technological capacities, despite efforts facing delays attributed to trade sensitivities. In this context, various nations within Europe are actively pursuing initiatives to promote homegrown alternatives to established American firms like Microsoft, reflecting a collective sense of urgency regarding technological independence.
Concerns underpinning these efforts include the potential risks posed by U.S. policies, such as the Obama-era Cloud Act, which mandates that U.S. cloud providers must comply with law enforcement requests for user data, even if the information is stored on foreign servers. Critics of this legislation argue that it creates vulnerabilities for European data sovereignty and undermines privacy protections for users.
Following the announcement of the proposed sale, a coalition of privacy advocates and tech experts initiated legal action to contest the BTI’s initial refusal to provide transparent information regarding the acquisition. Privacy First, an NGO involved in this coalition, articulated their concerns, stating, “Putting part of our vital digital infrastructure in U.S. hands increases the Netherlands’ vulnerability to failure, manipulation, or even blackmail.”
In March, the Dutch government opted to extend Solvinity’s contract for an additional two years, positing that a hasty transition to a new supplier prior to the contract’s expiration could jeopardize the security and functionality of the DigiD system. However, this move was met with dissent from a group of citizens who filed a lawsuit challenging the government’s decision to renew the contract based on the implications of the Kyndryl deal. Last week, a ruling from the Hague district court supported the government’s choice, asserting that it would be irresponsible to alter suppliers at this late stage.
With the cancellation of the acquisition now confirmed, Solvinity has expressed its commitment to ongoing discussions with relevant authorities concerning national security considerations, digital sovereignty, and the safeguarding of critical infrastructure in the Netherlands. Following the government’s decision, the company removed the November press release announcing the acquisition from its website.
In response to the government’s decision, Kyndryl expressed its “extreme disappointment,” citing a commitment to engaging in open dialogue with Dutch government stakeholders throughout the process. The company lamented that while the proposed transaction aimed to provide significant benefits to Solvinity’s customers and the Dutch populace, the politicization of the acquisition overshadowed these intended advantages.