Summary As proposed under the Cloud and AI Development Act (CADA), the EuroCloud Federation would be a voluntary, public-sector-only mechanism for sharing data centre and cloud computing capacity between Union entities and public sector bodies, governed solely by public-interest considerations rather than profit. A commercial cloud marketplace, by contrast, is a vendor-run platform where private providers sell services to any buyer, including the public sector, on commercial terms. CADA provides that sharing within the EuroCloud Federation should be free of charge except for strictly necessary, proportionate cost recovery, which would not constitute a "pecuniary interest" — so such sharing would fall outside Union public procurement rules. CADA is still a proposal and the text may change.

Detail

As proposed, CADA would create a distinct legal channel for public-sector cloud cooperation: the EuroCloud Federation (formally, the European public sector cloud federation). To see how it differs from a commercial marketplace, look at the legal basis, participation rules and financial model in Articles 34, 35 and 36.

1. Legal basis and purpose

EuroCloud Federation (public cooperation). The Federation is established under Article 34, and its purpose is to facilitate the sharing of public sector data centre services and cloud computing services between Union entities and public sector bodies. It is a mechanism for interconnecting public infrastructure to increase resilience and efficiency — not a commercial market. As Recital 73 puts it, the sharing should be "anchored in a public-sector cooperation," governed solely by considerations of public interest, with no consideration given in exchange for another.

Commercial marketplace (private commerce). A commercial marketplace operates under general contract law and the public procurement directives (such as Directive 2014/24/EU). Private cloud providers offer services to a broad range of customers, including public authorities, on a commercial basis: the buyer pays a price that reflects costs, market risk and a profit margin.

2. Participation and control

EuroCloud Federation. Participation is voluntary and limited to public entities. Article 34(1) opens the Federation to Union entities and public sector bodies, which may request the Commission to join. Recital 71 confirms there should be no direct participation of a private party. Under Article 35(1), a member ("sharing entity") may share services only where it owns the hardware through which the service is made available — directly, or indirectly through an intermediate legal entity over which it exercises control. Recital 71 elaborates that control over an intermediate entity requires three cumulative conditions: the sharing entity exercises decisive influence over the entity's strategic objectives and significant decisions; there is no direct private capital participation in that entity; and more than 80% of the entity's activities are carried out in performing tasks entrusted by the sharing entity. This keeps the infrastructure under public control.

Commercial marketplace. These are open to any qualified vendor, including private companies and non-EU providers, with no restrictions on private capital ownership beyond meeting technical, security and procurement criteria. Control over the infrastructure rests with the private provider.

3. Financial model: cost recovery vs commercial pricing

EuroCloud Federation. Article 35(5) provides that a sharing entity may charge the using entity a fee, but the amount must be limited to the costs incurred in sharing the service and "shall not constitute a pecuniary interest" within the meaning of Article 2 of Directive 2014/24/EU and Regulation (EU, Euratom) 2024/2509. Recital 73 adds that sharing should be free of charge except where charges are strictly limited to recovering the additional costs of sharing capacity — such as allocating and isolating resources, managing access, enabling interoperability, and ensuring compliance with Union law. Crucially, Recital 73 states that under these conditions, sharing within the Federation should not fall under Union public procurement rules. This lets public bodies share idle or underused capacity without launching a tender.

Commercial marketplace. Prices are set by the market and the provider's business model, including a profit margin. Where the buyer is a contracting authority, the transaction is generally a public contract, triggering full procurement procedures (tenders, award criteria, contract management).

4. Governance and administrative fees

EuroCloud Federation. The Commission establishes a platform providing at least a catalogue of available public-sector services and a service platform for exchanging and orchestrating computing, storage and network resources (Article 34(3)). The costs of administering the Federation are jointly financed by members through fees levied by the Commission (Article 36); where the Union budget initially bears costs, members reimburse them over a period not exceeding three years (Article 36(2)). Revenues from the fees constitute internal assigned revenues for the Union budget (Article 36(3)). The Commission adopts implementing acts to specify participation procedures and the required technical and organisational measures (Articles 34(4) and 35(6)).

Commercial marketplace. Governed by the marketplace operator's terms of service and the individual provider–buyer contracts. There is no central EU administrative fee; costs are embedded in prices or charged as transaction fees by the operator.

What this means for you

For public-sector procurement officers and IT decision-makers, the distinction has practical consequences:

  1. Procurement efficiency. If your organisation has idle data centre or cloud capacity, you could share it with other public bodies via the EuroCloud Federation without a tender, provided you meet the ownership/control and cost-recovery conditions in Articles 34 and 35.
  2. Sovereignty and trust. The Federation is designed to keep infrastructure and data within a controlled public-sector ecosystem, which can suit sensitive workloads — though note that the assurance levels (Article 16) and procurement obligations (Article 30) apply to the cloud services you procure regardless of channel.
  3. Cost predictability. Sharing is limited to cost recovery, which may be cheaper than commercial rates for bulk or idle capacity — but you must accurately calculate and document the additional sharing costs.
  4. Strategic sourcing. For services not available within the Federation, you would still rely on commercial marketplaces and standard procurement. The Federation complements, rather than replaces, the commercial market.
  5. Participation requirements. To share within the Federation, your entity must demonstrate to the Commission that it owns or controls the hardware and has put in place the necessary technical, operational and organisational measures (Article 35(2)–(3)).

Common misconceptions

  • "The EuroCloud Federation is a public cloud provider." No. It is not a single provider but a framework for sharing capacity between public-sector members, who remain distinct legal entities.
  • "Any public body can simply join and share." Participation is voluntary but conditional. A sharing entity must own or control the hardware and demonstrate the required measures to the Commission; private entities cannot directly participate.
  • "Sharing within the Federation is always free." It is free of profit, not necessarily free of cost. A sharing entity may charge fees strictly limited to recovering the additional costs of sharing (Article 35(5)).
  • "The Federation replaces commercial cloud providers." No. It complements them; public bodies would continue to procure commercially for services the Federation does not offer.
  • "Joining the Federation exempts you from all procurement rules." It would exempt the sharing of capacity between members, because that is not treated as a public contract. The initial procurement of the infrastructure, and any services bought outside the Federation, remain subject to procurement law.

Related

This is general information about a draft EU regulation, not legal advice.