Exclusive-US orders diplomats to fight data sovereignty initiatives

By Raphael Satter and Alexandra Alper

WASHINGTON, Feb 25 (Reuters) – President Donald Trump’s administration has ordered U.S. diplomats to lobby against attempts to regulate U.S. tech companies’ handling of foreigners’ data, saying in an internal diplomatic cable seen by Reuters that such efforts could interfere with artificial intelligence-related services.

Experts say the move signals the Trump administration is reverting to a more confrontational approach as some foreign countries seek limits around how Silicon Valley firms process and store their citizens’ personal information – initiatives often described as “data sovereignty” or “data localization.”

In the State Department cable, dated February 18 and signed by U.S. Secretary of State Marco Rubio, the agency said such laws would “disrupt global data flows, increase costs and cybersecurity risks, limit Artificial Intelligence (AI) and cloud services, and expand government control in ways that can undermine civil liberties and enable censorship.”

The cable said the Trump administration was pushing for “a more assertive international data policy” and that diplomats should “counter unnecessarily burdensome regulations, such as data localization mandates.”

The State Department did not return a request for comment.

Data sovereignty initiatives have gathered pace, particularly in Europe, amid flaring tensions between the United States and the European Union over Washington’s protectionist trade policies and support for far-right political parties. 

The dominance of U.S. artificial intelligence companies – many of which draw on massive stores of personal data to power their models – has underlined European concerns around privacy and surveillance. Officials across the continent have increased pressure on American social media giants, too.

Bert Hubert, a Dutch cloud computing expert and former member of the board that regulates the Dutch intelligence services, said Europe’s increasing wariness of America’s tech companies may be spurring Washington to take a more aggressive tack.

“Where the previous administration attempted to woo European customers, the current one is demanding that Europeans disregard their own data privacy regulations that could hinder American business,” he said.

‘UNNECESSARILY BURDENSOME’

Data sovereignty laws vary in scope. Some impose rules around where information is kept by requiring that data collected from a certain nation only be stored within that country. Others put restrictions around how data is shared, limiting its distribution to foreign companies. The European Union’s 2018 General Data Protection Regulation (GDPR), for example, imposed restrictions on transferring Europeans’ data abroad and has led to a series of stiff fines on American tech firms.

Rubio’s cable cited GDPR as an example of a rule that imposed “unnecessarily burdensome data processing restrictions and cross-border data flow requirements.”

It also said China was “bundling enticing technology infrastructure projects with restrictive data policies that expand its global influence and access to international data for surveillance and strategic leverage.” The cable did not provide much more detail, but China has over the past few years tightened regulations over how its companies store and transfer user data.

The Chinese Embassy in Washington said it was not familiar with the cable but that Beijing “has always attached great importance to cybersecurity and data security.” The European Commission in Washington did not respond to a request for comment.

The cable, whose headline described it as an “action request”, tasked American diplomats with tracking the development of proposals to restrict cross-border data flows and supplied talking points promoting the Global Cross-Border Privacy Rules Forum, a group established in 2022 by the United States, Mexico, Canada, Australia, Japan, and others “to support the free flow of data and effective data protection and privacy globally.” The Forum did not respond to requests for comment.

The cable is the latest in a series of initiatives aimed at thwarting European regulation of the digital sphere.

Last year, Rubio ordered diplomats to whip up opposition to the EU’s Digital Services Act, which aims to make the internet safer by compelling major social media firms to remove illegal content, such as extremist or child sexual abuse material. Last week, Reuters reported that the United States planned to launch an online portal intended to help Europeans and others bypass the censorship of material including alleged hate speech and terrorist propaganda.

(Reporting by Raphael Satter; Editing by Stephen Coates)