Rubio Orders U.S. Diplomats to Lobby Against Foreign Data Sovereignty Laws - Citing AI and Cloud Risks

The Trump administration has turned its diplomatic corps into a lobbying force for American AI companies. A State Department cable dated February 18, signed by Secretary of State Marco Rubio, orders U.S. embassies worldwide to actively oppose foreign data sovereignty laws - and explicitly names the European Union's GDPR as a target.

"Counter unnecessarily burdensome regulations, such as data localization mandates."
State Department cable, February 18, 2026

The directive frames unrestricted cross-border data flows as a strategic priority on par with semiconductor exports. It's the clearest signal yet that Washington views European privacy regulation as a direct obstacle to American AI dominance.

TL;DR

A Rubio-signed cable orders U.S. diplomats to fight data sovereignty laws globally
The GDPR is singled out as imposing "unnecessarily burdensome" restrictions on data processing
Diplomats must track foreign proposals promoting data localization and promote the Global Cross-Border Privacy Rules Forum as an alternative
The cable accuses China of "bundling enticing technology infrastructure projects with restrictive data policies"
This follows a prior August 2025 directive ordering diplomats to challenge the EU's Digital Services Act

What the Cable Says

The cable, first reported by Reuters and subsequently obtained by TechCrunch, lays out three core arguments against data sovereignty laws. They would, according to the State Department:

"Disrupt global data flows, increase costs and cybersecurity risks"
"Limit Artificial Intelligence and cloud services"
"Expand government control in ways that can undermine civil liberties and enable censorship"

The language is deliberate. By packaging data localization as a censorship and civil liberties issue, the administration reframes what's fundamentally a commercial dispute - American tech companies want unrestricted access to foreign training data - as a freedom-of-speech argument.

The cable explicitly criticizes the EU's General Data Protection Regulation for imposing "unnecessarily burdensome data processing restrictions and cross-border data flow requirements." This is a significant escalation. The GDPR has been in force since 2018, governs the data of over 440 million EU citizens, and has become the de facto global privacy standard. Calling it "unnecessarily burdensome" in an official diplomatic cable isn't subtle.

The China Angle

The document also accuses China of "bundling enticing technology infrastructure projects with restrictive data policies that expand its global influence." The framing positions the U.S. as offering an alternative: open data flows through the Global Cross-Border Privacy Rules Forum, a multinational project launched in 2022 by the United States, Canada, Japan, and others.

Rows of server racks inside a modern data center An estimated 97% of Europe's cloud infrastructure runs on American-owned servers. The Rubio cable aims to keep it that way.

Who Benefits, Who Pays

Stakeholder	Impact	Timeline
U.S. cloud providers (AWS, Azure, Google Cloud)	Retain access to 97% share of EU cloud market; avoid costly data localization mandates	Immediate
U.S. AI labs (OpenAI, Google, Meta, Anthropic)	Preserve cross-border data pipelines critical for training frontier models	6-12 months
EU citizens	Privacy protections potentially weakened under diplomatic pressure	12-24 months
EU cloud startups	Lose potential competitive advantage from data localization requirements	12-24 months
Developing nations	Pressured to adopt U.S.-friendly data frameworks over sovereign alternatives	Ongoing

Companies

The numbers explain the urgency. An estimated 97% of Europe's cloud infrastructure market is led by non-European providers - mainly Amazon Web Services, Microsoft Azure, and Google Cloud. The EU's Data Act, which entered application in September 2025, creates switching and interoperability obligations that could chip away at this dominance. Mandatory data localization would be far worse for American firms, forcing them to build duplicate infrastructure and fragment the datasets their AI models depend on.

For AI labs specifically, the stakes are existential. Cross-border data flows are the oxygen supply for frontier model training. GDPR-style restrictions, if adopted globally, would force companies to train separate models on geographically siloed data - a technical and economic nightmare that could hand an advantage to Chinese labs operating under different constraints.

Users

European privacy champions argue the opposite case: that GDPR is precisely the kind of regulation that prevents American corporations from treating personal data as a free input to their AI systems. Dutch cloud computing expert Bert Hubert told Reuters: "The current administration is demanding that Europeans ignore their own privacy regulations that could hinder American companies."

The irony is not lost on Brussels. The same administration that restricts chip exports to China on national security grounds is arguing that Europe shouldn't restrict data flows to American companies - also on national security grounds. The common thread is not principle. It's American competitive advantage.

The European Parliament building in Brussels The European Parliament in Brussels. The EU's proposed Cloud and AI Development Act would be built on internal market harmonization rules with direct legal effect across all member states.

Competitors

The EU isn't standing still. The European Commission's proposed Cloud and AI Development Act, expected in Q1 2026, aims to strengthen Europe's autonomy over its cloud infrastructure and reduce strategic dependence on non-EU providers. Europe plans to triple its data center capacity within five to seven years. If the act passes as binding regulation - and unlike previous EU cloud initiatives, this one would be built on Article 114 TFEU (internal market harmonization) with direct legal effect - it could fundamentally reshape where AI training data lives.

A Pattern, Not an Incident

This cable isn't an isolated move. It's part of a coordinated campaign against European digital regulation that has been escalating since mid-2025.

In August 2025, Rubio ordered U.S. diplomats in Europe to launch a lobbying offensive against the EU's Digital Services Act, which the State Department characterized as a "censorship tool." In December 2025, the administration went further: it imposed entry bans on five Europeans, including former EU Commissioner Thierry Breton - the architect of the DSA - for allegedly "leading organized efforts to coerce American platforms to censor American viewpoints." French President Emmanuel Macron called the bans "intimidation and coercion aimed at undermining European digital sovereignty."

The data sovereignty cable adds a new dimension. Where the DSA fight was about content moderation, this is about the raw material of AI itself. As we noted when France built its own MCP server for national open data, European governments are increasingly building sovereign AI infrastructure. Washington is now pushing back against the regulatory framework that would make such sovereignty meaningful.

The pattern mirrors what is happening in hardware. Just as DeepSeek's decision to lock U.S. chipmakers out of its V4 architecture revealed the fragility of American leverage in semiconductors, the data sovereignty fight shows a parallel vulnerability: American AI depends on access to foreign data as much as foreign AI depends on access to American chips.

What Happens Next

The immediate question is whether this diplomatic pressure actually works. The EU has historically been resistant to American lobbying on data protection - the GDPR survived years of Silicon Valley opposition, and the current Data Privacy Framework that enables transatlantic data transfers is itself under legal challenge and could collapse.

But the broader dynamic is clear. The AI race is no longer just about who builds the best model. It's about who controls the inputs. Data sovereignty laws threaten to fragment the global data commons that American AI labs have relied on, and Washington is deploying every tool short of sanctions to keep those pipelines open.

For anyone following the open-source vs. proprietary debate in AI, the data sovereignty fight adds a new wrinkle: even open-weight models are useless if the data they're trained on becomes geographically restricted. The next frontier of AI competition isn't compute or algorithms. It is jurisdiction.

The cable asks diplomats to promote "free data flows" and frame localization as censorship. But the subtext is straightforward: American AI needs European data, and European regulators are starting to charge for it. Whether that's a market correction or a threat to innovation depends completely on which side of the Atlantic you're sitting on.

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