The Dutch government blocked the acquisition of cloud service provider Solvinity by the American giant Kyndryl with the intention of protecting citizens’ sensitive data not from an autocratic nation like China, but from an allied country like the United States.
It is true that this is an isolated episode, but do you think it could represent the beginning of a paradigm shift? What are – to take up the title of your latest essay – the “invisible lines” being drawn between Europe and the United States regarding data control?
The United States is among the top investors in Europe and has rarely been subject to government vetoes for reasons of national interest. The Solvinity case is essentially unprecedented in the Netherlands. In Italy, there has been only one veto against an American investor under the Golden Power law, last year, concerning the acquisition of the defense sector company Tekne by Nuburu, but probably more for financial and industrial unreliability of the buyer than geopolitical reasons.
In short, American investments in Europe are generally welcomed, at most with prescriptions and conditions. The radical veto on Kyndryl marks a change of pace and is significant because it touches on a very sensitive area in Europe at this historical stage: the need to reduce dependence on American technological services and build its own sovereign cloud, and more generally European critical digital infrastructures.
Here we see the invisible lines activate, which separate the two legal geographies, the American and the European. The goal is to have companies incorporated under European jurisdiction that develop their own technological services intended for the European market, and thus have in European soil headquarters, human capital, intellectual property, and so on. So much so that, if there are niches able to meet these autonomy needs, as Solvinity partly could, the government decides to resort to total protection of the asset (and its autonomy), preventing an acquisition that would potentially absorb it into the US ecosystem, with its laws, players, and technologies, at a historical moment of deep tensions between allies.
In the Netherlands, the case of Nexperia is also unfolding, the semiconductor company based in Nijmegen but controlled by a Chinese firm. About ten years ago, Chinese investments in Europe were welcomed, but today this is no longer the case. How then can European countries manage the presence on their territories of strategic assets that answer to command chains of systemic rivals? Can golden power become a tool for internal and continuous oversight?
This is the great challenge of this historical phase, that is how to manage strategic companies, based in our legal geography, but acquired, especially in the early 2010s, by Chinese entities, in capital injection operations at the time welcomed with great favor but which today give rise to problematic situations, also in relation to the new US stance.
There is a delicate balance between legitimate ownership and corporate rights and geopolitical factors, starting from Beijing’s renewed technological-industrial assertiveness, as well as generally a lack of reciprocity. The golden power, as designed, with open clauses, today allows some interpretative lines functional to continuous and ex post oversight. See the Pirelli case. This is obviously a critical boundary, but so far it is the only legal instrument able to manage this situation.
Otherwise, diplomatic channels and pressures remain to initiate exit processes for Chinese shareholders, or, and this would be the most desirable, the development of alternative domestic or European capital markets able to acquire, launch takeovers, propose integrations.
The Australian government has ordered some China-linked entities to sell their shares in the mining company Northern Minerals, specialized in rare earths: this confirms that the ecological transition is not a cooperative project, based on the common pursuit of sustainability for the good of the planet, but a competition between states. In this sense, can we say that – when it comes to critical raw materials – governments are intervening in markets to “correct” their neutrality? Has the nationality of the shareholder become more important than the price they offer?
In that case, first of all, the aggressiveness of China in trying to acquire, at all costs and through a complex game of connected entities based in different legal geographies, control of Northern Minerals, one of the few entities autonomous from the Chinese ecosystem, is striking, so as to absorb it into its own networks and maintain the sector monopoly. A monopoly which then translates into a real chokepoint, that is a lever used by Beijing through prescriptions to its companies not to export, delay or reduce exports. For this reason, protecting the autonomy of one’s own strategic asset has become fundamental, especially from the American perspective, which has every interest in seeing allied countries’ assets remain in domestic hands.
Nationality today represents the dividing criterion. It is a parameter that can matter more than price, within market imperatives, as well as more than the actual weight in a company’s capital. To paraphrase, votes, or money, are not counted, but weighed. In terms of nationality.
Recently China blocked Meta’s attempt to acquire Manus, a promising artificial intelligence startup. You pointed out how, with this move, Beijing “acted American,” applying national security scrutiny logics similar to those of the US Cfius or European golden power laws. What does this episode tell us about the evolution of asset protection tools?
It is a clear example of how China has reached considerable maturity in building its own legal arsenal suited to current times. In this sense, I spoke of the “Americanization” of China, as the United States has a long tradition in using such tools. It is no coincidence that since around 2019, Beijing has refined a series of regulations, from those on foreign investments to export control, including sanctioning and anti-foreign sanction tools.
In the Manus case, Beijing seems to have used both the export control regulations on technologies and those on foreign investments, intercepting, with claims of extraterritoriality, an acquisition of a Singaporean company by a US company, based on a rather radical substantial nexus: the fact that the startup and technologies were originally developed in China and that Chinese citizens were the engineers.
Finally, Italy. Most of our oil refining capacity is under foreign control (net of the Ludoil Energy operation on Isab). What is the role of golden power in this sector? And how is the need to attract foreign capital for industrial reconversion balanced with national security protection?
The golden power, now an integral part of the country system, has accompanied the last three major foreign acquisition operations of our refining companies: Goi Energy-Isab S.r.l.; Vitol-Saras S.p.a.; Socar-Italiana Petroli. The operations were not banned, but authorized with conditions and prescriptions. These are imperative constraints, whose violation entails serious civil and financial consequences, aimed at guaranteeing national interest.
As for concrete effectiveness, it is difficult to say, probably one must wait. However, they could represent a hypothesis of virtuous compromise, able to balance the need for foreign capital with some national security safeguards. Thus, we see another paradigmatic example of the invisible lines, which interpose between the ownership of the foreign investor and the company incorporated in the Italian legal geography with related concrete assets (plants, factories, infrastructures, workforce). A partial interruption of the direct link between control and management, where the third element comes into play, that of special powers, that is the imperative prescriptions with which the foreign investor will have to coexist in concrete management.
