Why European companies building AI systems have a bigger problem than they realise – and practical steps to safeguard your intellectual property and business stability.
There is one conversation we keep having with founders and compliance officers that nobody seems to be addressing properly.
It goes like this: Company decides to get serious about EU AI Act compliance. They look for AI compliance platform to help them manage documentation, track evidence, prepare for audits. They choose well-known US provider because “everyone uses it” and it has nice interface.
Six months later, a question pops up: “Do you know your entire compliance documentation is subject to US CLOUD Act?”
Usually, there is silence.
Let me explain why this matters and what you should know before choosing your AI compliance platform.
What is US CLOUD Act and Why Should You Care?
US CLOUD Act — the Clarifying Lawful Overseas Use of Data Act — was passed in 2018. It gives United States law enforcement authority to demand data from US-headquartered companies, regardless of where that data is physically stored.
This means: if your AI compliance platform is operated by US company, your data can be requested by US authorities. Even if servers are in Frankfurt. Even if you are German company with German customers building AI for German market.
Your compliance documentation. Your risk assessments. Your algorithm descriptions. Your training data records. All of it — potentially accessible to foreign government.
This is not conspiracy theory. This is the actual law.
The Specific Problem for AI Compliance Documentation
Here is what makes this particularly problematic for companies using AI compliance platform for EU AI Act:
EU AI Act requires you to maintain comprehensive technical documentation for high-risk AI systems. This includes:
- Detailed descriptions of your AI system architecture
- Training data specifications and data governance records
- Algorithm documentation and model development methodology
- Risk assessment and mitigation documentation
- Testing results and validation evidence
- Human oversight procedures
- Post-market monitoring records
This documentation must be kept for minimum 10 years. It must be available to regulators within 15 days upon request.
Now think about what this documentation contains. Your proprietary algorithms is your competitive advantage. Training data that may include customer information. Risk assessments showing exactly where your system has potential weaknesses. Testing results revealing performance characteristics.
This is crown jewels of your AI development. And if you store it on US-based AI compliance platform, it falls under US CLOUD Act jurisdiction.
The Compliance Contradiction
Let me be direct about the problem:
EU AI Act requires you to create and maintain sensitive compliance documentation.
GDPR and EU data sovereignty principles require you to protect this data from unauthorised access.
US CLOUD Act potentially allows US authorities to access this data if stored with US providers.
You cannot fully satisfy all three requirements simultaneously when using US-based AI compliance platform. This is logical fact, not opinion.
If US authorities request your AI compliance documentation and you comply, you may violate GDPR. If you refuse, you face legal consequences in United States. Your US-based AI compliance platform provider is caught in middle — and so are you.
What Your AI Compliance Platform Stores
Many companies do not fully realise what ends up in their AI compliance platform over time. Let me make it concrete:
Technical Documentation:
- System architecture diagrams
- Data flow documentation
- Algorithm descriptions
- Model specifications
- Integration documentation
Training Data Records:
- Data sources and collection methods
- Data quality assessments
- Bias detection results
- Data governance policies
- Potentially samples of actual training data
Risk Management:
- Risk identification records
- Severity assessments
- Mitigation strategies
- Residual risk documentation
- Continuous monitoring results
Evidence and Audit Trail:
- Compliance evidence files
- Version history of all changes
- User actions and decisions
- Timestamps and approval records
All of this builds up in your AI compliance platform over years. It becomes complete record of how you built your AI, what decisions you made, what risks you identified, what data you used.
This is exactly what competitor — or foreign government — would want to understand your AI capabilities.
Why European Companies Are Negatively Affected
The impact falls disproportionately on European companies. Here is why:
1. Asymmetric Risk
US companies building AI do not face equivalent risk from European authorities. There is no “EU CLOUD Act” that lets European law enforcement demand data from European providers serving US companies. The risk flows one direction only.
2. Market Dominance of US Providers
Most well-known AI compliance platform options are US-headquartered. This is not accident — US tech ecosystem is larger and better funded. But it means European companies often choose US providers by default, inheriting US CLOUD Act exposure without conscious decision.
3. Supply Chain Exposure
Even if you choose European AI compliance platform, you must verify their infrastructure. Do they use AWS or Azure for hosting? Do they use US-based sub-processors? The US CLOUD Act exposure can come through supply chain, not just direct provider relationship.
4. Competitive Disadvantage
European companies must spend additional resources navigating this compliance conflict. US companies building AI for US market do not have equivalent burden. This is real competitive disadvantage.
What to Look for in AI Compliance Platform
When evaluating AI compliance platform for EU AI Act, here is what I recommend considering:
Jurisdiction and Ownership
Where is the company headquartered? Who owns it? A European-sounding name does not guarantee European jurisdiction. Check actual corporate structure.
AI compliance platform headquartered in EU member state and owned by EU entities is not subject to US CLOUD Act. This is significant advantage.
Infrastructure Location
Where are servers physically located? But more importantly — who operates them? European data centre operated by US cloud provider is still potentially subject to US CLOUD Act through the provider relationship.
Look for AI compliance platform using European-owned infrastructure. OVHcloud, Hetzner, Scaleway — these are genuinely European alternatives.
Sub-processor Chain
Review the sub-processor list carefully. Your AI compliance platform may be European, but if they use US sub-processors for critical functions, you still have exposure.
Ask specifically: Who provides hosting? Who provides backup? Who has access to production data?
Data Residency Guarantees
Look for contractual commitments on data residency, not just marketing claims. “EU data centre” is not same as “data never leaves EU jurisdiction and is never accessible to non-EU entities.”
Encryption and Access Controls
Customer-managed encryption keys can provide additional protection. If you control encryption keys and AI compliance platform provider cannot access unencrypted data, this limits — but does not eliminate — US CLOUD Act exposure.
Why We Built eyreACT in Europe
I should be transparent: I am co-founder of eyreACT, and these concerns directly influenced how we built our AI compliance platform.
eyreACT is European company — registered in Estonia, operating under EU jurisdiction. Our infrastructure is European. We do not use US cloud providers for customer data. We are not subject to US CLOUD Act.
When you use eyreACT as your AI compliance platform, your EU AI Act documentation stays under EU jurisdiction. Your algorithm descriptions, your training data records, your risk assessments — they are protected by European law, not exposed to foreign government access.
This is not accident. This is deliberate architectural decision because we understand what compliance documentation contains and why it needs protection.
We built AI compliance platform for European companies who take data sovereignty seriously. Because compliance documentation is too sensitive to store on infrastructure subject to foreign government access.
Practical Steps for European Companies
Whether you choose eyreACT or another solution, here is what I recommend:
1. Audit Your Current Tools
Where is your AI documentation currently stored? Microsoft 365? Google Drive? Notion? Confluence? All of these are subject to US CLOUD Act. Know your exposure before you can address it.
2. Assess Sensitivity
Not all documentation is equally sensitive. Public-facing transparency documents are different from proprietary algorithm descriptions. Understand what needs most protection.
3. Evaluate AI Compliance Platform Options
When choosing AI compliance platform, make jurisdiction primary criterion, not afterthought. Ask vendors directly about US CLOUD Act exposure. If they cannot give clear answer, that tells you something.
4. Document Your Decisions
Whatever approach you take, document your reasoning. When regulators ask about your data protection measures — and they will ask — you need to demonstrate you made informed decisions.
5. Consider Transition Timeline
If you are currently using US-based tools, plan realistic transition. EU AI Act enforcement begins August 2026. You have time to move to European AI compliance platform, but not infinite time.
The Bigger Picture
What frustrates me about this situation is that European companies are forced to navigate conflict that should not exist.
EU AI Act is good regulation. It pushes companies to build AI responsibly, document their systems, manage risks properly. I support this completely.
But the infrastructure ecosystem for AI compliance platform is dominated by US providers subject to laws that conflict with European data protection principles. Companies are caught in middle.
Choosing European AI compliance platform is not just about compliance checkbox. It is about genuine data sovereignty — ensuring your most sensitive business documentation remains under legal framework you can trust.
US CLOUD Act is not going away. EU AI Act requirements are not going away. The conflict between them is structural, not temporary.
European companies building AI need to make conscious choice about where their compliance documentation lives. And that choice has real consequences.
Ready to Explore European Alternative?
eyreACT is AI compliance platform built in Europe, for European companies, with European infrastructure. We automate EU AI Act compliance without US CLOUD Act exposure.
We are running pilot programme ahead of August 2026 enforcement deadline. If you want AI compliance platform that takes data sovereignty as seriously as you do, let us talk.
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Why European companies building AI systems have a bigger problem than they realise – and practical steps to safeguard your intellectual property and business stability.
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