The Dutch government has prohibited U.S. IT company Kyndryl from acquiring local cloud provider Solvinity, as the transaction was deemed to pose potential risks to public interest and data sovereignty, given that Solvinity hosts the Netherlands' online identity platform, DigiD.
The transaction was blocked due to DigiD business issues.
On Monday, Dutch Minister of Digital Economy Willemijn Aerdts stated in an open letter that the government has imposed a "complete ban" on this acquisition, meaning Kyndryl cannot complete its purchase of Solvinity; the transaction amount was not disclosed.
Solvinity-hosted DigiD, managed by the Dutch government, is an online identity verification platform used by residents to access public services and is considered part of the critical digital infrastructure.
Concerns center on foreign control.
Concerns have been raised that if Solvinity comes under the control of a U.S. company, data related to DigiD could fall under foreign control and become subject to requests for access by U.S. authorities.
The report states that U.S. law permits government agencies, including law enforcement and intelligence bodies, to require U.S. companies to hand over data stored in overseas data centers, even if the host country has its own local data protection laws.
Europe tightens scrutiny of key technologies
The Dutch government did not provide further specifics on the legal basis, but this rejection occurs against the backdrop of several European countries reassessing their dependence on U.S. technology, particularly in areas such as cloud services, identity systems, and public data hosting.
As the Trump administration's policy style becomes increasingly unpredictable, cross-border mergers and acquisitions involving critical digital infrastructure are facing stricter scrutiny. Kyndryl told the media that the company is “deeply disappointed” by this decision.