Dutch authorities block US technology company’s $115 million deal
In November, a little-known American technology company announced a $115 million deal to buy a little-known Dutch technology company.
Deals like this usually fall into obscurity. Not this time.
The proposed acquisition, which comes at a time when tensions are rising between the Trump administration and Europe on issues as diverse as tariffs and Greenland, has set off a geopolitical upheaval. The Dutch government held hearings on the deal and investigated it. American diplomats jumped behind the scenes and urged Dutch officials to approve the purchase.
On May 26, the Dutch government blocked the deal, the first known case of the Netherlands stopping an acquisition of a US technology company. Dutch authorities said they stopped the deal because U.S. officials could “force” the U.S. company to share sensitive data the Dutch firm processed for government services, according to a confidential ruling reviewed by The New York Times.
“The threat to the public interest can only be averted by prohibiting the proposed acquisition,” Dutch regulators wrote in their ruling. “Geopolitical unpredictability,” they added, created risks of “digital addiction.”
In many ways, the details of the companies — Kyndryl, a New York-based firm that runs business and government information systems, and Solvinity, a Dutch company that makes the technology that underpins the Netherlands’ national identification system — are secondary to what the episode revealed: growing European suspicion of the United States.
For years, the US government has blacklisted Chinese technology companies over concerns about national security and privacy. A similar logic was now applied against American society by a NATO ally.
“We’re starting to see a tech wave, a broader opposition to blindly trusting American tech companies with sensitive information,” said Emily Benson, chief strategist at Minerva Technology Futures, a geopolitics and policy advisory to businesses, and a former Commerce Department official. “I suspect this is the very beginning of a much tighter investment security regime in the EU”
The Dutch economy ministry declined to comment, referring to earlier statements by authorities that said the blocking of Kyndryl’s purchase of Solvinity was an isolated case based on sensitive data.
“American companies like Kyndryl are and will remain trusted and important partners,” Rob Jetten, the Dutch prime minister, said on social media after the deal was halted. “One case does not change our strong bilateral relationship.
On Monday, the Dutch government said it would consider it blocking foreign acquisitions in the future in areas such as artificial intelligence and biotechnology.
A senior Trump administration official, who declined to be named to give an unofficial position, said the Dutch approach indicated that American investment was not welcome and was in line with a broader European offensive against American technology companies.
Kush Desai, a White House spokesman, said the administration is committed to “advocating for American industry and companies and continues to work with the Netherlands and other trading partners to ensure fair and reciprocal market access and partnerships in the technology sector.”
Kyndryl and Solvinity declined to comment.
The collapse of the deal could be a sign of things to come. European leaders increasingly see reliance on American technology as a threat to the region’s economic and geopolitical future. Amazon, Google and Microsoft dominate 70 percent of the European cloud computing market. In the Netherlands, roughly two-thirds of the government’s information technology systems come from American technology, the report says Dutch broadcaster NOS.
Updated
Last week, the European Union outlined a “technological sovereignty” plan that included potentially blocking some Amazon, Microsoft and Google cloud computing contracts. In Britain, a parliamentary committee this month called for the end of a £330 million, or about $440 million, health data contract with US technology firm Palantir, calling it “an unacceptable point of weakness.”
Europe’s resistance is largely linked to distrust of President Trump, said Bert Hubert, a technologist who has advised the Dutch government. European officials pointed to the International Criminal Court, where judges and other officials lost access to US digital services last year after being hit by US sanctions. The administration also issued a travel ban last year against the leaders of European groups that pushed for regulation of American companies on social media. And last week Mr Trump said he was considering accepting the US government financial share in American artificial intelligence firms and strengthened its ties to Silicon Valley.
“You’re selling control to Donald Trump,” Hubert said.
In the midst of this friction, Kyndryl’s deal with Solvinity became a point of contention.
After the acquisition was announced in November, the Dutch Ministry of the Interior said it could find no original legal justification for blocking it. Kyndryl, formerly a unit of IBM, already has a contract with the Dutch military worth about 4 billion euros, or $4.6 billion. Amsterdam-based Solvinity has a foreign owner in Vitruvian Partners, a British private equity firm.
But opposition to the deal was growing. In the Netherlands, a country of 18 million people, almost every citizen uses the DigiD national identification system to access tax, healthcare records, benefits, pension information, education records and other government services. The basis of the system is Solvinity technology. Concerns grew that US officials could force Kyndryl to give up Solvinity data or cut off access to the technology altogether.
In January, lawmakers held hearings in The Hague, the center of government in the Netherlands, and pledged to scrutinize the deal.
“If the systems that connect Dutch citizens with their own government fall under the control of a US-based technology company, basic public services risk becoming collateral damage in someone else’s power struggle,” said Barbara Kathmann, a member of the Dutch parliament’s digital affairs committee, who led public hearings on the takeover.
In April, criticism mounted after Pieter van Oordt, the Home Office’s top privacy official, said a report he wrote on the national security risks of selling Solvinity to a US company had been overlooked. He said the company’s technology underpins not only DigiD, but also a key government communications platform. Even if the likelihood of US government intervention were slim, it wasn’t worth the risk, he said.
“We need to take care and protect the country’s lifelines, digital or otherwise,” Mr. van Oordt said in an interview. According to him, Solvinity should be owned by a Dutch company.
Amid the backlash, Kyndryl, which also faced an inquiry from the Securities and Exchange Commission over its cash management practices, sought help from the Trump administration. Joe Popolo Jr., the U.S. ambassador to the Netherlands, along with the Office of the U.S. Trade Representative privately urged Dutch officials to approve the deal, according to Dutch and U.S. officials involved in the discussions. U.S. officials have also raised the issue with representatives of at least one other Dutch company in Washington, an industry executive said.
Their efforts failed. The Dutch government announced last month that the deal would be blocked. “The politicization of this process has overshadowed the clear and important benefits that this transaction would bring,” Kyndryl said. Solvinity has pledged to work with the Dutch authorities to address “national security, digital autonomy and the protection of Dutch critical infrastructure”.
Dutch authorities said their decision was “country neutral” and uniquely related to the national identification system. Mr. Jetten, the prime minister, met with Mr. Popolo, the American ambassador, to assure him that the blocked deal was not part of a trend.
Confidential judgment over business was more direct. In it, Dutch authorities repeatedly expressed concern that the US government could gain access to the national identification system. They cited the US access to data law, the CLOUD Act, which allows the federal government to request information about foreign nationals from US technology companies, even if the data was stored overseas.
Such laws put the Dutch system at risk of being “under the influence” of the US government, the report said.
Last week, a Dutch minister announced that only companies based in the European Union can oversee the DigiD program. That would “limit national security risks,” she said.
Claire Moses contributed reporting from London.