The Dutch government has blocked New York-based Kyndryl’s proposed acquisition of cloud services provider Solvinity, citing national security concerns tied to the company’s management of the Netherlands’ DigiD digital identity platform. The U.S. Embassy in The Hague expressed disappointment Wednesday, though it acknowledged the right of allies to protect critical infrastructure.
“We were disappointed by the Dutch government’s decision regarding the Kyndryl-Solvinity deal,” the embassy said in a statement. “We understand and respect the responsibility to safeguard critical infrastructure and protect citizens’ data.” The statement added that Washington believes more dialogue could have resolved the issue, but pledged to work closely with Dutch partners to protect both nations’ interests.
Kyndryl, an IBM spinoff, announced the $113 million deal in November as part of a push to expand its European footprint. Solvinity hosts DigiD, a national digital ID system used by Dutch citizens to interact with government agencies, healthcare providers, schools, and pension funds. The platform holds sensitive personal data, which triggered opposition from lawmakers and activists who feared foreign ownership could expose it to U.S. legal and intelligence pressure.
Critics pointed to the 2018 Clarifying Lawful Overseas Use of Data (CLOUD) Act, which allows U.S. law enforcement to compel American-owned tech companies to hand over data under their control, regardless of where it is stored. That law raised concerns that a U.S.-owned Solvinity could be forced to share DigiD data with U.S. authorities, a risk Dutch officials found unacceptable.
Willemijn Aerdts, the state secretary for Digital Economy and Digital Sovereignty, informed parliament Tuesday that the government had followed the advice of its foreign investment screening authority and blocked the deal. She wrote that the acquisition “may pose a risk to the public interest” but did not detail specific threats. The decision reflects the Netherlands’ broader effort to balance openness to U.S. tech investment with independent security reviews.
In a letter to parliament, Aerdts emphasized that the Netherlands values U.S. tech companies and their contributions to the economy and digital infrastructure. But she stressed that its investment screening framework applies equally to all investors, regardless of origin. “The Netherlands maintains an independent investment screening framework aimed at protecting the public interest,” she wrote, according to a translation from Politico EU.
Kyndryl called the decision “extremely disappointing,” insisting it had engaged in good faith with stakeholders throughout the process. The company argued that political factors overshadowed the benefits of the deal for Solvinity’s customers and Dutch citizens. “Despite this engagement and our long history of managing mission-critical operations in the Netherlands, the politicization of this process has overshadowed the clear and important benefits,” the company said.
The move adds to a pattern of European governments tightening scrutiny of U.S. tech acquisitions, particularly those involving sensitive data or critical infrastructure. It also echoes recent debates in Washington over foreign ownership of key assets, as seen in Senate GOP blocking efforts to halt a $1.78 billion fund for Trump allies and North Dakota’s high court blocking Greenpeace’s Dutch legal end-run around a U.S. verdict.
The Biden administration has not signaled any retaliatory measures, but the episode underscores growing transatlantic tensions over data sovereignty and national security in the digital age. For now, the Netherlands has made clear that protecting citizen data from foreign legal exposure outweighs the economic benefits of the deal.
