By Foo Yun Chee

BRUSSELS The European Union is considering broadening the scope of proposed cybersecurity labelling rules that would affect not just Amazon, Alphabet's Google and Microsoft but also banks and airlines, according to the latest draft of the rules.

The EU move to set up such a system comes as Big Tech looks to the government cloud market to drive growth in the coming years while a potential boom in artificial intelligence after the viral success of OpenAI's ChatGPT could also boost demand for cloud services.

The latest proposal from EU cybersecurity agency ENISA concerns an EU certification scheme (EUCS) which vouches for the cybersecurity of cloud services and determines how governments and companies in the bloc select a vendor for their business.

The document retains key provisions contained in earlier drafts such as a requirement that U.S. tech giants set up a joint venture with an EU-based company to qualify for the EU cybersecurity label.

Another provision states that cloud service must be operated and maintained from the EU, while all cloud service customer data must be stored and processed in the EU, with EU laws taking precedence over non-EU laws regarding the cloud service provider.

These obligations apply to the highest security level, of which there are four. The latest draft sets out the possibility for these tough requirements to be extended to the third highest security level.

EU countries are now reviewing the latest draft after which the European Commission will adopt a final scheme.

Tech lobbying group CCIA said broadening the scope would affect a bigger swath of industries.

"Perhaps the most striking part of this new draft is that ENISA now suggests the requirements that discriminate against foreign cloud providers could also be extended to lower levels of assurance," said Alexandre Roure, CCIA Europe's public policy director.

"That would include banks, but also airlines, utility companies, and heavily regulated sectors," he said.

The European Banking Federation (EBF), together with the European Savings Banks Group (ESBG), the Association for Financial Markets in Europe (AFME), the European Payment Institutions Federation (EPIF), and Insurance Europe on Tuesday criticsed the sovereignty requirements.

(Reporting by Foo Yun Chee; editing by Jonathan Oatis)