This is nothing new, Microsoft signed an agreement with the French government to build a sovereign cloud called Bleu [1] operated by Orange and Capgemini using Azure and Microsoft 365 technology. The German government did something similar and launched Delos Cloud, operated by SAP and Arvato Systems.
The reasoning is that, with sufficient security, on premise (more or less) cloud technology is not much different in terms of sovereinty from sourcing your hardware from China.
That was such a low blow, given we have stellar companies like OVH that have demonstrated their skills and willingness to bring great hosting, and are fully local.
[1] https://www.globenewswire.com/en/news-release/2021/05/27/223...
[2] https://www.bertelsmann.com/news-and-media/news/first-sovere...