Strong reactions after Netherlands blocks US takeover of Solvinity, DigiD operator
Kyndryl is “extremely disappointed” by the decision of the State Secretary for Economic Affairs to prohibit its takeover of Solvinity, the company behind DigiD. State Secretary Willemijn Aerdts banned the acquisition on Tuesday following advice from the Bureau for Investment Screening (BTI). The BTI stated that “this proposed acquisition of Solvinity may pose a risk to the public interest,” Aerdts wrote to the Tweede Kamer, the lower house of Dutch parliament.
Kyndryl says it has cooperated “in good faith” with the Dutch government. “Despite this cooperation and our long history of managing mission-critical operations in the Netherlands, the politicisation of this process has overshadowed the clear and important benefits this transaction could have delivered to Solvinity’s customers and Dutch citizens,” the company said.
In response to the failed acquisition, Solvinity said it will remain fully focused on delivering secure, dependable, and high-quality IT services to its clients.
“Solvinity remains in dialogue with the relevant authorities about the considerations made in the context of national security, digital autonomy, and the protection of Dutch critical infrastructure,” says the company behind DigiD.
Journalist Eric Smit has described the blocked acquisition of DigiD operator Solvinity by US company Kyndryl as “very good news.” Smit, who is the co-founder and chair of the investigative journalism platform The Firewall, previously worked with technology experts to challenge the takeover of the Dutch IT provider through the courts.
A week earlier, the group of technology experts appeared in court, stressing the need for transparency in how the takeover decision was made. The case was initiated by Smit and supported by figures including Joris Luyendijk, Sander Schimmelpenninck, Maxim Februari, and the privacy organisation Privacy First.
The Dutch government is not concerned that the United States will take retaliatory measures after blocking the sale. State Secretary Eric van der Burg said the U.S. is likely to understand that national security considerations play a key role in such decisions. He added that the Cabinet acted on the recommendation of an independent advisory committee.
Aerdts said the decision was “not taken lightly” during a press briefing. She stressed that government intervention in the market is generally avoided.
However, she explained that a ban became unavoidable after the BTI concluded that the risks linked to the acquisition could not be sufficiently reduced and that the public interest could not be safeguarded. She added that the United States has been notified of the decision.
Earlier this month, the Cabinet extended Solvinity’s contract for a further two years, allowing the company to continue maintaining DigiD, Van der Burg said.
Both ministers said they would not comment on the future of the company. “This decision was made last night; it is too early to address that,” Aerdts told reporters. She added that she does not expect to face a similar situation again in the near future. “Solvinity is a special company when we look at the public services it provides for the government.”
During question time in the Tweede Kamer, Van der Burg later said he would speak with Solvinity to understand the consequences of the failed takeover for the company’s continuity. “We also have an interest in ensuring that DigiD is maintained and remains operational.” According to him, there are currently “no indications that alarm me.”
DigiD is owned by the Dutch government, while Solvinity is responsible for keeping the system running. The US company Kyndryl was close to acquiring Solvinity, which raised concerns that US authorities could potentially gain access to DigiD-related data in certain situations.
Separately, it was recently reported that Microsoft and Meta had shared data from Dutch civil servants with the US House of Representatives, prompting Aerdts to raise the issue with the American ambassador.
Privacy First said the government made the only appropriate decision in blocking the deal. “Any other outcome would, in our view, have been irresponsible and unlawful,” said the foundation’s director, Vincent Böhre.
Privacy First opposes the takeover of the company behind DigiD because it does not want the United States and the long arm of that country to gain access to sensitive data of Dutch citizens. According to Böhre, the ban is in line with the right to privacy and the protection of Dutch national security.
The foundation hopes that Aerdts’ decision will set a precedent for also taking a critical look at the use of other services from outside Europe. “We risk becoming more dependent on non-European parties in more areas,” said Böhre. “This could mark a positive turning point in history.”
Privacy First expects a ruling soon in the lawsuit in which it, together with tech experts, challenged the takeover. The parties hope to be recognised as an interested party. “To be able to have our say and influence this kind of process.”
If a lawsuit were then brought by Solvinity or the American company Kyndryl against Aerdts’ decision, Privacy First is prepared to intervene in that case and, “for the first time in our history,” stand alongside the government.
Citizen movement De Goede Zaak says the decision to impose the ban came “after a period of strong public pressure.” Through its website, it collected more than 200,000 signatures against the takeover. The movement is relieved that the government has chosen “to protect the public interest.”