The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Jeffrey Goldfarb

NEW YORK, June 4 (Reuters Breakingviews) - A small deal blocked in the Netherlands signals far bigger problems worldwide for acquisitive U.S. bosses. The Dutch government last week nixed Kyndryl's plan to buy cloud services provider Solvinity for €100 million after foreign investment authorities invoked a data-protection law only ever applied before to Chinese companies. It's evidence of the mounting concerns overseas about a United States being reshaped by President Donald Trump's policies.

New York-based Kyndryl's takeover was met with understandable skepticism in the Netherlands. Solvinity provides part of the technological backbone for DigiD, a one-stop shop used by Dutch citizens to access their pension, medical and tax information. Yet the buyer, spun off from IBM IBM.N five years ago, also had reasons to be confident it could overcome any doubts. The $3 billion company already works with the country's Ministry of Defence while European officials have designated it one of 19 approved third-party providers under the bloc's Digital Operational Resilience Act.

As transatlantic tensions escalated, however, so did resistance to the deal. Clashes over digital sovereignty have intensified as Brussels maps out ways to curb Europe's dependence on big U.S. tech companies, inviting retaliatory threats from Trump. His administration's sanctions on The Hague-based International Criminal Court also sparked fears of a presidential "kill switch" that could force U.S. suppliers to cut off services abroad. Against this backdrop, Dutch parliamentarian Barbara Kathmann said she did not want Solvinity "to fall into American hands. Period."

Following the backlash, the Bureau Toetsing Investeringen, the Netherlands equivalent of the Committee on Foreign Investment in the United States, recommended blocking the takeover. It concluded that the U.S. government can access data processed by Amazon.com AMZN.O, Microsoft MSFT.O, Google and others, even if stored overseas, and referenced provisions in the Dutch Telecommunications Act to justify a veto, according to excerpts of the confidential decision seen by Reuters Breakingviews.

Trump's unconventional methods also include using taxpayer funds to take equity stakes in U.S. companies and meddling in M&A. If this sort of behavior, along with the president's transactional and protectionist tendencies, prompts investment and antitrust authorities overseas to regard Washington as they do Beijing, it will only create more political problems for globetrotting U.S. buyers. China issued sweeping new rules on Monday to tighten control of overseas deals involving domestic investors and technology, a month after it ordered Meta Platforms META.O to undo its acquisition of AI startup Manus.

Cross-border deal activity hit a record first-quarter high, exceeding $400 billion, according to Dealogic, but the number of transactions fell by a fifth to its lowest level in a decade. The Kyndryl rejection, and the rationale for it, is a reason to think the count will keep tumbling.

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CONTEXT NEWS

The Dutch government on May 26 blocked the €100 mln takeover of cloud services provider Solvinity by larger U.S.-based peer Kyndryl, citing public interest concerns following advice from the domestic agency that screens foreign investments.

Kyndryl's deal raised concerns among Dutch legislators because Solvinity's technology is used by DigiD, the digital ID system citizens use to access medical, pension and tax information.

Following the decision, Kyndryl said "the politicization of this process has overshadowed" the benefits of the transaction. Solvinity, which is owned by British investment firm Vitruvian Partners, said it "continues to engage in dialogue" with authorities over national security, digital autonomy and protecting critical Dutch infrastructure.