Dutch court upholds block on Kyndryl purchase of cloud firm Solvinity

A Dutch court on Tuesday upheld a government decision to block US IT infrastructure firm Kyndryl from buying Dutch secure cloud services provider Solvinity because of concerns that sensitive data could be accessed by the US government.

The Dutch government announced at the end of May that it would block Kyndryl's planned 100 million euro, or $114 million, purchase of Solvinity. Solvinity provides infrastructure used for the digital platform for public services, including tax filing and state health insurance claims, and the deal had raised concerns among Dutch lawmakers.

Kyndryl, which developed from IBM's IT services unit, asked the Rotterdam court to lift the ban. The company argued that the government did not have the legal authority to block the transaction.

The court rejected that argument. It said the law gave the government such authority and that the purchase of Solvinity by Kyndryl constituted a threat to the public interest.

The report said US laws allow the US government to require US companies to hand over data even when it is stored outside the country. It also said the US government has shown willingness to block access to technology and financial services.

The Rotterdam court said the junior minister responsible for the digital economy and sovereignty should review whether less restrictive measures could be applied. The minister said the review would be completed by the end of September.

Kyndryl did not immediately provide a reaction.