Misleading title by Reuters.
The title should be "US orders diplomats to fight _EU_ data sovereignty initiatives".
Why? Because the US is far too pussy to fight the other countries that have such initiatives - some of them reaching further than the EU's - knowing that unlike the EU those countries are definitely not going to take their shit.
I can tell you that if the US says to Japan or Korea, just to name two such examples, "stop enacting privacy/sovereignty laws that interfere with US big tech or we tariff you" , there's absolutely zero chance they're going to be listened to and the only thing it will do is make people hate the US.
I don't think it's going to be anymore successful in the EU, honestly. The last couple of years have EU politicians throughly over their shit, and it's unlikely many concessions to US BigTech can be bought without serious reciprocity on the table (for example, a major expansion of US military aid to Ukraine)
I don't think it's right to say "privacy/sovereignty". As gestured towards in the source article, Japan and Korea have joined the US's preferred data privacy forum https://www.globalcbpr.org/. Data sovereignty is not a common idea outside the EU, and AFAIK even the current American government doesn't object to US citizens' data being stored in foreign servers under foreign jurisdiction.
Not only europe:
https://www.state.gov/releases/office-of-the-spokesperson/20...
https://apnews.com/article/chile-united-states-china-visa-sa...