Europe's Sovereign Cloud Surge: Geopolitics Forces $21 Billion Shift Away From US Providers

European organizations are accelerating investments in sovereign cloud infrastructure at unprecedented rates, with spending projected to more than triple from $6.9 billion in 2025 to over $21 billion by 2027 according to new Gartner forecasts. This 83% growth rate—the second highest globally—signals a fundamental shift in digital strategy driven by escalating geopolitical tensions and concerns about US data access laws.

The Geopolitical Catalyst

The surge stems directly from the US CLOUD Act of 2018, which empowers American authorities to compel US-based technology companies to hand over user data regardless of where it's physically stored. These concerns intensified following former President Trump's return to office and subsequent sanctions against international entities. A stark example emerged when the International Criminal Court (ICC) temporarily lost access to Microsoft services after Chief Prosecutor Karim Khan pursued war crime investigations against Israeli officials. Though Microsoft claimed it didn't cut services to the ICC "as a whole," the incident prompted the court to migrate to OpenDesk—an open-source suite from Germany's Centre for Digital Sovereignty (ZenDiS).

Rene Buest, Gartner senior director analyst, confirms the geopolitical impact: "There is a lot of uncertainty being created... Decision makers are asking whether we can still rely on digital infrastructure from US-based service providers. Nobody really knows."

Strategic Sovereignty Investments

European enterprises aren't just migrating existing workloads but strategically routing new projects to regional providers:

• Retail giant Schwarz Gruppe (owner of Lidl) committed €11 billion to its STACKIT cloud platform
• French provider OVHcloud secured major investments to expand capacity
• Airbus is actively soliciting proposals for sovereign alternatives, comparing the shift to Europe's post-WWII aeronautics strategy: "We learned about aeronautics by working under license of US products. Then we developed our own skills," said EVP Catherine Jestin

This reflects a critical realization: Dependency on US providers represents a low-probability but high-impact business continuity risk. As Jestin noted, Airbus now prioritizes infrastructure where "there is any existing European infrastructure that would be capable to deliver."

The Hyperscaler Response and Its Limits

US cloud providers have launched "sovereign" offerings targeting European concerns:

• Microsoft's EU Data Boundary promises in-country processing for Microsoft 365 Copilot in 15 countries
• AWS European Sovereign Cloud operates as physically/logically separate infrastructure within the EU
• Google and Oracle established similar governance structures with European oversight boards

Yet European enterprises remain skeptical. As Buest explains: "The AWS European Sovereign Cloud GmbH is a 100% subsidiary of Amazon Inc. There are still dependencies... They don't give up control." AWS countered that its European subsidiaries are "led by EU citizens who are obligated to abide by European laws," but the fundamental tie to US jurisdiction persists.

The Road Ahead

This investment surge represents more than technical migration—it's a redefinition of digital autonomy. Organizations are prioritizing:

1. Workload placement: New projects and on-premises migrations target regional providers first
2. Open-source adoption: Avoiding vendor lock-in through solutions like OpenDesk
3. Capacity building: Partnerships like Google-Thales and Microsoft-Orange transfer cloud expertise locally

The transition faces hurdles, particularly the deep integration many enterprises have with proprietary hyperscaler services. But with European spending projected to outpace US growth by nearly 3-to-1, the message is clear: Digital sovereignty is now inseparable from geopolitical and economic resilience. As regulatory pressures mount and global tensions persist, Europe's cloud infrastructure is undergoing a fundamental realignment toward regional control.