OPINION

Shifting geopolitical alliances have marked the first six months of the most recent Trump presidency. The relationship between Europe and the US — once among the closest of partnerships — has weakened due to ongoing debates over tariffs, NATO funding and the response to Russia’s invasion of Ukraine, among other issues. To some Europeans, the US is no longer the trusted ally it once was (see Tariff tensions undermine trust in cloud hyperscalers).

Regarding technology, European states are heavily reliant on US corporations. US hyperscalers — including Amazon, Google, IBM, Oracle, Meta and Microsoft — are not merely tech suppliers to consumers; they also provide essential resources to businesses and government agencies. Europe’s digital economy cannot prosper without these US tech giants and, in turn, the hyperscalers benefit substantially from European markets.

These companies are aware of increasing mistrust and geopolitical tension. Since President Trump came into office, many hyperscalers have published commitments to Europe and launched so-called sovereign clouds, where operations remain within European borders. Meanwhile, European tech providers have sought to differentiate themselves by touting their credentials as being independent of US politics. But are these moves enough to put the hyperscalers at risk in the European market?

Why are the hyperscalers successful?

There have long been calls — from both governments and organizations — for Europe to reduce its reliance on the US for its tech infrastructure. European cloud providers have positioned digital sovereignty as a key component of their marketing propositions. Recent shifts in political alliances have heightened these calls and provided European cloud providers with an opportunity to strengthen their position.

Alternatives to the hyperscaler cloud providers are available. Even so, the dominance of hyperscalers has grown organically over the past decade because organizations have chosen to use them. They have secured considerable market share by offering competitive pricing, a wide range of services, strong reliability, global reach, and a consistent single experience. Customers can use any region they choose, utilizing the same control plane and user interface, and benefit from paying a single bill. For European customers, hyperscalers have offered a compelling proposition.

Why hasn’t Europe developed its own hyperscaler cloud? To some degree, this is because the scale and capabilities of US hyperscalers have been more than sufficient, which makes the case for a European alternative less compelling. Currently, no European entity is capable of building public cloud infrastructure at the same scale, same cost, and with the same level of innovation and capabilities as the hyperscalers.

While some Europeans have opted for smaller, regional providers, these public clouds have not experienced growth anywhere near the rate of the hyperscalers. Smaller cloud providers offer distinct benefits such as personalized support, local language capabilities, and assurances around keeping data within national or regional borders. They are often ideal for organizations that operate within a single country or region, particularly those with limited needs beyond compute infrastructure. Examples include Aruba (Italy), Gigas (Spain), UpCloud (Finland), Leaseweb (Netherlands), Hetzner (Germany) and Hyve (UK).

Larger providers — such as OVH (France), T-Systems (Germany) and Scaleway (France) — may offer a broader range of services and operate across more countries than smaller cloud providers. However, their capabilities are still more limited than those of the major hyperscalers.

Some European-based cloud providers also offer services beyond Europe’s borders, in markets such as the US (e.g., OVH) and South America (e.g., Gigas).

What are Europeans worried about?

In recent months, hyperscalers have increasingly stepped up their efforts to demonstrate their commitment to European digital sovereignty through organizational changes, new product developments and public assurances. These actions are in response to several concerns in Europe, including:

• US hyperscalers’ European operations may be subject to US laws — the CLOUD Act can compel US-based companies to hand over data stored abroad to US authorities, even if it pertains to European citizens.
• Relying on foreign entities to host essential services (e.g., healthcare, government and banking) risks losing national or regional autonomy over critical infrastructure.
• Some EU regulators question whether US cloud services can fully comply with the EU’s strict data protection rules.
• Over-reliance on US providers could leave Europe vulnerable in the event of political tensions or economic disputes with the US.
• There is ongoing distrust about the potential for surveillance or backdoor access by US intelligence agencies to data hosted on US platforms.
• US tech companies may not always align with European values related to fairness, transparency and democratic oversight of digital services.

It is challenging to assess the validity of these concerns, given the rapidly evolving nature of recent geopolitics.

Why using a smaller provider might be challenging?

How feasible is it for an organization to use a European provider in conjunction with a hyperscaler or as an alternative?

For an organization already using a hyperscaler, several reasons may deter them from using a European provider, including:

• Increased complexity. Managing another European provider introduces additional development and operating challenges.
• Gaps in skills and support. Existing development teams may lack the expertise to administrate or develop on the new platform. Documentation, training and support forums are unlikely to be as ubiquitous than those for a hyperscaler.
• Limited services. A small provider usually offers a smaller range of services compared with a hyperscaler.
• Fewer geographical options. A smaller provider may have a limited range of data center locations. If an organization later wants to host that application in another region, it may need to use different providers, which increases management overhead and complexity.
• Legal concerns remain. A European provider is not necessarily immune to US jurisdiction. If the company operates in the US, such as by selling services or operating a data center, it may still be required to cooperate with US enforcement agencies — even if its headquarters are in Europe.

Over the past few decades, various entities have launched several alliances and brokers, including HPE Cloud28+ and Gaia-X, to help European cloud providers deliver cross-country services more effectively and address these challenges. However, they have had limited success. The issue is that each cloud provider offers different services with varying user experiences. An alliance lacks the consistency of services and experience that a single hyperscaler can offer across multiple regions.

Migrating an application from a hyperscaler introduces further complexities:

• Many applications are built using proprietary APIs, making them difficult to move between providers.
• Many applications are designed to span multiple availability zones and regions for resiliency and low latency, which requires a large data center footprint.

Is it worth the complexity?

Organizations operating in a single country or a small region with limited requirements may benefit from using a European cloud provider. In these cases, the reassurance that the application remains entirely within European jurisdiction is a significant advantage over the hyperscalers.

Organizations that require wide footprints and broad capabilities have a choice: either use a hyperscaler and accept some reliance on and oversight by the US, or use multiple European providers to keep the application within European jurisdiction, but at the cost of additional management overhead.

Unfortunately, geopolitical uncertainty makes assessing the risks very challenging today.

Taking preventative measures to mitigate this risk is only worthwhile if the cost of implementation is lower than the potential cost of the impact.

If an organization were to lose access to its applications and data stored with a hyperscaler, the consequences could be significant, resulting in a loss of revenue or worse. Using multiple European cloud providers instead of a single hyperscaler may increase complexity and costs. However, it would mitigate the risk of hyperscaler failure. The costs of mitigation and impact are relatively easy to determine.

The factor missing from this calculation is the probability that any of these European fears will come true and affect the organization. How likely is it that geopolitical tensions will lead to a US hyperscaler failing in Europe?

Years ago, that probability was tiny — and it is likely still small today. However, many organizations in Europe have sensed that the risk has increased. Unfortunately, this probability is changing daily because we are living in a rapidly evolving landscape with few recent precedents.

Most organizations will likely decide that the probability of disruption is small enough that mitigation is not worth the cost. Some may choose to pause their migration to the cloud until tensions subside. However, for others — such as governmental bodies, where the repercussions of failure are much broader — mitigation may be necessary. For these organizations, European cloud providers could serve as a destination for new applications, while European colocations may offer a safe haven for some workloads. That said, the hyperscalers will remain a powerful force in Europe.

Most enterprises are adopting a hybrid approach, selecting the venue — public cloud, colocation or private facilities — that best meets the needs of a particular workload. This trend is likely to continue, even amid geopolitical tensions, with hyperscalers, local providers, sovereign clouds and colocations selected for their specific capabilities to support specific applications.