Europe Sees Surge in Sovereign Cloud Solutions at the Expense of US Hyperscalers

The surge in sovereign cloud solutions in Europe and beyond, spurred in part by the growth of sensitive data and AI workloads, threaten–or at least complicate–the dominance of US-based hyperscalers.

While Google Cloud, AWS, Azure and the like continue to rule the global market, demand is growing rapidly for homegrown cloud providers and self-hosted open-source platforms that allow organizations to retain jurisdictional control over their data.

Digital sovereignty started gaining closer attention in 2018 with the enactment of the US CLOUD Act. The controversial law mandates that US-based tech companies—which include all the world’s biggest hyperscalers—to hand over electronic data at the request of law enforcement, regardless of where it physically resides. However, this is in direct conflict with the EU’s GDPR law intended to protect privacy for European citizens.

The demand for sovereign cloud solutions has only grown since, largely because of the proliferation of data in the AI era. With organizations in highly regulated industries like finance and healthcare now operationalizing AI, the need to retain jurisdictional control and data residency is greater than ever. On top of that, geopolitical uncertainty is further reshaping how technology is deployed across Europe. 

In 2025, multiple European governments and businesses took steps to reduce dependence on foreign cloud providers. For instance, Germany’s state of Schleswig-Holstein migrated 40,000 employees off Microsoft Exchange to open-source alternatives, while Austria’s Ministry of Economy deployed a self-hosted Nextcloud solution after phasing out Microsoft’s collaboration suite. Homegrown alternatives, such as OVHcloud, IONOS, and Scaleway are also growing, marketing their services as fully European-owned and operated.

For software vendors targeting EU customers, there’s increasing emphasis on data locality and control, especially in the case of sensitive industries. Companies involved in data management should highlight options for local data hosting, on-premises deployments, or EU-region clouds that aren’t subject to US digital surveillance laws. Open-source alternatives have also become a major selling point, not least because enterprises are becoming increasingly wary of vendor lock-in. At the same time, US-based tech companies will increasingly need to offer sovereign versions of their services via partnerships or dedicated EU infrastructure if they’re to retain European market share. By addressing data residency and sovereignty up front, US software companies can still stay relevant, even in the face of Europe’s upcoming AI regulations.