Europe’s $10 billion push for Digital Sovereignty: Building an alternative to US hyperscalers

Brussels and Berlin lead federation project to escape CLOUD Act jurisdiction and control critical data.

The European Union has significantly accelerated its multi-year, multi-billion dollar initiative to break free from its economic and regulatory dependence on American technology behemoths like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform. This strategic push, framed as a matter of "digital sovereignty," centers on creating a new, pan-European cloud ecosystem to keep the continent's most sensitive data under its own jurisdiction.

The initiative, most visibly embodied by the Gaia-X project, has secured over $10 billion in combined public and private funding across the bloc, reflecting Europe's determination to control its critical digital infrastructure.

The sovereignty imperative: Escaping the CLOUD Act

European lawmakers and business leaders argue that reliance on U.S.-based hyperscalers exposes the continent’s data to foreign government surveillance and legal mandates.

The US CLOUD (Clarifying Lawful Overseas Use of Data) Act grants American authorities the power to compel US-based cloud providers to hand over data, even if that data is stored physically on European soil. This conflict has fuelled regulatory disputes and is the primary legal justification for a domestic alternative.

Beyond legal risks, Europe is losing vast sums of potential revenue and jobs to non-European companies. Analysts estimate that 70% of the public cloud market in Europe is controlled by the three U.S. giants, leading to a long-term economic drain.

Gaia-X as the framework

Gaia-X, originally a Franco-German project, is designed not as a single rival data center, but as a federated, transparent cloud infrastructure. Its core goal is to define strict European standards for data security, portability, and trust, allowing European providers (like OVHcloud, Deutsche Telekom, and Orange) to compete on a level playing field built on EU regulatory principles.

The scaling challenge

Despite the political will and substantial funding, the project faces the colossal task of overcoming the scale and technological maturity of the U.S. hyperscalers.

Investment gap

The combined annual R&D budgets of AWS, Google, and Azure dwarf the total investment currently committed to European cloud alternatives. Building competing infrastructure requires massive, sustained capital expenditure that has yet to fully materialize in the private sector.

Adoption hurdle

Many European enterprises are already deeply integrated into the American platforms, making migration complex and costly. The key to Gaia-X’s success rests on government-backed contracts and regulatory incentives to compel public sector and regulated industries (such as finance and healthcare) to prioritize European-sovereign clouds.

Looking forward

Germany and France have focused initial efforts on highly regulated, industry-specific "sovereign cloud" segments, creating a regulatory firewall to protect core national interests and create mandatory market space for domestic providers.

While the market acknowledges that a single European "super-cloud" rivalling AWS is unlikely, the sustained investment signals a new era where Europe is willing to pay a premium to achieve true technological and digital autonomy.