The European cloud market is dominated by American companies as the continent has failed to develop strong domestic players. This dependence poses major risks: cloud technology is key for storing digital data and applications on interconnected servers, granting external actors access to sensitive information, including including health, defense, and research data.
How to address this problem? Mobilizing more funding alone is not enough – while France is rolling out major programs for the development of domestic cloud technology, its data protection Agency, the CNIL, will be trusting Microsoft to host citizens’ medical data. To foster genuine cloud sovereignty, European governments need a bolder political vision based on supporting local technological ecosystems and a revised approach to public procurement.
A dependence threatening European data sovereignty
At a time when the cloud has become a major information storage space of companies and organizations, as well as the training ground for AI models, structural dependence on American digital giants poses major risks for Europe. Firstly, the US government can access Europeans’ strategic data as most of it is hosted on platforms subject to the American Cloud Act, which obliges these platforms to comply with intelligence requests from the US government, even if the data is hosted outside US territory. This means that the EU’s GDPR provides only an illusion of protection – the bloc and national governments have no concrete means of preventing the US government from accessing personal citizens’ data or information relating to national security. This conundrum exacerbates the need for a reliable EU-based cloud alternative.
Secondly, dependence on the American cloud introduces geopolitical risks, with European access to its own data and threats of its cut-off serving as a potential bargaining chip for the Americans. This risk is all-the-more relevant in the context of tensions in transatlantic relations triggered by Trump’s tariff offensive, and a potential legal rationale for deploying such a cut-off based on the International Emergency Economic Powers Act (IEEPA). While a full cut-off remains unlikely, the sheer existence of the threat hinders the ability of the European Commission to use its Anti-Coercion Instrument (ACI) against US digital services.
Finally, reliance on American cloud constrains the scaling of a European cloud sector that would be capable of competing with US providers. Domestic European cloud companies are facing established American behemoths with strong innovation capabilities, who have invested $800 billion into developing the technology since 2010.
The weakness of the French Cloud, and more generally of the European Cloud, is a problem of political vision
In France, cloud service seekers tend to turn to the US giants, with 71% of French companies prefering American Cloud solutions. The reason is simple: there are no credible French-made alternatives.
This failure in developing domestic cloud capacities stems from the lack of sufficient political foresight. While the French government had initially planned to devote EUR 285 million to the Cloudwatt and Numergy (SFR and Bull) projects – run by large local companies, which do not specialize in cloud – both projects are performing well below expectations. Numergy generated €6 million in 2014, whereas revenue of €400 million was expected for 2016. The problem is that by entrusting the sovereign cloud development project to large companies not specialized in these technologies, the state is trying to reinvent what innovative SMEs – such as OCH and Clever Cloud – already know how to do. A case is point is the governmental support for Orange – a company specializing in infrastructure – for a project that is first and foremost about software-based services.
Then, another problem is more structural: the inability of European companies to leverage economies of scale. The constrained access to private venture capital investment (in 2023, European startups raised $63 billion, down 37% on 2022, and government agencies accounted for 37% of funds raised by European venture capital funds), the poor choice of state funding outlined above, and the lack of effective European coordination to pool investment, mean that French cloud players are unable to scale-up to become competitive enough.
In such conditions, it is no wonder that American companies capture the bulk of public tenders, as the French public procurement code (article L2152-7) will always buy from the best offer, often defining parameters that only GAFAMs (Google, Apple, Facebook, Amazon et Microsoft) can meet.
Towards the development of a sovereign French Cloud?
As the European cloud market is expected to grow by 20% a year in the coming years, the government should support French cloud players through programmes promoting and funding them. By developing their competitiveness on the European market, they will be more able to face up to GAFAMs. There is no shortage of talent to develop this technology. French universities such as Polytechnique and Ecole Normale Supérieure with its 8 Fields Medal winners and 13 Nobel Prize winners, train engineers who are among the best in the world. France can capitalize on this talent pool by supporting the emergence of innovative initiatives, through public funding and public procurement. Favoring companies with the SecNumCloud label, ensuring “excellent IT hygiene for service providers and protection in line with European law” could be a first step. These software companies will be able to draw on the infrastructure of the Franco-German Gaia-X project, which provides for data storage on the continent in order to secure European data. The important thing is to develop confidence in European tech players, because if you do not test local solutions, you are depriving yourself of an essential industrial alternative.
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