Report highlights impact of EU sovereign cloud on cloud ecosystem

A report has found enterprises in Europe are gaining access to faster, more secure, and more reliable cloud services through single-source providers, driven by partnerships between European cloud platform providers and global hyperscalers.

This finding is detailed in the 2024 ISG Provider Lens™ Multi Public Cloud Services report for Europe, published by the Information Services Group (ISG), a global technology research and advisory firm.

The report highlights how alliances between European cloud providers and US-based hyperscale operators have created a seamless and scalable cloud ecosystem using open-source infrastructure technologies. This ecosystem addresses the EU’s stringent data privacy, security, and interoperability standards despite initial expectations that the Gaia-X initiative would reduce reliance on non-European cloud providers.

Director of technology modernisation in Europe at ISG, Matthias Paletta, said the idea behind the Gaia-X initiative was to drive European ownership of cloud and data centre infrastructure.

“Instead, the EU’s strict requirements for data privacy and sovereignty have ended up constraining organizations purchasing Gaia-X platforms and services with respect to scalability and accessibility,” added Paletta.

Report Highlights Role of Hyperscalers in EU Cloud Market

The ISG report noted the current sovereign cloud ecosystem is largely enabled by partnerships with US hyperscalers like Google Cloud, AWS, and Microsoft Azure. Google, for instance, has established key collaborations with EU-based providers, including T-Systems, Thales, and Proximus, offering competitive, single-source sovereign cloud services that meet the EU’s regulatory requirements.

These partnerships have provided enterprises with flexible and adaptable cloud solutions while ensuring sovereign data remains compliant with EU restrictions, which now prohibit hosting such data on public cloud infrastructure.

Challenges in Transitioning to Sovereign Cloud Platforms

While the sovereign cloud market is poised for growth, the report identifies several hurdles for enterprises migrating to these platforms. Compatibility challenges with existing infrastructure often necessitate significant investment in integration and testing. Requirements for localised data storage and processing may also lead to increased operational costs and reduced flexibility.

Partner and global leader at ISG Provider Lens Research, Jan Erik Aase, said Gaia-X has set new standards for data security and interoperability due to the Association’s members uniting around open-source technologies.

“Sovereign cloud providers will work with big public cloud managed service providers, navigating around Gaia-X to offer services at the level European customers have already come to rely on,” said Jan Erik Aase.

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