The driving force behind this digital gold rush is a potent cocktail of factors. European businesses and governments are increasingly prioritizing data security and local control, sparking a surge in demand for sovereign cloud solutions. Gartner’s recent findings highlight this trend, with 61% of Western European CIOs expressing a desire to increase their reliance on local cloud providers.
The concept of “cloud sovereignty” is no longer a niche concern; it’s rapidly becoming a boardroom priority. Concerns about data residency, compliance with local regulations, and the potential for foreign interference are pushing organizations to seek out cloud solutions that keep their data within national borders. As Gartner pointed out in a separate survey, 53 percent said geopolitics would restrict their use of global providers in the future. This trend benefits local cloud providers and reshapes the competitive landscape.
But it’s not just about keeping data “at home.” It’s also about ensuring that European companies have access to cutting-edge technology without being beholden to external forces. This desire for technological independence is reflected in the growing investment in GenAI models, which are projected to see a 78% spending increase next year.
Generative AI is supercharging demand for compute, and Europe is feeling the heat. Spending on data centers is forecast to grow by a hefty 38.2% in 2025, reaching $83.6 billion. While growth is expected to moderate to 18.8% the following year, the overall trend is clear: Europe needs more infrastructure to support its growing AI ambitions. The US may currently be the epicenter of AI investment, but Europe is rapidly catching up.
John-David Lovelock, distinguished VP analyst at Gartner, emphasizes the unique challenges facing Europe: “The European economy is somewhat different to the rest of the world. Europe is still struggling with an overall GDP recovery, much more susceptible to the uncertainty with their global trade. They are looking at ‘geo-repatriation,’ a portion of the digital sovereignty movement who is trying to get more technology from companies closer to home.”
The war in Ukraine and other geopolitical tensions have undoubtedly influenced IT spending decisions in Europe. Organizations are seeking to build resilience and agility in the face of uncertainty. According to the article, this sentiment is captured by a quote from Mark Carney, the Prime Minister of Canada: “We will control the things that we can control.”
This “Carney Doctrine,” as it might be called, has resonated with the business community, driving a focus on internal control and strategic planning. Companies are reassessing their operations and seeking opportunities for growth, even amidst global instability. This includes initiatives like Microsoft’s data sovereignty offerings designed to meet these growing regional needs.
The surge in IT spending in Europe is more than just a temporary blip; it’s a sign of a fundamental shift in priorities. Cloud sovereignty, AI adoption, and geopolitical resilience are now key drivers of investment. As Europe navigates an increasingly complex global landscape, its commitment to technological independence will likely continue to shape its digital future, even down to secure state messaging with projects like France’s adoption of Matrix.
