The Cloud Atlas of Europe: US technologies take over the continent

Research finds that most European enterprises have migrated their IT infrastructure to the cloud but primarily use US cloud technologies.

According to research by Forrester, European businesses are using public clouds at a new level. 92% of UK, France, and Germany-based businesses claim to have adopted cloud computing, and 78% say they use a hybrid cloud. 75% use multiple public clouds, mostly based on US-made technology. After a sluggish start, according to research, Europeans now recognize the cloud for its support of new apps and its ability to provide affordable computing and storage for existing ones.

Although European firms have made a significant migration to the cloud in quest of speed, scalability, and innovation, the top security and privacy issues with public cloud usage were data protection and disaster recovery (32%), followed by application security and protection (31%). Lack of internal governance over public cloud storage (26%), poor performance (23%), and compliance (21%) were less serious but still real issues.

According to Forrester's State of Cloud in Europe 2022 report, infrastructure decision-makers at European businesses indicate that, on average, 41% of their whole application portfolios are already in the public cloud, and 58% expect their company to move within the next two years. According to Forrester, modernization is the top priority for more than half (56%) of those who purchase IT infrastructure. According to Forrester, regulation is a significant challenge for European cloud markets, given the lack of any hyperscale cloud providers in Europe.

European resistance is broken

Since its inception in 2020, the Franco-German program GAIA-X has not had a significant impact. It is envisaged that it will enable Europe to rely less on foreign technologies. GAIA-X is headed up by Germany's T-Systems and France's OVHcloud. Scalaway, a founding member of the French GAIA-X organization, left the effort in November because it "accepted all the non-European major cloud service providers without any limitation." In 2020, GAIA-X welcomed Microsoft and Amazon Web Services. Scalaway's retreat makes sense when considering that the market share of European cloud service providers decreased from 27% to around 16% between 2017 and 2021.

US-based companies' entry added value to the market. Its value increased from €2 billion each quarter in Q1 2017 to €7.3 billion by the second quarter of 2021. However, Amazon, Microsoft, and Google were the biggest winners of this expansion as they invested billions in extending and enhancing cloud infrastructure throughout Europe.

European providers focus on data sovereignty and privacy requirements

By concentrating on use cases that have higher data sovereignty and privacy standards, European cloud companies may be able to continue expanding.

Last year, Deutsche Telekom was the largest European cloud provider, but it only had a 2% market share. It was followed by OVHcloud, SAP, Orange, and then national and regional competitors. Forrester also mentioned T-Systems, Cleura, and Swisscom.

Jeffrey Rajamani, a senior analyst at Forrester, summarizes the European cloud market situation in the research: "There is anxiety across Europe. Fears are mounting (rightfully so) that players outside the region will essentially control the continent's digital future. As a result, the European Union and local governments are setting rules, mandates, and standards on how data can (and cannot) traverse worldwide."

Rules and regulations are not only made stricter in Europe. Over 50 nations are accelerating their efforts to control data flows to achieve digital sovereignty, which requires data to comply with privacy and other criteria established by the relevant regulatory agencies.