Local clouds shape Europe’s AI future

It’s a foggy morning in Munich. Marie, CIO of a fictional, forward-thinking European healthcare startup, pores over proposals from cloud vendors. Her company is on the verge of launching AI-powered diagnostics but must keep every byte of patient data within EU borders to comply with strict regional privacy laws. On her desk are slick portfolios from Microsoft, AWS, and Google, all touting sovereign cloud options in the EU. Alongside them are proposals from national cloud providers—smaller, perhaps, but wholly grounded in local laws and run by European nationals. After consulting several legal teams, Marie chooses the local sovereign cloud, believing it’s the safer, smarter option for an EU-based company committed to secure, lawful AI.

Sovereignty is more than a checkbox

Europe has redefined digital sovereignty, emphasizing control, accountability, and operational independence. For European companies and governments, sovereignty is more than data location. Who controls access? Who is legally accountable? Do foreign governments have any claim—however remote—to sensitive business or personal information? European law is driven by values of privacy and autonomy and requires true digital self-determination beyond technical compliance.

The new “sovereign” offerings from US-based cloud providers like Microsoft, AWS, and Google represent a significant step forward. They are building cloud regions within the EU, promising that customer data will remain local, be overseen by European citizens, and comply with EU laws. They’ve hired local staff, established European governance, and crafted agreements to meet strict EU regulations. The goal is to reassure customers and satisfy regulators.

For European organizations facing tough questions, these steps often feel inadequate. Regardless of how localized the infrastructure is, most global cloud giants still have their headquarters in the United States, subject to US law and potential political pressure. There is always a lingering, albeit theoretical, risk that the US government might assert legal or administrative rights over data stored in Europe.

For companies operating in sensitive industries—healthcare, finance, government, and research—this gray area is unacceptable. Legal teams and risk officers across the continent are setting clear boundaries. For them, true sovereignty means that only nationals of their country, subject solely to their laws, can access and manage critical or sensitive data. This goes beyond data residency. They demand meaningful, enforceable autonomy with no loopholes or uncertainties.

Local cloud providers in the AI era

Enter Europe’s national and regional sovereign cloud providers. These companies might not have the global reach or the full range of advanced services that Microsoft or AWS offer; however, what they lack in size they more than compensate for with trustworthiness and compliance. Their infrastructure is entirely based and operated within the EU, often within a single country. Governance is maintained by boards made up of local nationals. Legal contracts are drafted under the authority of EU member states, not merely adapted from foreign templates to meet local rules.

This sense of ownership and local control is convincing many EU companies to choose local providers. When the stakes are high—a leak, breach, or accidental foreign intervention that could result in regulatory disaster, reputation damage, or legal action—these organizations feel they cannot risk compromise. Even the most remote possibility that a foreign government could access their sensitive data is a dealbreaker.

Some argue that only the largest cloud providers can deliver the scale and specialized services needed for ambitious artificial intelligence projects, but the European market is already demonstrating otherwise. Local sovereign cloud alliances, often built from federated national clouds, are pooling resources, investing in high-quality AI hardware, and collaborating with local universities and tech hubs to speed up machine learning research and application deployments.

The majority of European businesses are embarking on their AI journeys with applied AI, predictive analytics, or secure cloud-based automation. For these cases, the performance and scalability offered by local providers are more than sufficient. What’s more, they offer a level of transparency and adaptation to local expectations that the multinationals simply can’t match. When new rules or compliance demands emerge—inevitable in such a fast-moving regulatory landscape—European providers pivot quickly, working alongside regulators and industry leaders.

Big Cloud versus Europe’s offerings

As more European organizations pursue digital transformation and AI-driven growth, the evidence is mounting: The new sovereign cloud solutions launched by the global tech giants aren’t winning over the market’s most sensitive or risk-averse customers. Those who require freedom from foreign jurisdiction and total assurance that their data is shielded from all external interference are voting with their budgets for the homegrown players.

This puts the major cloud providers in a tricky spot. They have already built a strong sovereign cloud infrastructure. However, if corporate and government leaders remain unconvinced about the extent of their local control and security, these services may remain underused, outpaced by flexible, locally trusted providers. The cloud landscape is changing fast. True sovereignty—the kind demanded by European regulators, executives, and citizens—is about more than checklists or technology. EU laws and values are embedded at every level of digital infrastructure offered by EU providers. The companies that prioritize these things will choose providers whose roots, leadership, and accountability are all local.

In the months and years ahead, I predict that Europe’s own clouds—backed by strong local partnerships and deep familiarity with regulatory nuance—will serve as the true engine for the region’s AI ambitions. Global tech giants may continue to invest and adapt, but unless they fundamentally rethink their approach to local autonomy and legal accountability, their sovereign clouds are likely to remain on the sidelines.

For executives like the fictional Marie, the future is already clear: When it comes to sovereignty, local clouds are the best kind of cloud cover.