EuropTech vs. BigTech – how to build Europe's technological sovereignty
Today, three US companies - Amazon (AWS), Microsoft (Azure) and Google - control around 72% of the European cloud market, while European providers have only a 13% share, despite the fact that they provide comparable or often better quality services. European business representatives point to the need to level the playing field for the development of Europe's digital sovereignty. They put forward specific demands: preference for supplier localisation in public procurement, the appointment of a digital sovereignty regulator and certification of a sovereign cloud.
According to data from the Draghi Report (2024), as much as 80% of the digital infrastructure, products and services used in Europe come from third countries (The Report: The Future of European competitiveness). By 2034, it is projected that as much as 70% of new global value will be generated by digital solutions. Experts and representatives of the European technology sector are sounding the alarm that unless this trend is reversed in favour of indigenous suppliers, the risk of losing control of strategic resources, as well as systemic economic decline, will increase. As a result, Europe will find itself on the periphery of the global economy.
Profits from the sales of cloud services also represent substantial investment capital. However, over €30 billion annually in profits accrued by US companies from cloud services in Europe do not reinvest back into the EU. Even a partial reallocation of these funds to strengthen R&D or local suppliers would mean real support for European development, local infrastructure and jobs. Dependence on a few global suppliers translates not only into economic conditions, but also into security, competitiveness and regulatory independence for Europe. If we want to develop a modern state, we must take charge of our data processing landscape, as it is the foundation of a modern economy.
"It is imperative that we start realising that in the face of digital challenges, Europe - including Poland - cannot stand defenceless without their own cloud services, or data processing capabilities. This is the foundation of a modern economy. We have the legislative tools available, but the key is the will and the decision to use them. This is where it all starts. It is worth investing in national companies with the right competences – an opportunity for growth in the sector, new jobs and tax revenues. Examples are the NSIS-Cloud and CAMILA projects, in which CloudFerro is also involved. In NSIS-Cloud, we are responsible for providing a national cloud platform for the secure storage, processing and sharing of satellite data. Within CAMILA, the Polish national satellite constellation, we are responsible for the ground segment, providing reception, processing and distribution of data in the sovereign Polish cloud” – explained Dr Maciej Krzyżanowski, the CEO of CloudFerro.
"Building a European cloud is a matter of strategic freedom. If we do not build our own capabilities and nurture the local ecosystem, we will be dependent on political and geopolitical shifts beyond our control," pointed out Robert Paszkiewicz, OVHcloud's vice president for Central and Eastern Europe.
Levelling the playing field
European suppliers anticipate levelling of the playing field rather than an imposition of protectionist measures. Currently, BigTechs are wielding an overwhelming advantage, thanks to their ability to subsidize products through profits generated in other business segments. The current landscape is also marred by inadequate protections against vendor lock-in, a significant challenge that hampers seamless migration between cloud providers. In light of this, the forthcoming European certification of cloud sovereignty and the standardisation of interoperability emerge as critical initiatives. These measures are essential strategies designed to foster genuine market competition.
What we need is to level the playing field. While many advocate for a free market, this market is de facto not free. The dominant players have their key customers who will continue to buy from them, unless regulation forces them to apply free market rules. In contrast, we are not part of a conglomerate – we operate solely as IaaS (infrastructure as a service) and PaaS (platform as a service) providers, with no guaranteed market. To level the playing field, Europe should, in selected areas, prefer local, genuinely sovereign, service providers and buy from them first and foremost” – adds Dr Maciej Krzyżanowski.
Xawery Konarski, lawyer, senior partner, Traple Konarski Podrecki i Wspólnicy, vice-president of the Polish Chamber of Information Technology and Telecommunications (PIIT), indicates that Poland does not harness the full potential of EU legislation designed for the new technology sector because it lacks a dedicated regulator. "Poland has not created any regulator for new technologies. We already have important EU regulations, such as the Data Act or the Digital Markets Act, which provide real tools for action. However, without a national regulatory body, we will not use their potential. We need an institution capable of not only enforcing the law but also comprehending the mechanisms of BigTechs," said the PIIT Vice-president.
Public procurement – a catalyst for essential change
As the IT market is shaped by public procurement, we need a strategic and thoughtful approach in this context. However, today numerous tenders mandate that servers be situated outside of Poland. This practice poses a significant threat to the security of our strategic data. "For years, we have encountered the assertion that the geographic location of data processing is irrelevant – a notion that is simply a myth. In fact, the location of data is the cornerstone of digital sovereignty. If today's tender requires data to be stored outside Poland, it means that we are relinquishing control over information that is fundamental to our national interests," emphasised Wiesław Wilk, CEO of Polska Chmura (Polish Cloud).
Piotr Mieczkowski, Vicepresident of European AI Forum and member of the KIGEiT board of directors, pointed out that European cloud providers are capable of delivering world-class services if they are given a chance to grow. He notes that without clearly identifying the areas where sovereignty must be safeguarded - such as health, energy or state infrastructure - it will be difficult to talk about genuine change. “Without decisions in public procurement and the identification of critical sectors such as energy or health, Europe will not establish resilience,” pointed out Piotr Mieczkowski.
Considering the growing need for innovation in the public sector, particular attention is paid to mechanisms that can support the development of innovative solutions. Ignacy Święcicki, Head of the Digital Economy Team at the Polish Economic Institute, highlights: "There are also programmes supporting innovative public procurement, which not only address specific challenges but also significantly stimulate the growth of the SME sector. While Poland has initiated such efforts, they have not been pursued further. This is a valuable direction that can genuinely empower domestic innovative companies to thrive".
The sector advocates for a level playing field
European cloud providers speak with one voice: ‘we want a level playing field’. How do we achieve this? A group of industry representatives - both from cloud providers, organisations representing the technology sector and the expert community - looked at this topic. They came up with 3 demands.
- Public administration must prioritize European providers in critical sectors such as health, energy, defence and space – where data security and technological independence are crucial.
- Introducing the certification of a sovereign European cloud based on clear, verifiable criteria, with no links to, or dependence on, jurisdictions outside Europe. Here, it should be clear that simply registering a subsidiary in Europe, or locating a data centre in Europe, is not enough to ensure sovereignty.
- Establishing an independent regulator who would ensure oversight and compliance with legislation related to digital sovereignty, including the Data Act, Digital Markets Act, and AI Act. Such oversight is vital for the consistent and effective implementation of these laws.
To meet these demands effectively, we must not only take decisive action through concrete measures but also foster a transformative shift in our mentalities and attitudes towards cooperation at the European level. This endeavour is undeniably worthwhile.
Europe can not only gain from digital sovereignty but also create a more competitive market that fosters innovation and growth. This is a challenge that requires the active participation of all stakeholders - from governments and businesses to educational and research institutions.