The digital sovereignty debate keeps landing in the same place: data residency, GDPR, server locations. These are real concerns. But they're symptoms. The system underneath is larger, more consequential, and harder to reverse than most policymakers currently treat it.

The Legal Fiction of "EU-Hosted" Data

Europe has built serious regulatory infrastructure — GDPR, NIS2, DORA, the AI Act. The instinct is right. But one structural problem none of it resolves: the US CLOUD Act allows American law enforcement to compel any US-owned company to produce data stored anywhere in the world, including Frankfurt or Amsterdam. FISA Section 702, reauthorized in 2024, lets US intelligence agencies collect data on non-US citizens outside US borders.

 

The critical word is ownership, not location. AWS launched its European Sovereign Cloud in Brandenburg in 2025, backed by €7.8 billion. The servers are local. The ownership isn't. The legal exposure doesn't disappear — and no amount of clever contract drafting changes that.

You're Paying Twice

When a hyperscaler builds a data centre in your country, the grid infrastructure — transmission lines, substations, capacity upgrades — is paid for by the state, the utility, or the ratepayer. The data centre is a private asset generating returns for American owners. The grid is a public cost shared by everyone.

 

Then the same hyperscaler sells services back to European governments, hospitals, schools, and companies at significant markups. The European sovereign cloud market is projected to reach up to $321 billion by the early 2030s. Those revenues flow to American balance sheets and get reinvested — mostly in the United States.

 

You pay once as a co-funder of the infrastructure, and again as a customer of it. The value extracted doesn't circulate in your economy.

The Switch Gets Flipped

When Russia invaded Ukraine, the Western cloud stack that Russian organizations had deeply embedded stopped working. Microsoft cut off over 50 cloud products. Oracle left abruptly. Amazon stopped new AWS sign-ups. Microsoft had reportedly been used by up to 90% of Russian corporate and state clients at the time.

 

The Russia case involved a government that started an illegal war. That's not the debate. The debate is what every other country watching learned: if your critical infrastructure runs on a foreign technology stack controlled by companies in a single jurisdiction, your operational continuity is conditional on that jurisdiction's goodwill. Administrations change. Strategic interests diverge. History doesn't support betting on geopolitical stability.

Capturing the Next Generation

AWS offers startups up to $100,000 in credits. Microsoft up to $150,000. Google up to $350,000 for AI-focused companies. The hyperscalers know exactly what they're buying: architectural dependency at the moment of maximum formability.

A startup that builds on proprietary cloud services makes choices that become increasingly expensive to reverse. By the time the credits run out, migration is often prohibitive. Europe's most promising companies get locked into American infrastructure before they're large enough to evaluate alternatives. European providers hold roughly 15% of the European cloud market. Hyperscalers hold around 70%. That gap wasn't inevitable — it was built through credits, lock-in mechanics, and ecosystem gravity, compounding over a decade.

What Actually Needs to Change

The goal isn't autarky. It's the ability to make choices and maintain leverage when the stakes are highest. That requires regulatory clarity on ownership, not just location; honest accounting of data centre deals that includes public grid and energy costs; portability and interoperability as enforceable standards, not aspirational guidelines; and genuine investment in European alternatives at real scale.

 

Most importantly: sovereign AI infrastructure treated as a strategic priority. As AI becomes the infrastructure layer of the economy — touching healthcare, finance, public services, education — who controls that layer is an economic sovereignty question in the same category as energy or financial independence.

 

The real question is never where the server sits. It's where value gets created, and where it accumulates.

 

Europe has world-class users, enterprises, researchers, and builders. All of that generates enormous economic leverage. The question is whether it stays in the system — or gets extracted through the infrastructure layer and reinvested somewhere else.

Right now, the answer is mostly the latter. Not because Europeans are less capable. Because the frameworks, investment flows, and procurement habits are all structured to make extraction the path of least resistance.

 

The problem is never the problem. It's a symptom of a system. And this one has a clear shape.

 

Based on my publication on MoreThanDigital and my blog article.