European governments are racing to reduce their dependence on American technology, with ministers now describing digital sovereignty as ’a matter of national survival’. With US cloud providers controlling over 85 per cent of the European market and the Trump administration’s relationship with Brussels deteriorating, the push to build a genuine European alternative—EuroStack—has become an urgent political priority.
Digital sovereignty is ’a matter of national survival, not just IT policy’, warned Estonia’s digital affairs minister Liisa Pakosta to CNBC. She reflected a mood sweeping European capitals as the continent’s dependence on US tech infrastructure collides with an increasingly volatile transatlantic relationship.
Reality hard to escape
Pakosta’s comment represents a much larger European shift. Be it member states like France, who recently announced it will replace Microsoft Teams and Zoom with Visio, a domestically developed platform, across all government departments by 2027, or the European Commission piloting an internal communications system built on the open-source Matrix protocol, everyone is looking to ditch US tech.
In the European Parliament, lawmakers are pushing president Roberta Metsola to move from US software entirely. All 27 member states signed a digital sovereignty declaration in December. And the Cloud and AI Development Act is expected to be formally proposed by the Commission this quarter, which would establish EU-wide eligibility requirements for cloud providers and expand computational capacity for startups.
Even locally, this push is moving forward. The northern German state, Schleswig-Holstein, has become a poster child for the transition, migrating 40,000 government mailboxes away from Microsoft Exchange and Outlook to open-source alternatives in just six months. “It feels kind of like there is a real Zeitgeist shift,” Eurasia Group’s Nick Reiners told The Telegraph.
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Despite the urgency, Europe faces a reality it can’t escape quickly: US cloud providers control up to 85 per cent of Europe’s cloud market, and American firms hold near-monopolies in AI chips and satellite internet. According to a Proton study, over 74 per cent of publicly listed European companies depend on US-based tech services, with countries like Ireland and Finland rising above 90 per cent.
From dependence to independence
The solution being proposed: EuroStack, the building of independent European digital infrastructure—cloud computing, semiconductors, software, and AI systems—to replace reliance on foreign providers. This would pave the way for massive deep tech growth, the broader ecosystem of companies turning technological breakthroughs into scalable businesses, spanning areas like novel AI, defence tech, robotics, and advanced materials.
The two initiatives are distinct but deeply linked: EuroStack provides the sovereign infrastructure, while deep tech generates the innovation and economic value to run on top of it. McKinsey projects that investing in Europe’s broader deep tech ecosystem could generate $1tr in enterprise value by 2030. But with European platforms often still running on American infrastructure underneath, and 27 member states pulling for their own champions, the path from political momentum to genuine independence remains anything but straightforward.
We are basically faced with three cloud providers—that is not normal and is not desirable. – Giorgos Verdi, European Council on Foreign Relations
“We basically are faced with three cloud providers—that is not normal and is not desirable,” says Giorgos Verdi, policy fellow at the European Council on Foreign Relations. “Those monopolies actually make the products that we have worse. Dominance of a few tech corporations in public infrastructure limits our flexibility, threatens our security and inflates our software costs,” Schleswig-Holstein’s digitalisation minister Dirk Schroedter told AFP.
But beyond exposure in the client economy, a Europe that takes tech seriously could revitalise the economy.
European ecosystem to be started
Between 2005 and 2015, Google, Meta, and the modern American tech economy took shape—and no comparable European companies emerged to challenge them. Crucially, as Verdi points out, this happened in the absence of regulation: “The GDPR did not exist in that decade, and the entire single market is essentially governed by the e-commerce directive, and the US has a pretty similar arrangement anyway.”
The gap was not regulatory, it was structural. Rooted in the absence of the kind of deep, government-backed investment and geographic concentration that seeded Silicon Valley in the first place. “Silicon Valley was built on a network effect where one solution led to the need for the creation of another solution,” says Verdi, arguing that Europe’s push to transition public institutions toward domestic platforms could help kickstart a similar dynamic.
EuroStack aims to do just that: use public procurement and government demand to kickstart a European ecosystem.
Deep tech: replicating the boom
In deep tech, Europe is already making gains. Europe’s share of global deep-tech unicorns doubled from 4 per cent to 8 per cent between 2021 and 2024, according to McKinsey. Companies like Mistral AI, Helsing, and IQM are emerging as genuine contenders, and European corporations are beginning to back them. ASML’s decision to lead Mistral AI’s $2bn Series C—becoming the company’s largest shareholder—is the most visible example of the ecosystem choosing itself.
For Verdi, that kind of intra-European investment is essential. They “remain viable—Mistral can do one more year without being acquired by Apple,” he said partially joking, “but then also because you build more tailored products for the industries that Europe has,” he continued, raising a point that extends beyond AI. Europe’s automotive sector, for instance, does not need cutting-edge semiconductors. “We’re chasing the sort of cutting edge semiconductors, but there might not be a market for those in Europe so far, whereas the more legacy chips—although they’re more boring, not as flashy—are the ones that the automotive European companies use,” he said.
McKinsey projects that a genuine commitment to deep tech could generate $1tr in enterprise value and up to one million jobs across Europe by 2030. But European tech startups remain cash-starved, VC ecosystems are thin outside a handful of cities, and the continent still lacks the equivalent of Pentagon-scale procurement to anchor demand.
The US Pentagon’s annual budget of nearly $1tr—including over $140bn for research and development—dwarfs anything European governments have collectively committed to tech investment.
The boom, if it comes, will have to be built differently than the American original—but the underlying logic, Verdi argues, is the same.
Urgent and fragmented
The urgency is not just coming from European officials, but is felt by the public. A recent Proton survey of consumers across the UK, Germany, and France found that more than eight in ten are concerned about Europe’s dependence on US technology.
Everybody has realized how important it is that we are not dependent on one country or one company when it comes to some very critical technologies. – Henna Virkkunen, Commissioner for Tech Sovereignty, Security and Democracy
EU tech chief Henna Virkkunen has given that anxiety institutional voice: “It’s very clear that Europe is having our independence moment. During the last year, everybody has really realized how important it is that we are not dependent on one country or one company when it comes to some very critical technologies.” This importance stems from the ECFR warning that a future US administration could restrict European access to American cloud services, AI applications, and military software—a scenario that would devastate Europe’s economy and security.
The problem is that urgency does not resolve fragmentation. With every member state wanting a stake, the EuroStack risks becoming 27 parallel projects rather than one coherent ecosystem. “If France certifies a sovereign cloud and Germany refuses to recognise it, we enter patchwork territory,” Sanchit Vir Gogia, chief analyst at Greyhound Research warned to ComputerWorld.
Geographic concentration was central to Silicon Valley’s success, but replicating it in Europe is politically unlikely. “It would be very difficult to accept that one or two cities would take the lead,” Verdi acknowledges, though he argues the single market’s connectivity means Europe can still build a competitive industry without it.
“I think it takes intellectual bravery to chart our own path and understand what is good for us rather than be happy clients,” Verdi says, reflecting on the push by American tech for deregulation in Europe.
The path forward
Despite the obstacles, there are reasons for cautious optimism. Sovereign cloud spending in Europe is projected to more than triple to $23bn by 2027, according to Gartner. The Cloud and AI Development Act, expected in the first quarter of 2026, will attempt to address Europe’s cloud and AI shortcomings by encouraging new data centre construction, expanding computational capacity for startups, and establishing EU-wide eligibility requirements for cloud providers. The Franco-German digital sovereignty summit in November launched a joint task force due to report this year. The political infrastructure, at least, is taking shape.
For Verdi, the most important shift is cultural as much as legislative—the European ecosystem beginning to choose itself. The ASML-Mistral model, he argues, could be the template. Public procurement can reinforce that logic, using government demand to anchor the kind of network effects that Washington once used the Pentagon to create. Verdi advocated for middle power partnerships to help fill gaps, though Verdi is also realistic: “I fear the majority of the legwork will be left for Europeans to do,” he says.
Those stark dependencies that we have endured so far should not be as normalised and as acceptable as it has been for the last two decades. – Giorgos Verdi, European Council on Foreign Relations
The deeper question is one of speed. The Bertelsmann Stiftung’s EuroStack report estimates the transformation will be incremental, taking roughly a decade and require investments of around €300bn.
What has changed, Verdi argues, is the baseline consensus: “Those stark dependencies that we have endured so far should not be as normalised and as acceptable as it has been for the last two decades.” For a continent that spent twenty years as a client of American technology, this sentiment is where the shift begins.
