Can Europe balance tech sovereignty with competitiveness?

Digital sovereignty is the policy topic of the moment. Europe’s push for digital sovereignty is being shaped by growing friction on multiple fronts, from regulatory tensions with the United States, to efforts to reduce dependence on China, and persistent cybersecurity threats linked to Russia. In response, European policymakers are doubling down on the importance of tech sovereignty, with Gartner predicting more than 75% of all enterprises outside of the US will have a digital sovereignty strategy by 2030.

But for true digital sovereignty, ambition and reality are not the same. European companies largely still run on US-based cloud infrastructure and software from US companies continues to dominate. Loosening that reliance on the world’s largest tech providers like Microsoft and AWS is anything but straightforward. 

Recent analysis suggests the reality of tech independence looks quite different in practice. After examining two years of European boardroom transcripts using AI-driven analysis in AlphaSense, we tracked how often senior leaders referenced major technology providers to assess whether growing geopolitical tensions are shifting how companies think about their reliance on US tech.

The results are stark - across the period analysed, Microsoft was referenced over 19,000 times in European boardrooms, far more than any other company and well ahead of both AWS (5,953) and leading European players such as SAP (11,932) and Siemens (11,534). The overall sentiment towards Microsoft is positive, though it is often framed as a strategic necessity for companies. A clear “Microsoft wave” of adoption is evident across Europe, driven by the company's positioning as a key enabler of measurable business outcomes in cloud and AI. However, this momentum is tempered by rising concerns around digital sovereignty and regulatory friction, as boardrooms grow increasingly cautious of US legal jurisdiction over their data. 

The volume, and the disparity in mentions between US and European tech leaders, highlights how deeply embedded US platforms remain in day-to-day European business operations, despite growing political pressure to diversify.

Why digital sovereignty is moving up the corporate agenda

With the rise of agentic AI alongside ongoing geopolitical volatility, sovereignty has quickly evolved from a political buzzword to a necessity for businesses. Control over core technologies is now viewed as essential for long-term competitiveness and isn’t just about where data is geographically housed.

Recent volatility has seen geopolitical tensions peak and the AI arms race supercharge technological competition to an all-time high. The combination of these two catalysts has alarmed the increasingly fragmented world we live in.

Business leaders and policymakers are seeing digital sovereignty as the means to mitigate geopolitical risks, avoid the over-concentration of a few big vendors and ensure that AI driven transformations remain under an organisation or nation’s direct authority. Sovereignty is seen as an architectural requirement for AI and enterprise decision making, particularly in Europe, with a laser focus on trust and transparency.

Unsurprisingly, economic competition is also a key driver, with access to advanced AI and cloud solutions estimated to drive €1.2 trillion in GDP growth for the EU over the next decade. However, this could all collapse by two-thirds if industries are restricted by a lack of sovereign, high performance infrastructure. 

As a result, we are seeing the introduction of regulatory frameworks being rolled out, with the EU setting a global blueprint with the European Cloud Sovereignty Framework announced in October last year.

But implementation isn’t straightforward. US Big Tech is embedded in the backbone of most companies and sovereign digital tools come at a price. Rigorous compliance adds cost and complexity, “buy-local” rules are depriving innovators of world-class platforms and local players have struggled to compete with a handful of the Big Tech leaders.

To achieve this, Europe would need to begin building its own digital stack, something we are starting to see with the introduction of the European Chips Act, set to double Europe’s share of global semiconductor production and secure supply chains for critical hardware. Similarly, the proposed Cloud and AI Development Act has the aim of boosting data centre capacity and creating a secure, competitive European ecosystem for scaling AI.    

There is still a long way to go, with local providers’ combined share fell from 29% to 15% between 2017 and 2024 whereas three US-based hyperscalers now account for about 70% of demand. There is a similar trend in AI, where the largest investments are concentrated in a few, very large data centres owned by a handful of corporations headquartered in the United States or China.

Intent is one thing, but the practicality for European businesses to break away from US tech, without compromising on competitiveness, is quite another. By developing the EURO-3C project, a €75 million federated network of over 70 edge and cloud nodes across 13 countries, Europe could prove out alternative infrastructure capabilities.

The case for sovereignty without isolation

As calls for digital sovereignty grow louder, the debate must move past all-or-nothing thinking. Full de-coupling from US hyperscalers is neither realistic nor commercially rational. Europe’s reliance on these platforms is structural, and unwinding it would take years of sustained investment, with no guarantee that domestic alternatives could match their scale or performance. Sovereignty does not have to mean total isolation. But it does require a more pragmatic definition. 

Whether digital self-governance is realistic or not, the real challenge is seeing if Europe can achieve technological independence whilst securing control where it matters most. It’s not a matter of choosing sovereignty or competitiveness, but using the next phase of the AI revolution to find a way the two can co-exist.