Europe’s long-running debate over digital sovereignty is rapidly turning into a major shift in cloud spending, as organizations respond to rising geopolitical uncertainty and regulatory pressure by keeping more data and infrastructure closer to home.
According to forecasts from Gartner, worldwide spending on sovereign cloud infrastructure as a service is expected to reach about $80 billion in 2026, representing growth of more than 35 percent year over year. The rapid expansion is driven primarily by governments and heavily regulated industries, with Europe emerging as one of the fastest-growing regions.
European organizations are expected to nearly double their sovereign cloud IaaS spending between 2025 and 2026, rising from roughly $7 billion to more than $12 billion. Gartner projects that investment will almost double again in 2027, pushing Europe ahead of North America in total sovereign cloud spending for the first time.
Resistance to American Vendors
The spending surge reflects a full-fledged resistance to U.S. hyperscalers. European policymakers and executives have grown concerned amid strained transatlantic relations and continued debate over laws that allow U.S. authorities to request data held by American companies, regardless of where it is stored.
Rather than triggering an immediate mass migration away from existing providers, the shift is playing out more selectively. Gartner estimates that roughly 80 percent of sovereign cloud spending will be tied to new digital projects or legacy systems that have not yet moved to the cloud.
Only about one-fifth of existing workloads are expected to be relocated from global platforms to local or regional providers over the next several years, a process the firm describes as geopatriation.
This gradual approach reflects the practical limits of cloud exit strategies. Large organizations remain deeply integrated with proprietary services from the US cloud vendors, making a full-scale departure costly and complex. As a result, many enterprises are choosing to place new workloads with sovereign providers while maintaining established relationships elsewhere.
Governments are the dominant of sovereign cloud services, using them to meet national security and compliance requirements. Regulated sectors such as financial services, energy, utilities, and telecommunications are close behind, as they face similar obligations around data residency. In some countries, public sector initiatives are channeling spending toward domestic cloud platforms.
Hyperscalers Strategize to Maintain Market Share
The trend poses a challenge for hyperscalers. While major U.S. cloud companies have launched offerings branded as sovereign, questions persist about how much independence those services truly provide when ownership and ultimate control remain overseas. Gartner has warned that treating sovereignty as a narrow compliance issue, rather than a broader economic and political concern, risks eroding market share.
In response, some hyperscalers are experimenting with partnerships that license technology to European firms or operate through locally governed joint ventures. These arrangements aim to balance customer demands for control with the capabilities of U.S. platforms, though they still involve trade-offs around dependency on foreign software.
Beyond Europe, sovereign clouds are also accelerating in the Middle East, Africa, and Asia-Pacific, as governments pursue similar goals of technological autonomy and local economic development. Overall, the shifts suggest that sovereignty considerations are no longer a niche policy issue but a central factor shaping how and where organizations build their digital infrastructure.
