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European enterprises are accelerating their adoption of sovereign cloud solutions, shifting from viewing them as niche compliance tools to treating them as core infrastructure for critical workloads and AI platforms, according to a new ISG Provider Lens® report. This move is driven by stricter regulations, geopolitical risks, and demands for data sovereignty, transparency, and operational resilience within EU jurisdiction.
ISG report: European firms are adopting sovereign clouds as core infrastructure, not just for compliance.
Drivers include EU regulations, geopolitical risk, AI adoption, and demand for data sovereignty.
Enterprises prioritize EU-based infrastructure, customer-managed keys, and transparent pricing.
Sovereign AI infrastructure is in high demand for training and inference under EU jurisdiction.
Providers are embedding zero-trust architectures and automated compliance tooling.
Leaders named in the report include AWS, Google, Microsoft, Deutsche Telekom, and OVHcloud.
The report identifies a significant strategic shift, with sovereign cloud becoming integral to enterprise IT strategy. Matthias Paletta, director at ISG, noted, “European enterprises are reclassifying sovereign cloud from a compliance safeguard to core infrastructure.” This expansion supports a wider range of workloads, services, and especially AI platforms that must operate under European legal and regulatory frameworks, reshaping the competitive landscape for both regional and global providers.
Key selection criteria for enterprises now include regulatory alignment, operational resilience, and commercial transparency. There is a heightened focus on multizone EU-based infrastructure, customer-managed encryption keys, and clear pricing models. The accelerating adoption of AI is a major catalyst, driving demand for sovereign AI infrastructure to ensure training and inference occur within EU jurisdiction. Providers are responding by integrating zero-trust security, compliance automation, and real-time threat detection into their offerings.
To mitigate risks and assert digital autonomy, organizations are deploying advanced measures such as air-gapped environments, external key management, and confidential computing. Procurement is increasingly favoring European-owned providers to tighten governance control and reduce legal exposure to entities outside the EU. Meenakshi Srivastava, lead analyst at ISG, stated that while regulations drive current adoption, future expectations will include open-source interoperability and sustainability compliance.
This trend underscores a fundamental evolution in the European cloud market, where sovereignty is becoming a non-negotiable requirement for digital transformation, fundamentally altering how enterprises architect their technology foundations for security, compliance, and innovation.
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