'Close to impossible' for Europe to escape clutches of US hyperscalers

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European organizations wanting to break free of American cloud operators may find their hopes dashed, according to industry analysts, for a number of reasons including a sheer lack of datacenter capacity.

[I]f everybody in Europe was to move to the public cloud, it would still take about 20 years (based on historical build rates) to build enough capacity to meet the demand as it stands today ...

Recent events in Washington have focused minds on this side of the Atlantic, and many have wondered if their data is safe, perhaps expressing a desire to be less dependent on US mega corporations and make use of locally owned and operated cloud resources instead.

A recent report in Politico claims that the European Commission is set to admit this goal is unrealistic, a view that will be outlined in an International Digital Strategy for Europe, due to be published in early June.

When it comes to the big players like Amazon Web Services (AWS), Microsoft Azure and Google Cloud, "decoupling is unrealistic and cooperation will remain significant across the technological value chain," a draft of the EC document states, according to Politico.

The European Commission would not confirm or deny these claims - a spokesperson told The Register that it does not comment on leaked documents.

Yet industry experts we quizzed seem to largely agree that Europe won't be able to avoid dominant American vendors: AWS, Microsoft and Google account for more than 70 percent market share of the public cloud in Europe, for example.

"In theory, there's nothing stopping European companies from repatriating their data and applications to European clouds, or even bringing everything back on-premise," said Steve Brazier, former CEO at Canalys and now a Fellow at Informa.

"But in practice, it's close to impossible. The barriers are significant, and they stack up quickly," he told us.

Part of the problem is that European engineers have honed their skills on the American hyperscalers, optimizing for cost and performance on their architectures.

"Learning a new platform from scratch isn't just daunting, it's deeply unappealing - most would rather get a root canal than start over," Brazier added.

Another issue is just one of sheer capacity represented by the all the corporate data and apps out there, not just onboarded by the big three over years, but the volume still sitting in enterprise datacenters.

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"One of the things that I always point out is that if everybody in Europe was to move to the public cloud, it would still take about 20 years (based on historical build rates) to build enough capacity to meet the demand as it stands today for public cloud infrastructure services, let alone what capacity will be needed with new IT and GenAI+ type workloads," said IDC Senior Research Director Andrew Buss.

In response to a recent story about Microsoft making new European "digital commitments," because it was twitchy about potential loss of business, Buss told us that it was a recognition on Redmond's part that sovereignty and control of data and applications is becoming vitally important.

"I think it is was less about them being spooked over companies wanting to ditch US based hyperscalers (this would be very painful, expensive and slow) but more about lessening the potential impacts, long term, of not having local infrastructure to meet local needs for both sovereignty as well as delivery," he said.

However, it appears the chief pitfalls when moving your workloads from those of a hyperscaler to a more local or sovereign cloud are technical barriers and the scale of operations.

The big three have been maturing their platforms for well over a decade, and offer a range of services beyond just running user code inside a virtual machine or container. They've built globe-spanning networks of datacenters to serve customers with a presence in multiple countries.

"The big three (and increasingly Oracle) are the only ones with a truly comprehensive range of cloud services and a European network and service footprint that allows them to address the full range of European clients. Beyond that, most other cloud providers are limited to a specific service or geographic niche," said John Dinsdale, Chief Analyst & Research Director at Synergy Research Group.

"For multinational companies that have a broad range of cloud needs and who don't want to deal with multiple suppliers, the options are very limited," he told us.

"It is also worth noting that some of the local options are themselves partners with Amazon, Microsoft or Google, so even if a company isn't dealing with the big three directly, they may well be providing services in the background."

"The truth is that when cloud technology and the associated market were in their infancy and then developing rapidly, no European tech companies were able to compete; or they chose not to due to other priorities. Playing catchup now is an extremely challenging proposition," Dinsdale said.

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Gartner told us the global cloud market is highly concentrated, with the US-based giants representing approximately 84 percent of the business.

"On top of that, most regional cloud providers are not on par with global hyperscalers in both execution and vision. Therefore, completely eliminating dependency on global cloud hyperscalers without losing significant functionalities is, at present, nearly impossible," said advisory director Joe Rogus.

"We recommend carefully considering your digital sovereignty requirements so that you can choose the right solution or mix of solutions. For example, utilizing distributed or sovereign cloud offerings (supported by global hyperscaler technologies) are a good way of balancing reduced risk while maintaining the ability to utilize advanced features and functionalities," he said.

Brazier identifies additional reasons why moving off the big clouds, perhaps back to on-prem, might be tricky.

"The rapid migration to cloud came at a cost - many organizations hollowed out their internal IT capabilities. The people who knew how to run infrastructure in-house have retired or retrained. Rebuilding that in-house expertise now would be extremely difficult," he said.

"Then there are egress fees: once your data is in the cloud, getting it out can be prohibitively expensive. It's a classic vendor lock-in," he added.

This was challenged by the cloud players themselves during hearings by the UK's Competition and Markets Authority (CMA) last year into whether the cloud market was functioning as well as it should (it concluded it isn't).

Microsoft insisted that egress fees were not a significant issue for customers, while AWS said that any attempt to restrict these would result in less predictability in its revenue and affect how it invests for the future.

Yet the new flavor of geopolitics is changing the risk assessment many organizations and governments undertake on the delivery of IT services, according to Omdia chief analyst Roy Illsley.

"In Western Europe it was very much a binary choice: Chinese or US hyperscalers, with the US being the supplier of choice. However, the Trump administration has impacted the longer-term strategy on risk," he said.

"I have heard major global European companies talking about having a dual-supply strategy, which many have already, but what is new is that where possible, these should be geographic as well. For instance, Red Hat and SUSE, both Linux operating systems, but one from a US company the other German," Illsey told The Register.

Adopting a strategy such as this will take time and requires there to be alternatives in Europe, so we should not expect to see a sudden mass exodus by businesses from the likes of AWS, Google and Azure.

"The truth is migration is hard and costly, so it is more likely that new workloads will be considered with a greater scrutiny on where they should run, which in the medium term may mean selecting a sovereign cloud option from a US vendor," he said.

"But even if the next US president is more like most previous ones, the fact that Americans might elect another Trump is now a reality that organizations need to have mitigation plans for," Ilsley warned. ®

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