Amazon, Microsoft and Google collectively now have over 140 hyperscale data centres operational in Europe
Synergy Research Group has provided a timely reality check to aspiring European cloud providers hoping to take advantage of geopolitical tensions and subsequent sovereign aspirations. Its latest report shows that European service providers more than tripled their local cloud revenues from 2017 to 2024. However, over that same period the European cloud market grew by a factor of six, reaching €61 billion ($70 billion) in 2024.
European cloud providers’ market share dropped from 29% in 2017 to 15% in 2022, though it has stayed relatively constant at around 15% since then. The main beneficiaries of Europe’s market growth have been Amazon, Microsoft and Google. These three global cloud providers now account for 70% of the regional market.
Among the European cloud providers, SAP and Deutsche Telekom are the leaders, each accounting for 2% of the European market. They are followed by OVHcloud, Telecom Italia, Orange and a long list of national and regional players. The balance of the European market is accounted for by smaller US and Asian cloud providers.
“While European cloud providers have been growing and some will no doubt continue to grow, none come remotely close to challenging the big US cloud providers for leadership of European markets,” said Synergy Research chief analyst John Dinsdale. “That train left the station years ago and there were no European companies on it.”
He said Amazon, Microsoft and Google collectively now have over 140 hyperscale data centers operational in Europe. “US cloud providers continue to invest €10 billion every quarter in European capex, most of which comes from the big three,” he said. “European cloud providers need to focus on pockets of opportunity where they have some distinct and sustainable advantages over their US-headquartered competitors.”
KDDI provides sovereign service example
Synergy’s research clearly demonstrates that regardless of the rise of sovereign providers, the US cloud companies will continue to dominate. As a result, operators are looking at how to avoid becoming victims of the CLOUD Act (Clarifying Lawful Overseas Use of Data Act). One new example, outside Europe but applicable, is Japanese operator KDDI’s new “Encrypted Key Management Service for Google Cloud,” launching on 30 July 2025.
By ensuring that encryption keys are managed exclusively by domestic entities – KDDI and its affiliate iret – this service separates data control from the cloud provider, in this case Google Cloud, safeguarding customer data from foreign jurisdictions. It builds on Google Cloud’s Assured Workloads offering, which restricts data storage and processing to within Japan, aligning with local regulatory requirements and customer expectations in sensitive industries such as finance, healthcare, and energy.
This sort of model could prove valuable for European cloud operators grappling with the extraterritorial reach of US legislation, particularly the CLOUD Act. This US law compels American technology companies to provide data stored abroad to US law enforcement if requested, even if doing so would violate local laws. By placing encryption key control in the hands of a local entity and localising data processing environments, European providers could replicate KDDI’s approach to reinforce data sovereignty.
In fact, T‑Systems already provides External Key Management (EKM) alongside its Data Protection as a Service (DPaaS) for AWS users. In this setup, T‑Systems operates the key management infrastructure from its EU‑based data centres, separate from Amazon’s systems, ensuring that encryption keys remain under European control. Customer data stays within European borders and is managed exclusively by EU personnel, reinforcing compliance with GDPR and insulating data from US legal jurisdiction. The caveat with all of these services is that they are yet to be tested in court.
There’s a few other examples in Europe. LuxTrust, in partnership with Thales and DEEP by POST Group, provides a Key Management as a Service (KMaaS) solution based in Luxembourg. This setup ensures that encryption keys and data remain under European control, helping clients comply with EU data protection laws.
In the Google Cloud ecosystem, the S3NS joint venture between Thales and Google delivers trusted cloud services with data localisation in France or the wider EU. Meanwhile, OVHcloud has secured SecNumCloud certification from France’s cybersecurity agency ANSSI, affirming its suitability for public sector and regulated industries.
Breaking down the numbers
Synergy estimates that European cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were €36 billion in the first half of 2025, with full-year 2025 revenues set to grow by around 24% from 2024. Public IaaS and PaaS services account for the bulk of the market and they continue to grow more rapidly that hosted private cloud services.
AI is increasingly driving the market, with growth of 140-160% in generative AI-specific services such as GPUaaS and GenAI PaaS. In Europe the largest cloud markets are the UK and Germany, but the big markets with the highest growth rates are Ireland, Spain and Italy.
“The cloud market is a game of scale where aspiring leaders have to place huge financial bets, must have a long-term view of investments and profitability, must maintain a focused determination to succeed, and must consistently achieve operational excellence. No European companies have come close to that set of criteria and the result is a market where the five leaders are all US companies,” said Dinsdale.
“As US cloud providers continue to invest some €10 billion every quarter in European capex programs, that presents an impossible hill to climb for any companies who wish to seriously challenge their market leadership,” he said. “Consequently European cloud providers have mostly settled into positions of serving local groups of customers that have some specific local needs, sometimes working as partners to the big US cloud providers.”
He concluded: “While many European cloud providers will continue to grow, they are unlikely to move the needle much in terms of overall European market share.”
