By Mikael Knutsson, Jonathan Grahl, and Sascha Eglau, Founders of Molnett
Sleepwalking Into Digital Dependency
Europe has been sleepwalking into digital dependency for years. And the numbers tell a stark story: while Europe's cloud market has grown six-fold over the past five years, European providers' share of that market has plummeted from 26% to just 13% with the latest numbers being released in 2022.
Source: BDO, Statista; Synergy Research Group
This isn't mere market competition – it's digital colonisation happening before our eyes.
When we share this term – "digital colonisation" – with people, reactions range from disbelief to discomfort. Good. The situation should make us uncomfortable because the stakes are high.
What We Mean by "Digital Colonisation"
The pivotal shift occurred somewhere when we transitioned from buying American products, such as software licenses and hardware, to subscribing to American services such as cloud infrastructure. This change has fundamentally altered our relationship with technology and our geopolitical reality.
With purchased products, we maintained operational control and sovereignty no matter where they were produced. With subscription services, we've surrendered control over our most critical systems to foreign entities, often without reflecting on what this actually means. Yes, it frequently improved service quality, but at what cost?
Like historical colonisation, digital colonisation follows a similar pattern:
- Create dependency on external resources
- Extract value from the dependent region
- Impose external control over critical infrastructure
- Shape policies, standards and public opinion to maintain the arrangement
Trump's return to the White House with explicit threats of NATO withdrawal has now made this situation impossible to ignore. Suddenly, and as it should, digital infrastructure is moving to the centre of strategic discussions alongside energy and defence. The question is no longer theoretical: What happens to our hospitals, schools, and government services if tensions escalate further and they're running on foreign infrastructure?
To be clear: our concern isn't with the cloud model itself. Concentrating operational expertise in specialised organisations – similar to how we build roads or manage power plants – creates efficiencies that has and already is revolutionising European digitisation and productivity. The question isn't whether cloud computing makes sense (it undoubtedly does), but rather who controls these essential systems and whose interests they prioritise.
Why European Providers Haven't Succeeded (Yet)
Let's be brutally honest about why we're in this situation:
Fragmentation has killed us. While the US built cohesive giants, Europe's cloud landscape remains a patchwork of national champions – OVH and Scaleway in France, Hetzner and more recently StackIt in Germany, and dozens of smaller domestic players. But the problem runs deeper than geography. European providers have historically set their ceiling at domestic, or at best regional success, while American competitors target nothing less than global domination from day one. The difference isn't capability but ambition – continental scale isn't just possible, it's essential.
Europe's critical talent blind-spot. The misconception that cloud competitiveness requires massive data centres persists despite hardware costs dropping to nearly 1/8th since 2016 when AWS started charging $23/TB for S3. The real competitive advantage lies in the software engineers who build sophisticated infrastructure management systems. European companies fundamentally undervalue these specialists, resisting competitive salaries while failing to recognise that this talent - not physical infrastructure - creates the efficiencies that make cloud computing revolutionary. This cultural blind-spot has proven more damaging than any funding gap.
We've failed to differentiate beyond geography. Simply being "EU-based" isn't enough – and here's where the massive opportunity lies - we can and should build digital infrastructure that makes it easier to build software in and for Europe.
But, the Renaissance Has Already Begun
Despite these challenges, we're seeing genuine momentum toward European digital sovereignty for the first time in years. Three catalysts have ignited this renaissance:
Regulatory frameworks have evolved from theory to implementation. The passing of NIS2 and DORA represents a watershed moment – Europe now has binding frameworks that explicitly recognise digital infrastructure as critical to economic security. These aren't mere compliance exercises; they're strategic blueprints for building resilient digital systems with sovereignty at their core.
The EuroStack movement is gaining momentum. This collaborative grassroots initiative to build European alternatives across the entire technology stack – from chips to cloud to AI – demonstrates a newfound willingness to tackle digital sovereignty comprehensively. Rather than isolated efforts, we're seeing coordination between industry, government, and research institutions toward shared digital independence goals.
The AI revolution has heightened data sovereignty awareness. Organisations now recognise that when they adopt US-based AI platforms, they're not just buying a service – they're feeding valuable data into models owned by foreign entities. This realisation has sparked renewed interest in European-controlled alternatives, particularly in sensitive sectors like healthcare and energy.
Everyone Needs To Do Something
Breaking free from digital colonisation requires action at multiple levels:
For governments: Stop writing procurement rules that only hyperscalers can satisfy. Instead, fund local providers by using them. Take risks on European providers, allowing them to grow through real-world deployment. Use NIS2 and DORA frameworks to determine where European sovereignty is non-negotiable.
For European companies: Look local first, especially for critical infrastructure. Use our regulatory frameworks to grade systems according to "harm if this stopped working" and make cloud choices based on that assessment.
For European cloud providers: Stop trying to be AWS-lite. Build opinionated systems where security and compliance are built in by default, not premium add-ons. Create user experiences that make the right choice the easy choice, eliminating the complexity tax that hyperscalers impose. Differentiate by embodying European priorities in your architecture – where data protection isn't just a regulatory checkbox but a foundational principle, and where long-term resilience takes precedence over quarterly growth. Focus initially on high-criticality sectors where sovereignty concerns and these practical benefits create the most compelling case for change.
This Isn't Protectionism – It's Pragmatism
We are not suggesting we build walls around European technology or that every application must run on European infrastructure. What we want is genuine choice and appropriate risk management in a market currently dominated by a handful of foreign giants.
For many organisations and systems, foreign service providers will continue to represent an acceptable risk and even a good business choice. The concern we have is with critical systems where dependency creates unacceptable geopolitical vulnerabilities.
The real question isn't about data privacy policies or terms of service – it's about resilience. What happens if tensions escalate? Will our hospitals still function? Will our children's education be disrupted because their digital tools were suddenly turned off?
These aren't abstract concerns in today's unpredictable world, particularly for the essential services identified in NIS2 and DORA as requiring heightened protection.
The journey has just begun, but the destination is clear: a Europe where businesses can start, scale, and succeed without being forced to rely on foreign-owned and operated infrastructure to maintain market relevance. This isn't just about digital sovereignty – it's about fostering a local market with massive economic and educational gains.
That's the future we at molnett are fighting to build.
In our next article, we'll explore the technical roadmap for building truly European cloud alternatives that can compete with global hyperscalers.