Presented by Equinix
Imagine a technology-savvy European financial institution. The business serves customers across the European Union as well as globally, and depends on the seamless movement of data to provide market-leading solutions to its customers. More than ever, that financial institution is fielding pointed questions from regulators and customers alike: Who ultimately controls our data and infrastructure, how is that control exercised, and under whose laws?
The question has grown more urgent this year. There is understandable and rising unease across Europe about the implications of global, sometimes conflicting legal frameworks, and about scenarios in which access could be constrained by decisions made outside the region. In June 2025, testimony to the French Senate confirmed that a major U.S. cloud provider could not guarantee that data held in its French data center regions would never be disclosed to U.S. authorities under certain legal circumstances. While the legal exposure associated with the U.S. CLOUD Act had already been widely discussed across the industry, the testimony brought renewed public attention.
European enterprises are deciding how to respond now, without waiting for harmonized policy, and the choice shapes both their compliance posture and their economic competitiveness.
The scope and scale of the European sovereignty question
The context is significant. The European Commission estimates that the EU relies on non-EU countries for “over 80% of key digital products, services, infrastructure, and intellectual property.” Reducing that dependency and mitigating its risks is a stated priority of economic strategy.
Policy has moved accordingly. In June 2026, the Commission put forward the European Technological Sovereignty Package, a set of measures spanning semiconductors, AI, cloud, and open source, and designed to strengthen the bloc’s digital autonomy. Earlier, in April 2026, the Commission awarded a sovereign cloud contract worth up to €180 million over six years to four European providers, the first time EU institutions subjected cloud procurement to explicit, measured sovereignty criteria. The direction of travel is clear, and enterprises are increasingly evaluating how their cloud and AI strategies fit that trajectory.
The market is moving in step with policy. This year, Gartner estimated European sovereign cloud IaaS spending will grow approximately 83% in 2026, rising from $6.9 billion (in U.S. dollars) in 2025 to a forecasted $12.6 billion. It is projected to reach $23.1 billion by 2027, at which point Europe would surpass North America in sovereign cloud IaaS spending for the first time.
The spending surge mirrors other regions, including the Middle East and Africa (89% forecasted increase in 2026), as well as Gartner’s Mature Asia/Pacific region (87% forecasted rise). Gartner attributes the surge primarily to governments and regulated industries.
Sovereignty lives on a spectrum, not a binary choice
For all the policy momentum, the underlying enterprise decision is best understood as a spectrum of control rather than a single binary choice.
Picture a simple analogy. Sovereignty resembles control over a building more than ownership of the land it sits on. You hold the keys, determine who enters, and maintain a verifiable record, without needing to own every brick. The question organizations face is how much of the stack they must own, and how much they must simply control.
Oxford Economics modeling from May 2026, commissioned by the AI Adoption Initiative, categorizes sovereign AI policies into five levels of restrictiveness, ranging from control-and-choice approaches that retain global providers and apply residency rules to a narrow set of sensitive workloads, to ownership-centric approaches that mandate a fully domestically owned technology stack.
Many European enterprises are unlikely to sit comfortably at either extreme. The binary framing tends to drive over-restriction, and European policymakers are increasingly concerned about the competitiveness implications of excessive restriction.
Understanding the economics of excessive restriction
Restriction adds direct cost in the form of data centers, processors, and talent development. By many estimates, restriction can add a larger indirect cost through delayed adoption and lost productivity.
The Oxford Economics analysis estimates that highly restrictive approaches could delay enterprise AI adoption by approximately three to five years. While the report models the Asia-Pacific region, not Europe, these implications transcend regions.
Consider: duplication of infrastructure and delayed access impose an economic penalty wherever they occur. In a European context, this penalty can compound the fragmentation already present across national jurisdictions, and the cost is measured in slower innovation and higher run-rate. This is the balance Europe is now weighing as it directs an estimated $12.6 billion toward sovereign cloud IaaS in 2026: the cost of control compared with the cost of restrictions.
Where control actually comes from
Control is demonstrated through governance over data, infrastructure, access, operational authority and data flows, rather than through ownership of the full technology stack alone. This emphasis on demonstrable control is becoming increasingly visible in European policy discussions.
In a neutral colocation model, customers retain possession, custody, and control of their data and infrastructure environments; the provider does not operate the customer workload or control the customer data layer. The location of a provider’s headquarters does not automatically determine access to customer data. What matters is how control, custody, operational responsibilities, and legal obligations are structured and enforced.
The Commission’s Cloud Sovereignty Framework reflects this emphasis, assessing the legal, contractual, or technical channels through which non-EU authorities could compel access, with direct reference to the US CLOUD Act.
In models where customers retain operational control of their environments, they may also retain primary responsibility for responding to lawful requests relating to their data. That structure can help give an enterprise a defensible, credible and verifiable answer to the board’s question about who is in control.
The role of neutral infrastructure and a path between extremes
A neutral, interconnected foundation gives European enterprises a path between local-only providers and provider-operated sovereign clouds.
Customers keep ownership and operation of their environments while reaching global clouds, networks, and certified sovereign providers, without lock-in. For a European bank, that means keeping regulated workloads and market data in-region while still reaching cloud-based AI and analytics through private, controlled interconnection.
Organizations can implement network architectures and routing controls designed to support jurisdictional requirements for data in motion, including during resilience and failover scenarios. These controls can help organizations align network behavior with their sovereignty objectives while maintaining responsibility for their overall compliance and governance requirements.
This middle path also addresses a key concern Gartner raises. Even as U.S. hyperscalers launch sovereign offerings for the European market, questions remain about the level of genuine sovereignty those provider-operated services afford. A model in which the customer operates and governs its own environment is able to provide a stronger foundation for addressing those concerns.
The policymaker’s role in matching safeguards to risk and workload
The most effective policies calibrate safeguards to use cases, rather than imposing uniform rules, and European policymakers have a decisive role in getting this balance right.
A productive contribution is to match safeguards to workload sensitivity and to recognize demonstrable customer control as a key basis for compliance. This approach allows European policy to achieve sovereignty while keeping the region economically competitive and at the forefront of global innovation.
The Oxford Economics report makes a comparable case for a managed interdependency model that pairs domestic oversight with continued access to global AI infrastructure. Applied correctly, this would enable member states to set domestic terms while retaining access to leading global capabilities, all while empowering regulated European industries to keep sensitive workloads in jurisdiction while still reaching cloud-based AI.
Independence without isolation
Let’s go back to the example of the European financial institution. By governing the stack rather than owning all of it, the institution can provide regulators and the board a verifiable answer on the question of control, all while preserving the global reach the business depends on.
Sovereignty for Europe is best understood as the agency to govern, achieved through a foundation that keeps control in the customer’s hands while preserving global connectivity. As European policy continues to develop, that discipline is what allows enterprises to remain both compliant and competitive, independent without being isolated.
Bruce Owen is Executive Vice President, Global Markets at Equinix.
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