Microsoft outage reignites EU calls for digital sovereignty and local cloud investment

A major global outage affecting Microsoft Outlook and Teams has sharpened calls from European lawmakers for increased investment in local cloud providers, as concerns mount over Europe’s dependence on US tech giants for critical digital infrastructure.

The disruption, which impacted users in 74 countries and territories, exposed the risks of relying on a handful of American firms—Amazon, Microsoft, and Google—that together control approximately 70% of the European cloud market. In contrast, European providers hold just 15%, with the largest, SAP and Deutsche Telekom, each capturing only 2%.

The incident comes as MEPs presented a draft report on the proposed Cloud and AI Development Act, urging public authorities to prioritise purchases from European cloud firms. The report warns that 80% of Europe’s digital infrastructure is sourced from outside the EU, raising concerns about data sovereignty and strategic autonomy.

Recent investments in European technology signal attempts to address this imbalance. France’s Mistral AI reached a valuation of €21 billion after a €3 billion funding round, while STACKIT is building an AI data centre in Brandenburg, Germany, valued at €11 billion. The European Commission also awarded a €180 million sovereign cloud contract to OVHcloud and partners.

However, the dominance of US firms means any move toward local alternatives could increase costs for businesses required to switch providers or adapt to new systems. Critics argue that European cloud companies may struggle to compete at scale, even as policymakers emphasise the benefits of enhanced data security and digital sovereignty.

The proposed Cloud and AI Development Act will be discussed by Parliament committees on 1 December, with a provisional vote expected by mid-March 2027 and a plenary vote in April. The outcome could reshape Europe’s tech landscape and its relationship with global digital infrastructure providers.