Risk, Resilience, and a EUR 260B Opportunity

Copyright 2026, Bernd Schoner

January 2026

Abstract. Europe’s dependence on U.S.-controlled cloud and SaaS infrastructure has become a strategic risk for European governments and for businesses on both sides of the Atlantic. This paper frames “European digital independence” as (1) jurisdictional resilience (reduced exposure to extraterritorial access and coercive legal orders), (2) operational continuity (ability to keep critical services running if a foreign vendor is compelled-or chooses-to restrict service), and (3) economic value retention (capturing a larger share of Europe’s software and cloud spend within European-controlled ecosystems). Quantitatively, EU institutional research finds that U.S. Hyperscalers (AWS, Microsoft Azure, and Google Cloud) account for about 70% of the EU cloud infrastructure market [R1] and that roughly 80% of EU corporate spending on software and cloud flows to U.S. vendors [R1]. The same study estimates that European businesses spend around EUR 264 billion annually on U.S.-based cloud infrastructure and software (~1.5% of EU GDP) [R2] and that the EU imports over EUR 300 billion in digital services from the U.S. each year, creating a U.S. surplus in this sector estimated at over EUR 100 billion [R2]. These figures imply that the opportunity-and the exposure-is measured in hundreds of billions of euros per year.

 1. Introduction: why “digital independence” is a board-level AND policy-level issue

1.1 The CLOUD Act and extraterritorial reach

The U.S. CLOUD Act clarified that U.S.-based providers must preserve and disclose data within their possession, custody, or control, regardless of where the data is stored. This principle is reflected both in the CLOUD Act text and in U.S. Code (18 U.S.C. § 2713).

For European customers, the key risk is not merely “data in the U.S.” but vendor control: if the provider is subject to U.S. jurisdiction and can technically access or produce the data (or metadata), then location alone may not eliminate legal exposure.

1.2 Policies, geopolitics, and executive power

Even absent armed conflict, transatlantic relations can face sharp tension over trade, sanctions, competition policy, defense alignment, or industrial strategy. U.S. presidents have broad emergency authorities to regulate commerce after declaring a national emergency under IEEPA (International Emergency Economic Powers Act), which is frequently cited as a flexible instrument for sanctions and transaction restrictions.

In practice, this means that cloud and SaaS services can become entangled in geopolitical measures—either directly (sanctions) or indirectly (export controls, compliance constraints, pressure campaigns).

1.3 U.S. dominance in cloud and SaaS

European dependence is empirically large. A 2025 European Parliament “At a Glance” brief summarizing a larger study states [R2] states that

• Cloud infrastructure: AWS, Microsoft Azure, and Google Cloud hold about 70% of the EU market.

• Enterprise software: ~80% of EU corporate spending on software and cloud flows to U.S. vendors.

• “Android and iOS command virtually 100% of mobile OS usage; Windows holds 73% of desktop OS share, while iOS has most of the rest; Google Search exceeds 89% of web search” [R1]

The European Parliament study also estimates that European businesses spend ~EUR 264 billion annually on U.S.-based cloud infrastructure and software [R2] which provides a strong “top-line” figure for the broader software + cloud dependency .

The dependency is reinforced by vendor lock-in (proprietary APIs, managed services, identity stacks, data gravity) and network effects (ecosystem integration, marketplace procurement, skills pipelines).

1.4 Why Europe—and the rest of the world—must act

For Europe, digital independence is about:

• GDPR and fundamental rights compliance

• critical infrastructure resilience

• reducing strategic leverage that a foreign government can exercise over European public services and enterprises

For many non-EU countries, the same problem generalizes to “technical independence from the U.S. and China”—including the ability to

• protect data from major powers’ legal and intelligence reach

• continue operations if a dominant vendor withdraws services or is forced to do so.

Digital independence, in this paper, is therefore defined as the ability to operate, remain compliant, and recover—without requiring the continued goodwill or uninterrupted service of a foreign-controlled vendor.

2. EU Market estimates: what is at stake?

2.1 Methodology notes

Public, EU-wide compute capacity data is not reported in a single unified statistical series (especially once on-prem and private data centers are included). This section therefore uses:

• spend-based measures (more consistently published)

• operational data center capacity metrics (MW/GW IT load) from major real estate / market analysts

• market share estimates from respected cloud market researchers and EU institutional sources

Where EU-only splits are required but sources report “Europe” or “EMEA,” assumptions are provided explicitly.

2.2 How much cloud computing is used by EU customers?

Adoption (enterprises)

Eurostat reports 45.2% of EU enterprises bought cloud computing services in 2023, with many purchasing “sophisticated” cloud services (e.g., security applications, database hosting, computing platforms for app dev/test/deploy). This indicates cloud has crossed into mainstream enterprise operations and is no longer peripheral IT.[R4]

Spend (public cloud services)

IDC reports public cloud services spending in Europe will total about $221B in 2025 (Europe-wide). For EU-only, a reasonable spend proxy is ~75–85% of Europe’s total, based on the EU’s share of European economic activity and the concentration of cloud consumption in large EU economies [R5]. That suggests an EU27 order-of-magnitude of:

• EU public cloud services (2025): ~$165B–$190B

The band is wide because the IDC figure is “Europe” (not explicitly EU27), and the EU27 share depends on how “Europe” is defined in that dataset.

Cloud infrastructure services market (IaaS/PaaS)

Synergy Research reports that the European cloud infrastructure services market reached €61B in 2024 [R3], and that European providers’ share is about 15% (with AWS/Microsoft/Google as the main beneficiaries), down from 29% in 2017. This is consistent with multiple secondary write-ups referencing the same Synergy numbers. [R3]

Interpretation: the “€61B” is infrastructure services (IaaS/PaaS), while the IDC “$221B” is public cloud services (which typically includes SaaS as well). The two are not contradictory; they measure different slices.

2.3 How much server/data-center capacity exists in (EU) Europe—and who controls it?

Operational capacity in EMEA markets (a proxy for Europe’s digital “factory floor”)

Cushman & Wakefield reports that operational capacity of EMEA data center markets rose to 10.3GW by H1 2025, with substantial capacity under construction and planned.
A Reuters summary of a Savills report (EMEA) reports live data center capacity rose 12% to 11,400MW, and total contracted capacity increased to 14,500MW (EMEA framing).

In data-center market reporting, capacity is usually expressed as megawatts (MW) or gigawatts (GW) of “IT load.” IT load is the electrical power available to (and typically actually used by) servers, storage, and network equipment in the data halls; it is a practical proxy for compute/storage scale because higher IT load generally supports more installed hardware.

Operational capacity (10.3GW) means capacity already built and delivering power to IT equipment in the tracked markets; “under construction” (2.6GW) is capacity being built but not yet operational; “in planning” represents projects at earlier stages that may still be delayed or cancelled (11.5GW) [R6]. The Reuters/Savills framing distinguishes “live” (operational) capacity from “contracted” capacity (capacity reserved/committed by customers via pre-leases or contracts, which can exceed live supply because it reflects future demand and pipeline) [R7].

Important constraint: these figures are EMEA and/or “tracked markets,” and do not equal “all private server rooms and on-prem capacity.” They are best interpreted as the commercial hyperscale/colocation capacity base that underpins cloud and major enterprise deployments.

EU-only operational capacity (estimated range)

Given EMEA includes Middle East and Africa, and many “tracked market” dashboards include the UK, an EU27-only cut is not directly stated in these sources. A conservative, transparent approach is to state:

• EU27 share of “EMEA tracked operational capacity” is likely the majority, but not 100%.

• As an order-of-magnitude, ~60–75% is a plausible range given the concentration of hyperscale build-outs in major European hubs (e.g., Frankfurt, Paris, Amsterdam, Dublin, Nordics).

Applying that to 10.3GW implies:

• EU27 commercial operational capacity (proxy): ~6.2–7.7GW (IT load)

Capacity “controlled” by U.S. vs EU firms (proxy via cloud infrastructure market shares)

Because “control” is a legal/jurisdictional concept, the cleanest proxy is the share of cloud infrastructure services and enterprise cloud spend going to U.S.-controlled Hyperscalers.

• EU Parliament brief: U.S. Hyperscalers hold ~70% of EU cloud infrastructure market.

• Synergy for Europe: European providers ~15% of European cloud market; AWS/Microsoft/Google dominate the rest [R1].

A reasonable capacity-control inference: Hyperscalers’ share of infrastructure spend tends to correlate with their share of hyperscale capacity deployment. Therefore, for the hyperscale-cloud portion of EU capacity, an approximate split is:

• U.S.-controlled Hyperscalers (AWS/Microsoft/Google, plus other U.S. clouds): ~70–80%

• EU-controlled providers: ~13–20%

• Rest-of-world: ~0–10%

Where EU customer workloads run

For IaaS/PaaS, Hyperscalers generally allow customers to choose EU Regions and state that customer data can remain in the selected Region if customers architect for it (for example, AWS notes customers can choose EU Regions and that customer data stays in the AWS Region selected) [R17]. However, for SaaS and some managed services, “data residency” is usually scoped: vendors may keep primary content data at rest in-region while still transferring limited subsets of customer data (e.g., diagnostics, security telemetry, support data, or service-specific data) outside the region by design.

Microsoft’s EU Data Boundary documentation explicitly lists services that continue to transfer a limited amount of Customer Data (or pseudonymized data) out of the EU boundary as part of how those services function [R10]. Google Workspace’s data region controls also apply to defined covered data and services, with policies and reporting for data-at-rest and (in some editions) processing; this implies that coverage is not universal across all data types and services [R11]. Therefore, it would be inaccurate to assume that “all EU spend on U.S. cloud/SaaS equals workloads running only on EU servers.” In practice, many deployments are EU-hosted for primary workloads, but cross-border data handling can still occur through global service components, support operations, or by-design transfers.

Capacity (GW) versus market spent

GW/MW figures are a supply-side measure of installed compute “factory capacity” (power available to IT equipment in data centers), while cloud/SaaS market size is a demand-side revenue measure that includes software value, managed services, support, and margins. Revenue is not proportional to GW/MW because utilization rates, hardware density, workload mix (AI vs storage vs general compute), and pricing power vary widely.

Still, market share in IaaS/PaaS revenue tends to correlate with Hyperscalers’ share of hyperscale capacity build-out: providers with higher revenue share typically deploy and contract more GW/MW over time, but the mapping is approximate and becomes weaker as the measurement includes SaaS (which can generate high revenue with comparatively less incremental GW/MW).

Summary and statistical limitations

Mapping GW to € spend is not 1:1. The Savills/Reuters figure of 11,400 MW “live data center capacity” is a power capacity metric (installed IT load) across EMEA, spanning many workloads beyond public cloud, including enterprise colocation and other hosted services. By contrast, IDC-style totals such as $221B European public cloud services bundle SaaS + IaaS + PaaS, where much of the spend is application value and software subscription economics, not raw compute power. A closer comparator is cloud infrastructure services (IaaS/PaaS): Synergy estimates Europe’s cloud infrastructure services market at ~€61B in 2024. A rough ratio suggests multi-billion-euro annual revenues per gigawatt of installed IT load, but the relationship is approximate because the revenue and capacity scopes differ (Europe vs EMEA; cloud-infra vs all data-center workloads; capacity vs utilization). Some portion of EU SaaS/cloud spend can also rely on non-EU capacity (e.g., global control planes, telemetry, support operations, redundancy), which is one reason “EU region” alone is not sufficient to guarantee digital independence.

2.4 EU B2B SaaS spend: how much is contracted from U.S. vs EU vendors?

A Europe-wide market research estimate puts Europe SaaS market revenue at ~$95.15B in 2024.
For EU27, a cautious, GDP-weighted cut implies:

• EU27 B2B SaaS (2024): ~$70B–$85B (range; “Europe” vs “EU” definitions differ)

For vendor-origin split, the most policy-relevant quantitative statement comes from the European Parliament brief:

• ~80% of EU corporate spending on software and cloud flows to U.S. vendors.

This includes enterprise software and cloud; it is not SaaS-only, but it strongly implies that the U.S. share of B2B SaaS is very large.

Working estimate (EU27 B2B SaaS, vendor origin):

• U.S. vendors: ~70–85%

• EU vendors: ~10–25%

• Rest of world: ~0–10%

Reasoning: EU has one major global-scale enterprise software champion—SAP—plus meaningful regional SaaS players, but the top horizontal SaaS layers are heavily U.S.-dominated, aligning with the Parliament’s ~80% aggregate claim.

2.5 Summary: economic output at stake

The European Parliament brief (summarizing the full study) states:

• The EU digital trade deficit exceeds €100B annually, and roughly €264B per year (~1.5% of EU GDP) flows to foreign cloud and software vendors.

That “€264B/year” is a powerful top-line “what’s at stake” figure because it captures the outflow dimension: money paid for cloud/software value creation occurring primarily outside Europe.

Implication: even modest “repatriation” of this spend—through EU-controlled sovereign cloud, EU SaaS, and enforceable portability—represents a very large industrial opportunity (and a large strategic risk if left unaddressed).

3. Threat classification: realistic scenarios causing European exposure

This section focuses on three major thread categories related to digital dependency on the US. The key point is that Europe can face serious disruption without outright war, through legal conflict, sanctions, regulatory incompatibility, political pressure, misalignment of micro or macroeconomic interests between the continents, or concentrated vendor dependency.

Category 1: Access to European customer data by U.S. cloud providers (CLOUD Act / related powers such as Presidential Executive Action)

Scenario 1A: Lawful access request + secrecy constraints collide with EU compliance
A European firm stores regulated data in an EU region with a U.S. Hyperscaler. A U.S. lawful order or presidential order demands access to certain content/metadata under “possession, custody, or control” logic.

If the provider is barred from disclosure (gag/secrecy order), the EU customer may be unable to:

• notify a regulator, or

• assess legality under GDPR / sectoral rules, or

• prove compliance and auditability

Key tension: this is a structural legal mismatch: EU expects demonstrable lawful basis, minimization, and transparency; U.S. orders may impose secrecy.

Scenario 1B: Data access via “control path,” not storage location
Even with EU data residency, access can occur through:

• privileged administrative interfaces

• cross-border support processes

• remote management planes

• vendor-held keys or key escrow designs

Hence, “EU region” ≠ “EU legal control.” The risk is highest when the provider can technically decrypt or produce data.

Category 2: Service termination or restriction of U.S. cloud services (legal order / sanctions / emergency action)

Scenario 2A: Sanctions or IEEPA-driven restrictions cause service suspension
Under IEEPA, a U.S. president may exercise broad authority to regulate commerce following a declared national emergency.

Even if Europe is not the target, Europe can be collateral damage if measures affect:

• specific countries, entities, sectors, or technologies

• exports of advanced computing capabilities

• specific categories of cloud services (e.g., AI training, encryption tech, high-performance compute)

Scenario 2B: Export controls constrain advanced computing services
U.S. export controls on advanced computing and supercomputing have expanded in recent years. While primarily directed at certain end uses and geographies, they illustrate the mechanism by which compute access can become regulated.

Europe’s vulnerability here is not only that it will be directly sanctioned like an adversary, but that cloud-delivered capabilities (AI accelerators, model training, specialized services) can become subject to rapid policy shifts.

Scenario 2C: Political or regulatory standoff creates a “service degrade” rather than a shutdown
A very realistic non-war scenario is gradual degradation:

• delayed support response times

• refusal to provide certain managed services in EU jurisdictions

• de-scoping of features (e.g., sensitive analytics, specific security capabilities)

• increased compliance overhead and audits that raise cost and friction

These outcomes can still be existential for regulated sectors if they break certification, auditability, or continuity.

Category 3: U.S. SaaS providers — service termination or forced data handling (legal order / sanctions / policy conflict)

Scenario 3A: Identity/control-plane lock-in becomes the real kill switch
Many enterprises treat productivity suites, identity, endpoint management, and collaboration platforms as “plumbing.” If a SaaS provider suspends a tenant, an enterprise can lose:

• identity authentication (SSO), access tokens

• email and collaboration continuity

• compliance archives (eDiscovery, retention)

• device management policies

Impact: operations halt even if core business apps are elsewhere.

Scenario 3B: Regulatory invalidation of a transfer framework triggers forced migrations
EU–U.S. data transfer mechanisms have historically been unstable. The EU–U.S. Data Privacy Framework adequacy decision entered into force in July 2023 and is a key legal bridge for transatlantic flows.

But legal challenges and shifting judicial outcomes create ongoing uncertainty; Reuters reported the General Court upheld the framework in September 2025, which underscores both its importance and its contested nature [Reuters].

A future invalidation (or sectoral regulator pressure) could force rapid re-architecting, because of fundamental rights jurisprudence and surveillance-law concerns.

Scenario 3C: Contractual conflict between EU procurement sovereignty requirements and U.S. vendor terms
As EU member states tighten sovereignty requirements (e.g., national “trusted cloud” schemes), enterprises may find that U.S. vendor standard terms cannot meet:

• local operator control

• independent governance

• “immunity” from extraterritorial laws (as demanded by some certifications)

This can trigger forced vendor switching, feature loss, or dual-stack complexity.

4. Technical and legal mitigation: how to reduce dependency while retaining capability

A useful framing is that mitigation must cover three layers simultaneously:

1. Cryptographic sovereignty: who can technically access plaintext?

2. Operational sovereignty: who can run the service day-to-day under EU control?

3. Jurisdictional sovereignty: which courts can compel the operator/vendor?

4.1 Technical mechanisms (practical and auditable)

A. End-to-end / client-side encryption for crown-jewel data

• Encrypt data before it enters a cloud/SaaS boundary.

• Ensure the provider never possesses keys (or possesses only partial keys).

This reduces the practical risk that a provider can comply with compelled disclosure in plaintext form, though metadata and traffic patterns may remain exposed.

B. Hold-your-own-key (HYOK) and split-key schemes

Hold Your Own Key requires that the customer (or an EU-controlled key authority) generates and controls encryption keys so the cloud/SaaS provider cannot decrypt content unilaterally. Threshold / split-key schemes implement cryptographic designs where no single party holds the full decryption capability; for example, two independent EU entities (or EU entity + customer) must cooperate to decrypt.

• Keys generated and controlled by an EU entity; provider has no unilateral decrypt capability.

• “Split knowledge” or dual control (e.g., threshold cryptography) can require multiple parties to cooperate for decryption.

C. Confidential computing with verifiable attestation

TEE = Trusted Execution Environment requires a hardware-backed secure enclave that isolates code and data while in use (in memory), reducing the ability of the cloud operator or malware on the host to inspect plaintext. Attestation requires a cryptographic proof (often hardware-signed) that a specific approved software stack is running inside the enclave, so customers can verify what code is processing sensitive data before releasing secrets.

Usage of hardware-backed enclaves (e.g., TEEs) enables workload processing data while encrypted in memory, with attestation proving the code and environment. This is not a silver bullet, but it strengthens claims of “operator cannot see plaintext,” especially when combined with independent audit.

D. Portability-by-design

• Standardized data export, open formats, documented APIs

• Regular “exit drills” (restore from backups to a second provider)

• Infrastructure-as-code and reproducible deployment pipelines
  Digital independence is not a statement; it’s a tested capability.

E. Zero-trust identity and EU-controlled identity anchors

Zero-trust is a security architecture principle that treats every access request as untrusted by default, even if it originates “inside” the network. Instead of relying on a trusted corporate perimeter, zero trust enforces continuous verification of identity, device health, and context (who/what/where), and grants only the minimum privileges needed (“least privilege”). For digital independence, the key idea is to avoid a single SaaS vendor becoming the one identity control plane that can disable your entire business.

• Avoid a single SaaS vendor being the identity root-of-trust for everything.

“Break-glass” procedures are emergency access mechanisms (for example, offline admin credentials stored in a controlled vault, or an alternative EU-controlled identity path) that allow an organization to regain access during an outage, a tenant lockout, or a geopolitical/legal disruption.

• Use EU-controlled identity providers and federation, with break-glass procedures.

4.2 Legal and governance mechanisms enabling “sovereign” operation of U.S. technology in Europe

Europe does not need to exclude U.S. technology to achieve digital sovereignty. What it requires are legal, governance, and technical structures that allow European customers to use world-class technology while ensuring that operation, data control, and continuity sit under EU law, and while reducing the ability of a non-EU vendor to act as a single-point “kill switch.” A sober starting point is essential: if a U.S. provider directly operates a service and receives a lawful U.S. order requiring service termination or prohibiting certain transactions, that provider may be compelled to comply. A European “sovereign cloud” should therefore not be framed as a claim that U.S. law can never apply; it should be understood as a governance and control redesign that reallocates operational authority and technical control to Europe.

In practice, credible sovereign models aim to achieve two outcomes simultaneously: (a) day-to-day operation and customer service are performed by an EU-controlled operator subject to EU law, and (b) the U.S. technology provider is structurally unable—or contractually barred—from unilaterally disrupting service for European customers. Achieving this requires a combination of corporate governance, operational separation, cryptographic control, and legally enforceable continuity rights.

A. EU-operated “National Partner Cloud” models

One widely discussed pattern is the EU-operated national partner cloud, in which a U.S. technology stack is delivered through an independently owned and operated European entity. Microsoft’s “National Partner Cloud” concept illustrates this approach. In such models, services are operated by a locally governed company that owns or controls the production environment, employs EU-based staff for privileged roles, and provides customer support under EU jurisdiction. Examples frequently cited in public discussions include Bleu in France and Delos Cloud in Germany [Microsoft Blog].

The key design feature is operational control rather than branding. The European operator is not merely a reseller; it runs the service, controls access to production systems, and acts as the contractual counterparty for regulated customers. The U.S. vendor supplies technology, updates, and engineering support, but does not sit in the operational command chain. This structure materially reduces the risk that a foreign parent company can directly terminate service, even if it becomes legally constrained in its own jurisdiction.

B. Hyperscaler sovereign cloud with EU operational autonomy

A second pattern retains a closer relationship to the Hyperscaler while attempting to introduce explicit European operational autonomy. AWS’s European Sovereign Cloud is positioned as an example of this approach. AWS describes it as “independent,” designed for data residency and operational autonomy, with EU-based operations, governance controls, and no critical dependencies on non-EU infrastructure [Amazon Blog].

The rigorous framing here is important. These designs do not claim that U.S. law is irrelevant to a U.S.-headquartered company. Rather, the intent is to restructure control so that the Hyperscaler is not the single point of operational failure. In practice, this requires:

1. an EU operator that owns or controls the sovereign environment and performs privileged operations under EU law, including incident response and customer support;

2. EU-controlled cryptographic keys for sensitive workloads, so that the vendor cannot unilaterally access or decrypt protected data; and

3. legally enforceable continuity rights—escrow, step-in licenses, and rights to use necessary software components—that allow the EU operator to keep services running even if the U.S. vendor must cease providing updates or direct operational support.

AWS’s published sovereign cloud materials emphasize independent governance, EU-based operations, and the avoidance of critical non-EU dependencies. These measures significantly reduce the probability of an immediate shutdown, but the residual risk cannot be eliminated without genuine operational independence combined with continuity licensing.

C. “Trusted cloud” models anchored in certification (e.g., SecNumCloud)

A third branch of the design space anchors sovereignty claims in stringent certification regimes. In Europe, France’s SecNumCloud qualification under ANSSI is the most frequently cited example. SecNumCloud translates high-level sovereignty and security requirements into concrete, testable controls and recurring assessments. This is critical because it moves sovereignty from marketing language into enforceable operational obligations.

The Thales–Google Cloud partnership, marketed under the S3NS brand, illustrates this approach. S3NS positions its offerings as a trusted or sovereign cloud for sensitive workloads, operated by a European defense and security company with deep experience in regulated environments. Thales has publicly described SecNumCloud qualification milestones for an S3NS offering and explicitly frames the model as addressing exposure to extraterritorial laws. Conceptually, the S3NS architecture reflects the broader trusted-cloud pattern: a locally governed operator; strong segregation of privileged access; EU-based security operations; EU-controlled cryptographic material; and certification-driven audits that make independence claims verifiable rather than aspirational [R15][R16].

D. Core governance ingredients across sovereign models

Across national partner clouds, Hyperscaler sovereign variants, and certified trusted clouds, a common set of governance ingredients appears repeatedly:

1. EU legal entity as operator (not just a reseller). The operating entity must have real authority over production access, incident response, and customer support. Sovereignty cannot be achieved if the decisive operational levers remain outside the EU.

2. EU staffing for sensitive roles. Privileged functions—operations, security administration, data-center access approvals, incident commanders—are typically required to be staffed and managed under EU jurisdiction to avoid global support functions becoming the de facto control plane.

3. Independent governance with “golden share” or veto rights. A golden share is a special class of share, or equivalent contractual right, held by an EU public authority or trusted EU stakeholder that grants veto power over specific strategic decisions, such as transfer of control, changes to security governance, relocation of critical operations, or outsourcing of sensitive roles. Its purpose is to prevent unilateral structural changes after customers have committed.

4. EU-only control of cryptographic material for regulated workloads. Sovereignty becomes materially stronger when encryption keys and key-management processes are controlled by the EU operator or customer, and when privileged access paths do not allow a foreign vendor to reconstruct keys.

5. EU-located SOC and incident response authority. A Security Operations Center (SOC) monitors events, detects intrusions, coordinates response, and preserves evidence. For sovereignty, the decisive factor is that the SOC and response authority sit under EU law rather than a global “follow-the-sun” model.

6. Auditability and certification alignment. Auditability requires verifiable evidence—logs, access records, key-management procedures, incident response playbooks, penetration-test results, change-management records, and supply-chain attestations. Certification alignment maps this evidence to recognized European regimes (such as SecNumCloud), making sovereignty enforceable through recurring tests and assessments rather than contractual promises alone.

Taken together, these mechanisms define a general business and legal architecture for sovereign operation: a locally controlled operator with genuine operational authority; cryptographic and governance controls that prevent a foreign vendor from acting as a single point kill switch; and continuity rights that allow services to persist even if the foreign vendor must disengage. This architecture represents the most realistic path for Europe to retain access to best-in-class U.S. technology while materially reducing geopolitical and extraterritorial risk.

4.3 Licensing, escrow, and continuity rights

Legal sovereignty claims are not credible unless they are backed by continuity rights that survive vendor withdrawal, forced disengagement, or prolonged outage. In cloud and SaaS, the practical failure mode is not only data exposure; it is loss of operational capability when a provider terminates service, ceases support, or becomes legally constrained from transacting with a customer. “Continuity rights” are therefore the contractual and technical instruments that ensure a European customer (or an EU-designated operator) can keep essential systems running even if the original vendor cannot—whether due to commercial dispute, regulatory conflict, sanctions-like constraints, or a breakdown in geopolitical relations.

The core toolkit is well-established in critical software contracting but is not yet standard in cloud/SaaS at scale. First, source code escrow should be treated as an operational capability, not a paper artifact: the escrow package must include not only source code, but also build instructions, dependency manifests, deployment tooling, infrastructure-as-code, configuration templates, runbooks, admin utilities, and relevant documentation. Second, escrow must be coupled with verification—periodic “rebuild and redeploy” tests by an escrow agent or independent auditor—so the customer can prove that what is deposited is complete and actually runnable. Third, the customer needs a springing license and step-in rights that become effective upon defined triggers. This is the legal mechanism that allows a customer or EU operator to run, maintain, and patch the system within a defined scope (e.g., internal use, specific workloads, EU territory) after escrow release. Fourth, continuity rights should include data escrow and immutable backups under EU control to ensure that even if the vendor disables access, the customer can restore mission-critical datasets and continue business processes. Finally, for the highest-criticality environments, parties should pre-negotiate an “emergency transfer of operations” package: a contractual step-in procedure that specifies the handover of documentation, credentials bootstrap processes, key management handoff, staffing transfer options (where feasible), and the transition responsibilities of an EU continuity operator.

Two principles matter in drafting and implementation. (1) Triggers must be objective. The most defensible release conditions are externally verifiable operational failures or termination events—extended outage beyond SLA, repeated severe SLA breaches, non-renewal or termination notices, failure to deliver critical security patches, or defined cessation/insolvency events. Triggers tied to “government requests” are legally and practically fragile because such events may be subject to secrecy constraints and are not reliably verifiable by the customer. (2) Continuity rights must be paired with operational readiness. Without routine “exit drills” (backup restores, redeployment tests, and operator handover rehearsals), escrow and step-in clauses function like an untested insurance policy: comforting on paper, unreliable in crisis.

4.4 Continuity Rights Insurance (CRI): an enforceable operating model for “exit-ready” sovereignty

To make continuity rights scalable and investable, this paper proposes Continuity Rights Insurance (CRI): a bundled contractual-and-technical package that pre-positions the customer’s right and ability to continue operations and retain data control if a cloud/SaaS provider becomes unavailable, terminates service, or is legally constrained. It functions like “insurance” because it does not merely promise damages after failure; it funds and wires a continuity pathway in advance, with verified artifacts and clear activation logic.

CRI has two pillars: continuity of service and continuity of data control. The first pillar—continuity of service—requires a continuously updated escrow package, periodic verification that the system can be rebuilt and redeployed, and a springing license with step-in rights that allows an EU customer or EU continuity operator to run and maintain the service within defined constraints. A practical CRI implementation also names a pre-contracted EU failover operator (a systems integrator or managed service provider) that is trained on the specific stack and is authorized to execute the transition. The contract should mandate exit drills at a defined cadence (e.g., quarterly for high criticality, semi-annual for standard), including restoring from backups into an EU-controlled environment and demonstrating that the redeployed system meets minimal operational thresholds.

The second pillar—continuity of data control—addresses the most common sovereignty failure mode: even if software can be redeployed, the customer may be unable to recover if it cannot securely access its data or decrypt it. CRI therefore standardizes customer-controlled encryption keys for crown-jewel datasets (hold-your-own-key or client-side encryption), immutable EU-controlled backups (encrypted, with WORM/immutability and retention rules where appropriate), and enforceable portability guarantees (export formats, schema documentation, API access, and maximum export time objectives). For sensitive environments, CRI adds a controlled break-glass procedure: a documented, auditable mechanism that enables the EU customer/operator to assume control without vendor involvement while preserving logs, approvals, and incident evidence.

A CRI package becomes meaningfully stronger when parts of it can be activated automatically. Smart contracts can help—but only when triggers are verifiable. The practical way to automate CRI is not to “trigger on government request” (which is often secret and not machine-verifiable), but to trigger on objective service failure such as “no service for X days.” This requires an oracle design—a trusted mechanism that reports real-world events to the smart contract. A robust pattern is multi-party attestation: independent monitoring nodes (for example 5–9 nodes) run from different networks and jurisdictions, execute agreed test scripts against defined endpoints (API health, authentication, and core transactions), and sign an “outage attestation” if failure persists. The contract triggers only when a threshold is met (e.g., 5-of-7 monitors attest continuously for ≥ 7 days). False triggers are reduced by using multiple checks (DNS resolution, TLS handshake, API call success, transaction confirmation), and by explicitly excluding maintenance windows and agreed force-majeure conditions.

If the condition persists, the smart contract can execute a limited but valuable set of actions: it can release an escrow decryption key share (or a credentials bootstrap bundle) held in encrypted form, it can activate a continuity license token that serves as machine-readable evidence that step-in rights have vested, and it can optionally release an encrypted pointer and integrity hash for the escrow bundle in a way that preserves provenance and prevents tampering. In a typical architecture, key material is split using threshold schemes (e.g., 2-of-3 or 3-of-5), with shares held by the customer, an EU trustee/escrow agent, and possibly the EU continuity operator. After the smart contract releases the required share (or authorization), the EU operator can combine shares, decrypt the escrow package, and redeploy the service in the sovereign environment.

Smart-contract automation should be presented as an accelerator, not a guarantee. Oracles and signers can themselves be pressured if they sit in the wrong jurisdiction; courts can sometimes attempt to enjoin cooperation even if code is autonomous; and many legally important events (such as “stop-service order” or “government request”) are inherently difficult to verify automatically and may be covered by secrecy obligations. For these reasons, CRI should be structured as a tiered blueprint. Tier 1 (deployable now) is escrow + verification + springing licenses + EU-held keys + immutable backups + mandatory exit drills. Tier 2 adds multi-monitor outage attestations and threshold-key releases to reduce activation friction. Tier 3 can integrate confidential computing and attestation so that only an approved EU-operator runtime can unwrap keys, and can automate parts of failover provisioning—useful for large-scale deployments but not required for initial adoption.

In sum, CRI translates “digital independence” from a policy aspiration into an auditable, contract-backed, and operationally rehearsed capability. It is compatible with using U.S. technology, but it changes the default risk profile: European customers are no longer dependent on continuous foreign operational goodwill for business continuity, and sovereignty claims become testable by design through escrow verification, drills, and—where appropriate—automated activation tied to verifiable service failure.

4.5 Smart Contracts for Continuity Rights: key elements and technical implementation

Smart contracts can strengthen continuity rights by making activation fast, auditable, and less dependent on vendor cooperation during the moment of crisis. They do not replace legal agreements; rather, they implement a narrow, enforceable “automation layer” that executes when objective, verifiable trigger conditions are met. The central design constraint is the oracle problem: most real-world events (government requests, legal orders) are not machine-verifiable and may be subject to secrecy. Therefore, smart-contract continuity mechanisms should trigger on operational facts that can be independently measured—most commonly “service unavailability for X days,” repeated SLA breaches, or an issued termination notice that is cryptographically committed.

A practical implementation has four components. (1) On-chain escrow controller. A smart contract holds (or controls access to) digital release artifacts, such as an encrypted escrow bundle pointer (content address/hash), a “continuity license token” proving step-in rights have vested, and one or more encrypted key shares (never raw plaintext keys). (2) Threshold key management. Decryption authority is split using a threshold scheme (e.g., 2-of-3 or 3-of-5): the customer holds one share, an EU trustee/escrow agent holds one share, and a third share is released by the smart contract upon trigger. This ensures the system is not dependent on a single party, and that no party can unilaterally decrypt the escrow materials. (3) Independent monitoring oracles. Multiple independent monitoring nodes (e.g., 5–9) run standardized checks against defined endpoints (DNS/TLS handshake, API health, auth, and one or two “golden-path” transactions). Each node signs a time-stamped attestation if the checks fail. The smart contract triggers only when a threshold of attestations is met continuously for a defined window (e.g., 5-of-7 attestations for ≥ 7 days), with explicit exclusions for declared maintenance windows and agreed force-majeure conditions. (4) Release and audit logic. When the trigger is met, the contract (a) releases the escrow key share (or a token authorizing its retrieval), (b) mints/activates a continuity-rights token tied to the customer’s identity, and (c) emits immutable audit events that can be shown to regulators and counterparties.

Operationally, the EU continuity operator then combines the released share with its own and the customer’s share, decrypts the escrow package, and redeploys into the EU-controlled environment using the escrowed IaC/runbooks. To reduce false positives, the monitoring scripts and endpoints are negotiated upfront, diversified across networks, and require multiple independent checks. Finally, the smart-contract layer must be paired with a traditional contract that defines scope, liability, and carve-outs: smart contracts accelerate activation, but enforceability and lawful compliance still require a conventional legal framework.

5. Opportunity: why this is a winning strategy for EU customers, EU vendors, U.S. vendors, and EU policymakers

5.1 EU customers

EU customers face a simple requirement: they must be able to keep operating and remain compliant under EU law even if a foreign jurisdiction asserts power over their digital stack.

Key benefits of digital independence programs:

• reduced compliance uncertainty

• reduced concentration risk

• improved negotiating leverage

• better resilience planning and incident response

5.2 EU vendors

EU vendors can compete on a differentiated axis: sovereign-by-design capability and verifiable independence—especially for regulated sectors:

• public sector, defense, critical infrastructure

• healthcare and life sciences

• finance and insurance

• industrials (OT/ICS environments)

OT/ICS refers to Operational Technology / Industrial Control Systems: the hardware and software that monitors and controls physical processes (factories, energy grids, water systems, transportation). Unlike typical office IT, OT/ICS outages can stop production lines or create safety hazards. Because OT is increasingly connected to IT networks and cloud analytics, dependence on a foreign-controlled cloud/SaaS layer can become a critical infrastructure continuity risk (not just an IT procurement issue).

Given the scale of outflows cited by the European Parliament brief (≈€264B/year), even partial capture is massive industrial upside.

5.3 U.S. vendors

U.S. vendors have a strong incentive to develop:

• governance models that satisfy sovereignty requirements

• technical architectures that minimize vendor access to customer data

• contractual frameworks that give EU customers operational continuity

Otherwise, Europe’s sovereignty push becomes a gradual market share reallocation (or procurement exclusion) rather than a purely regulatory conversation.

5.4 European policymakers and governments

EU governments seek to reduce U.S. leverage: the ability to compromise, pressure, or disrupt EU business and public affairs. The policy toolkit includes:

• procurement sovereignty requirements

• certification frameworks

• interoperability mandates

• competition policy and anti-lock-in measures

• targeted industrial policy to build EU capacity (cloud, cybersecurity, identity, AI infrastructure)

A key point: policy can create the demand signal that makes sovereign offerings commercially viable, much like defense procurement shapes industrial ecosystems.

6. Specific business models that can come into play

This is where “digital independence” becomes investable and implementable.

6.1 Licensing arrangements (+ escrow + emergency ownership transfer)

Model: U.S. tech provider licenses software stack to an EU operator with:

• strict EU operational control

• EU-only key control for regulated workloads

• escrowed source + build pipelines

• step-in rights and “continuity license” triggers

Where it wins: critical infrastructure, regulated SaaS, national digital services.

6.2 Joint ventures (JV)

Model: EU telecom/system integrator/defense-grade operator forms JV with U.S. provider; JV is EU-controlled and operates the service locally.

Real-world analogs are explicitly cited in sovereign cloud announcements (e.g., Bleu, S3NS) even if the exact governance varies.

6.3 PE buyouts / divestitures of European business units

Model: EU-based PE or strategic buyers acquire:

• European subsidiaries

• European customer contracts and operations

• data centers and operational staff

• IP licenses sufficient to operate independently

This can transform a foreign vendor dependency into a European-controlled capability while preserving the product.

6.4 European “copy-cat” creation (cloud and SaaS)

Model: EU startups/scale-ups replicate high-demand SaaS categories (CRM, collaboration, analytics, observability) with:

• EU-by-default data governance

• open standards and portability

• competitive pricing

• security certifications aligned to EU procurement

The barrier is not only engineering; it is ecosystem (integrations, marketplace gravity, sales channels). That is why public procurement and industrial alliances matter.

6.5 Tech + legal “middleware” to mitigate threats or diversify risk

Model: A new vendor category provides:

• encryption/key control overlays

• sovereign identity brokers

• multi-cloud portability layers

• compliance evidence automation

• “exit drill” automation and disaster recovery to an EU sovereign environment

These are often faster to deploy than “replace Hyperscalers,” and can be adopted incrementally—making them commercially attractive now.

7. Conclusion: From narrative to measurable program

European digital independence should no longer be treated as a political slogan or a defensive reaction to geopolitical anxiety. It should be understood—and executed—as a measurable resilience and continuity program with clear commercial logic. For decision-makers on the vendor side and for investors, this is not primarily a compliance burden; it is a structural market opportunity created by law, geopolitics, and customer demand converging at the same time.

At the enterprise level, digital independence can be operationalized through a straightforward maturity model:

1. Map the dependency surface: identify which critical vendors are subject to which jurisdictions and extraterritorial authorities.

2. Classify workloads by impact: regulated, mission-critical, recoverable, or replaceable—rather than treating all workloads equally.

3. Apply cryptographic sovereignty to crown-jewel data, ensuring that loss of vendor cooperation does not imply loss of data control.

4. Make portability and exit drills routine, not exceptional—test them as seriously as disaster recovery.

5. Adopt EU-operated sovereign offerings where the business impact of disruption justifies deeper separation.

6. Embed continuity rights contractually, through escrow, step-in licenses, and pre-negotiated transfer-of-operations mechanisms.

This framing turns “sovereignty” into something auditable, testable, and budgetable—exactly the form decision-makers require.

7.1 Why vendors should act now

For U.S. and non-EU vendors, the conclusion is clear: sovereign-compatible offerings are becoming a prerequisite for access to Europe’s most valuable customers. Regulated industries, critical infrastructure operators, and the public sector increasingly cannot accept architectures where a foreign vendor remains a single point kill switch. Vendors that proactively design for EU-operated models, continuity licensing, and verifiable operational separation will retain market access and pricing power; those that do not risk slow but irreversible exclusion from the highest-margin segments.

For European vendors, systems integrators, and cloud operators, this moment represents a once-in-a-generation chance to capture strategic layers of the digital stack—not necessarily by rebuilding hyperscale infrastructure, but by owning governance, operations, cryptography, certification, and continuity. The value is in becoming the trusted operator of record, not merely the owner of hardware.

7.2 Why investors and private equity should care

For investors and PE firms, digital sovereignty is not an abstract policy debate; it is a capital allocation theme. Assets that sit at the intersection of cloud operations, regulated services, cybersecurity, key management, compliance automation, escrow, and continuity tooling are poised for sustained demand. Sovereign operating platforms, EU-controlled managed services, and “middleware” that enables continuity rights and portability can command long-term contracts, regulatory stickiness, and defensive cash flows.

Moreover, this is an area where buy-and-build strategies are particularly attractive: combining technical capabilities with governance, certification, and legal machinery creates barriers to entry that are difficult to replicate organically.

7.3 The role of European policy makers: forcing clarity—and doing stakeholders a favor

European policy makers play a decisive role in turning this from a narrative into a market. By mandating minimum continuity, portability, and sovereignty requirements for selected industries—such as finance, healthcare, energy, defense, telecommunications, and core public administration—they can force early alignment and remove ambiguity.

Such mandates would not be anti-market. On the contrary, they would reduce uncertainty for customers, vendors, and investors alike, accelerate standardization, and reward those who invest early in compliant architectures. Far from harming European stakeholders, this would protect them: it would lower systemic risk, prevent chaotic exits in times of crisis, and ensure that critical services remain operable even under geopolitical stress.

The central message

The real opportunity is not simply to “build European clouds.” It is to build—and invest in—the governance structures, cryptographic control, portability mechanisms, certification regimes, and continuity rights that make digital independence real while keeping Europe open to global technology. Those who move first will define the standards, shape procurement rules, and capture the most resilient value pools. Those who wait will find that the market—and the law—has already decided for them.

References

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