European businesses are increasingly raising concerns that the continent’s push for tech sovereignty could hit profits and undermine competitiveness, as many seek to reduce reliance on US technology giants.

Companies across sectors from banking to manufacturing told the Financial Times that their dependence on American software, cloud infrastructure and AI services cannot be unwound quickly without major disruption. Though, for banking, it seems a more nuanced issue (more on that later).

Top executives at European tech and infrastructure companies, including ASML, Ericsson and Capgemini, have cautioned against protectionist reflexes that could raise costs and slow investment.

The warnings coincide with a renewed drive for digital sovereignty in Europe, triggered in part by fears that US foreign policy under Donald Trump could force a “tech decoupling.” The European Commission is set to unveil a “tech sovereignty package” next month, aimed at expanding sovereign cloud solutions and reinforcing Europe’s independence in software.

Some European companies argue that policymakers underestimate the operational complexity and costs of switching away from US platforms.

European businesses, particularly those with global operations, have built their digital systems on US platforms. Moving away requires retraining employees, rewriting software, renegotiating contracts and accepting disruption.

Deutsche Bank highlighted similar concerns in its latest annual report, noting that its partnerships with global technology providers reflected a need to support clients worldwide while also working with companies across Germany, Europe and Asia.

The bank warned that the financial sector’s growing reliance on a small number of global cloud and data-centre providers, mostly US-based, increased concentration and systemic risks.

The push for tech sovereignty is partly motivated by concerns that US companies could be forced to stop providing services to Europe through sanctions, export controls or merely the whim of its country’s President.

In Berlin, some policymakers are considering prioritising the use of foreign AI models rather than building Europe’s own cloud infrastructure, due to the vast investment required.

European Banks Edgy Over Reliance on US Cloud

The concerns were echoed at the Institute of International Finance’s European Summit in Brussels, where European lenders flagged the potential for US cloud providers to cut off services due to geopolitical tensions.

Christoffer Malmer, chief financial officer at Sweden’s SEB, asked: “What happens if we can’t get supplies out of the US for geopolitical reasons?” He questioned Google Cloud’s Mark Rydquist on whether the company would halt services in Europe for political reasons.

Rydquist responded: “Technology owned by US companies doesn’t prohibit companies’ ability to access technology. The real question for Europe’s financial institutions is whether they are re-engineering their businesses quickly enough to win the race to build the most compelling, ‘digital-first’ experience.”

Maurizio Poletto, chief operating officer and chief platform officer at Erste Group, noted that he had been asked by stakeholders about “cloud sovereignty” and said: “If you asked me whether a global company would stop serving Europe, I would have said no. But it is more realistic today.”

Data from the American Society for Engineering Education shows that over half of the EU’s enterprise cloud infrastructure is provided by US hyperscalers, with AWS holding a 31% market share, Microsoft Azure 23% and Google Cloud 11%.

To bolster European sovereignty, SEB, alongside AstraZeneca and Saab, is building a sovereign computing capability using Nvidia chips, forming a consortium that also includes Ericsson and Wallenberg Investments. The initiative aims to develop next-generation AI compute infrastructure and secure critical infrastructure access for SEB, said Jonas Ahlström, SEB’s chief operating officer.

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SEB has also collaborated with other European banks to launch a euro-denominated stablecoin intended to challenge the dominance of US dollar stablecoins like USDC. Malmer emphasised: “We need to start acting on this [sovereignty]. We don’t have a choice. I would love for European supplies of these products.”

However, Poletto cautioned that the drive for tech sovereignty could exacerbate fragmentation across Europe: “I’m afraid we are going to have the same [sovereign initiatives] in Romania, Spain, Italy and Poland. We operate in seven countries in Europe. We have to be careful. Europe is too fragmented.”

Meanwhile, Rydquist maintained that US hyperscalers remain the “most viable option for building a competitive offering,” noting that Europe’s higher power costs limit its ability to lead in AI infrastructure relative to the US and China.