European Firms Seek Sovereign Clouds for Compliance, Resilience
Regulatory pressures, demand for digital autonomy increase use of cloud services based in the region, ISG Provider Lens® report says
European enterprises are accelerating their adoption of sovereign cloud solutions to address stricter regulations, geopolitical risk and growing demands for data sovereignty and transparency, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a global AI-centered technology research and advisory firm.
The 2025 ISG Provider Lens® Multi Public Cloud Services report for Europe finds that enterprises are expanding their use of sovereign clouds from niche deployments focused only on compliance toward foundational infrastructure to support workloads, services and AI platforms under EU jurisdiction. This shift is reshaping the provider landscape, increasing the momentum of both regional players and localized hyperscale offerings from global players.
"European enterprises are reclassifying sovereign cloud from a compliance safeguard to core infrastructure," said Matthias Paletta, director at ISG. "Regulatory enforcement, security concerns and AI adoption are leading organizations to pursue resilient, transparent and locally governed cloud platforms for critical workloads."
Regulatory alignment, operational resilience and commercial transparency are emerging as the most important criteria for choosing sovereign cloud platforms, especially in highly regulated industries, the report says. Organizations expect multizone EU-based infrastructure, customer-managed encryption keys and policy-driven services that support secure DevOps and disaster recovery. Enterprises are also placing greater emphasis on clear pricing models that offer visibility into capacity commitments, infrastructure usage and long-term costs, particularly for public sector deployments.
Accelerating enterprise adoption of AI is driving up demand for sovereign AI infrastructure to support training, inference and deployment under EU jurisdiction, ISG says. Providers are responding by embedding zero-trust architectures, automated compliance tooling and real-time threat detection into their solutions to help enterprises reduce exposure to insider threats and foreign surveillance.
To strengthen cloud security, organizations are deploying air-gapped environments, external key management and confidential computing. Procurement teams increasingly favor European-owned cloud providers to tighten control over governance, reduce legal exposure and achieve operational independence from entities outside the EU.
Enterprises seeking sovereign cloud services compare options based on data control, governance structures and alignment with national requirements, the report says. Global cloud providers are increasing investment in Europe with locally governed operating models designed to meet EU requirements. Regional providers are expanding local infrastructure for regulated and public sector environments across key European markets and industries.
"European enterprises are embedding sovereign cloud deeper into their IT strategies," said Meenakshi Srivastava, lead analyst, ISG Provider Lens Research. "Regulations and risk management drive most adoption now, but in the coming years, more companies will expect services to include features such as open-source interoperability and sustainability compliance."
The report also examines other trends in European cloud adoption, including enterprises' growing use of advanced encryption and compliance automation and the expansion of sovereign cloud marketplaces that support flexible deployment models across Europe.
For more insights into the cloud-related challenges facing European enterprises, plus ISG's advice for addressing them, see the ISG Provider Lens® Focal Points briefing here.
The 2025 ISG Provider Lens® Multi Public Cloud Services report for Europe evaluates the capabilities of 19 providers across one quadrant: Sovereign Cloud Infrastructure Services.
The report names AWS, Deutsche Telekom/T-Systems, Google, Microsoft, Oracle, Orange Business and OVHcloud as Leaders in the quadrant.
In the area of customer experience, LTIMindtree is named the global ISG CX Star Performer for 2025 among multi public cloud service providers. LTIMindtree earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.
Customized versions of the report are available from AWS, Deutsche Telekom/T-Systems and Orange Business.
The 2025 ISG Provider Lens® Multi Public Cloud Services report for Europe is available to subscribers or for one-time purchase on this webpage.
About ISG Provider Lens® Research
The ISG Provider Lens® Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.
About ISG
ISG (Nasdaq: III) is a global AI-centered technology research and advisory firm. A trusted partner to more than 900 clients, including 75 of the world's top 100 enterprises, ISG is a long-time leader in technology and business services that is now at the forefront of leveraging AI to help organizations achieve operational excellence and faster growth. The firm, founded in 2006, is known for its proprietary market data, in-depth knowledge of provider ecosystems, and the expertise of its 1,600 professionals worldwide working together to help clients maximize the value of their technology investments.
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