AWS, Microsoft, Google own 72% of Euro customer cloud spending
Democratizing IT? The next biggest 3 in region are also US headquartered giants
Six US titans are ruling the European cloud market, with AWS, Microsoft, and Google alone accounting for almost three-quarters of customers'spending in the region.
The figures from Synergy Research Group show the cloud market in Europe is five times as big as it was in early 2017 with revenues reaching €10.4 billion (c $10.9 billion) in calendar Q2 2022.
During that half a decade, local service providers collectively grew turnover by 167 percent but despite this, their market share plunged from 27 percent to 13 percent as they were outgrown by US rivals.
In contrast, the big three sucked in 72 percent of enterprise spending on cloud in Q2. "The top three really are in a league of their own," John Dinsdale, chief analyst at Synergy, told The Register.
"They place huge financial bets, had a long-term view of investments and profitability, have maintained a focused determination to success, and have consistently achieved operational excellence. They have now achieved scale that other cannot match and every quarter they continue to invest amounts that others can’t match," he added.
"No European companies have come close to that set of criteria and the result is a market where the six leaders are all US companies."
US cloud providers are investing on average $4 billion a quarter in capital expenditure into expansion efforts, and that is an "impossible hill to climb for any companies who wish to seriously challenge their market leadership."
AWS, which only started selling rack space during non-peak times, also had first mover advantage in the infrastructure cloud space and it continues to "press that home."
Behind the trio of titans comes IBM, Salesforce and Oracle. Synergy told us that SAP and Deutsche Telekom aren't lagging far behind Oracle in European cloud revenues.
We asked a bunch of local cloud providers for their take on how they plan to overcome the US service providers but have yet to receive as response.
Dinsdale told us European cloud businesses have mostly filled market niches or "pockets of opportunity" where they have "distinct and sustainable advantages." These companies also resell services from the big three or at least partner with them in some instances.
The dominance of the US giants has forced regulators to sit up and take note. In Britain, communications regulator Ofcom said last week it will review the sector to ensure businesses and consumers are getting a fair deal and competition is lively.
Simon Hansford, boss at UKCloud, told us at the time: "We hope that Ofcom's work will pave the way for a level playing field that will benefit the UK's own cloud hosting industry – in doing so creating a vibrant, competitive and innovative market that gives back to the UK, in terms of revenue for the exchequer, local job creation and economic and social value."
In mainland Europe, the EC has received numerous complaints from cloud providers – including OVHCloud and Nextcloud – about Microsoft's alleged anticompetitive behavior, a point that rivals have seized upon. Meanwhile, a campaign group, Coalition for Fair Software Licensing, launched in the US this week hopes to press for a better deal for software users already in or moving to the cloud.
- Microsoft revises software licensing, cloud policies amid EU regulator scrutiny
- OVH: The cloud should be open, reversible, interoperable
- EU digital sovereignty project Gaia-X opens its summit with the departure of Scaleway
- Franco-German cloud framework floated to protect European's data from foreign tech firms slurpage
Dinsdale said there was some interest by European customers in data sovereignty "but not as many as you might think."
"For the majority of customers the prime concerns are over range of cloud services, quality of service, security, flexibility, privacy, price and customer service," he said.
"Customer verticals where data sovereignty can be a bigger issue include finance, government and some public sectors."
Even in these instances, the US giants are "increasingly partnering" with companies such as Orange, Thales, Deutsche Telekom, and Telefonica to offer "trusted cloud" services that "meet or circumvent sovereignty issues."
The cloud was supposed to democratize IT, avoiding pitfalls such as vendor lock-in. In reality, a bunch of megacorps are ruling things and it isn't going to change anytime soon. ®