Europe's cloud customers eyeing exit from US hyperscalers

Are customers on the European side of the pond considering a move from US hyperscalers in the wake of recent events? Some of the region's vendors are reporting an uptick in inquiries as organizations mull their options.

After a year of navel-gazing over AI, the topic dominating conversations at April's KubeCon EU event was what to do about events unfolding in the US. Even before the recent flip-flopping over tariffs, users were already questioning whether including US-based hyperscalers in their supply chain was necessarily a good thing.

"It's amazing how fast the change has been," Mark Boost, CEO of CIVO, a UK cloud provider, told El Reg at the KubeCon EU event. Boost has long banged the drum for digital and data sovereignty, and is a vocal critic of hyperscalers' sharper practices, but says he was still taken aback by the surge in interest in cloud alternatives.

Other vendors like Nextcloud have also reported a spike in customer inquiries. CEO Frank Karlitschek attributed this not just to the Trump effect but to the actions of the US administration overall.

"There are three factors," he told The Register. "The first is really the unreliability, because we see what Trump is doing and the danger is that things will be just switched off from one day to another for negotiation purposes. Then we see the whole question around pricing with the tariffs.

"And then the other thing is really the espionage factor. This is relatively new and surprising to me ... but now you see what Musk is doing, that you can access really confidential databases ... I think this is a realistic fear nowadays."

A few months ago, we might have dismissed such talk as tinfoil hattery, but with reports of EU staff being given burner phones and laptops for US visits, and Elon Musk's DOGE running rampant, concerns about what might be in the next Executive Order signed by US President Donald Trump is perhaps weighing on the minds of customers. According to Nextcloud, interest in its services has increased threefold.

Kevin Cochrane, chief marketing officer of another hyperscaler alternative, also noted concerns. Vultr, an American-based company with datacenters worldwide, has seen an uptick in interest in sovereign infrastructure. He told us that recent events had sparked conversations about the need for governments and organizations to know where their data is held, processed, and backed up.

"There's just the general concern that national governments and enterprises are having around 'What is the control that this oligopoly – Microsoft Azure, GCP, and the rest – have on our data? What type of business risk does that mean for us?'"

Cochrane said the concern existed even before the current tariff furor "because these people have a stranglehold on the business critical infrastructure that they [the customers] need in order to be successful."

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According to Cochrane, the concerns now include "where is their operational data going? How is their operational data being used? And now, of course, there's even greater turmoil because now we don't necessarily know what the economic relationship is going to be between different entities."

Moving away from the hyperscalers is not straightforward. Nextcloud's Karlitschek noted that migration times tended to be measured in months or years and that a methodical, step-by-step approach should be adopted once alternative trusted providers are identified.

However, he also told us that several organizations "that are really threatened" by the US regime had approached Nextcloud seeking a more rapid move.

And is there a risk that the cloud giants might use customer consideration of alternatives to dodge scrutiny from antitrust regulators? Boost acknowledged the danger, "but there's a long way to go until they [the hyperscalers] can claim a monopoly doesn't exist."

The big three - AWS, Microsoft and Google - already have a circa 70 percent of the European cloud market.

Jonathan Bryce, CEO of the Open Infrastructure Foundation, agreed that interest in hyperscaler alternatives had "definitely taken a big uptick."

He acknowledged that the conversation had been rumbling on for years, but the growth in interest had suddenly accelerated. "What we've seen is, I think, with the geopolitical changes that there's just a lot more uncertainty – similar to the Broadcom situation, people aren't sure who they can trust."

Broadcom acquired VMware in 2023 and increased licensing costs for many VMware customers. The shockwaves are still being felt in the tech industry and sent a large number of customers scurrying to alternatives, such as the Open Infrastructure Foundation.

Bryce continued: "So now people are going, 'OK, wait a minute, where is my data? Who has access to it? What laws and how can it be accessed and subpoenaed, or cut off?' and, you know? So I think it's a really important movement.

"When people say, 'Oh, there's no way that other countries are going to catch up to the US hyperscalers,' I don't believe that. I think that with the right motivation, the technology is out there, and I think the motivation is arriving on the scene right now."

The Reg has yet to hear of any corporate enteprises or government departments in the UK that are willing to go public about turning their back on US hyperscalers. And there is nothing to say that expressions of interest in migrating to a European cloud provider will lead to something concrete, however, we live in unusual times. ®