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Europe’s AI ambitions depend on more than chips and computing power. Without sovereign cloud infrastructure, open standards and domestic alternatives to foreign hyperscalers, the region risks trading technological ambition for strategic dependence.
Digital sovereignty is more than a boardroom buzzword; it is a national imperative. We are at a defining moment, as we rely increasingly on data systems. ASML’s warnings regarding semiconductor supply chains remind us of the need to develop critical technology infrastructures. While this has been on boardroom agendas, it is now a priority for everyone. To have sovereignty over the infrastructure comprising our digital economies, the UK and Europe must take action by developing a robust strategy.
Industry leaders agree: digital sovereignty is real and actionable. Building a credible cloud stack to support AI development requires a break from historical reliance on foreign hyperscalers. Europe and the UK have demonstrated they will invest significantly in other technology sectors; now, they need to extend that commitment to local software, cloud infrastructure, and technical talent.
Having already anchored €80bn in the EU and £1.1bn in the UK for hardware, the next phase of investment must pivot toward domestic software and cloud solutions. True digital self-reliance depends on reducing our dependence on third-party providers, fostering a secure environment for European and British tech companies, and ensuring long-term economic resilience.
Geopolitical reality vs the sovereignty tax
Digital sovereignty is a business imperative. In fact, 73% of UK businesses consider data sovereignty important. The tech industry craves control over its assets. Unfortunately, there exists a barrier: the sovereignty tax — the cost incurred by British businesses due to continued dependence on global technology monopolies. Shockingly, last year, the percentage of businesses reporting increasing dependence on U.S. cloud companies rose from 12% to 28%.
We are losing ground. There is much talk of ambition, but we continue to double down on the wrong technology stack. This is not a call for protectionism.
There are many benefits to partnerships with global technology providers. However, our national infrastructure must not be solely dependent on companies operating under foreign law. Investing in existing domestic alternatives to provide greater choice needs to be a top priority.
Furthermore, there needs to be an active focus on reducing the reliance on offshore companies that lock us in and extract our digital wealth. Instead, support local; focus on open-source alternatives that reduce lock-in through portability and interoperability, while keeping data, skills, and revenue within the UK.
Economic subservience and the kill switch
AI increases the demand for controlled infrastructure – with 58% of UK technology executives worried about legal jurisdiction regarding AI and 43% agreeing AI workloads should be stored within UK borders. Furthermore, while foreign hyperscalers encourage customers to utilise localised data centres, the US CLOUD Act provides that data stored on US-based platforms is considered under US jurisdiction, regardless of physical location, thus undermining true sovereignty.
As long as the UK uses foreign-owned data centres for national processes, we remain open to risk. AI processes yield outputs substantially greater than human-produced equivalents; the UK remains at risk of catastrophic failure if there are significant geopolitical shifts between the UK and the locations of these data centres. The current state of affairs weakens the UK economy; 39% of IT executives in the UK reported experiencing significant outages related to foreign hyperscalers, with the majority indicating direct financial exposure of more than £50,000, while 5% stated losses exceeding £1 million.
Breaking cloud feudalism
Cloud feudalism has created a digital environment where hyperscalers have captive customers through extreme profit extraction, with regulators struggling to keep up. The CMA’s recent emphasis on Microsoft over AWS’s monopolistic position illustrates how regulators lack the holistic approach needed to provide an equitable competitive environment.
Lack of regulatory oversight allows the largest competitors to utilise defensive measures to limit competition through restrictive licensing and cloud credits provided during initial adoption. This results in only 25% of UK companies believing they could transition away from global suppliers, posing a strategic risk. The UK private sector has stated that 90% of businesses would like regulators to be proactive in advocating for the domestic cloud market.
We can fix this in two ways.
First, embrace open-source standards permitting data to be freely exchanged between providers. Reliance on proprietary cloud ecosystems creates systemic lock-in, forcing organisations to accept spiralling costs and restricted flexibility. UK AI business models need the ability to operate without incurring exorbitant transition fees or paying a heavy “rewrite tax” simply for having been locked in by a proprietary technology provider.
Second, develop cloud parity. As we define it, true cloud parity is about achieving full feature parity and seamless interoperability, particularly between public, private, and local cloud environments. Cloud parity gives leaders the ability to seamlessly transition businesses from global suppliers to local solutions without losing features, service, or performance. By providing leaders with the ability to select providers based upon technical merit and strategic fit, they will no longer need to consider historic relationships when making procurement decisions.
To ensure AI is deployed to its full potential within the UK, a strong regulatory framework must support UK-owned suppliers. This will not be achieved through top-down protectionism but will originate organically within the grassroots – driven by open infrastructure, open-source software, and local data centres operated by UK businesses. The rest of the planet is rapidly adopting digital independence. It’s time for the UK to wake up and take ownership of its digital future.
Mark Boost is the Chief Executive Officer and co-founder of Civo, a cloud computing provider focused on delivering fast, developer-friendly infrastructure. He founded the company in 2018 with the goal of building a modern Kubernetes-powered cloud platform. Before launching Civo, Mark founded several successful technology companies, including LCN.com, ServerChoice, Ai Networks, and Bulletproof Cyber. With more than two decades of experience building infrastructure and hosting businesses, he has a long track record of scaling technology companies.
