Europe’s Digital Dependence: U.S. Cloud and Software Firms Hold the Upper Hand

European governments have elevated “digital sovereignty” to a strategic priority, but a close reading of market data and recent policy moves shows how entrenched dependencies on U.S. cloud and enterprise software providers persist. By 2025 indigenous European cloud suppliers accounted for under 15% of the market, while Amazon, Microsoft and Google together controlled roughly 70% or more of cloud infrastructure across Europe. The imbalance extends into enterprise applications: U.S. vendors account for about 59% of the European enterprise software market, with Oracle and Microsoft alone holding substantial shares. Scale and sustained global investment — in data centres, R&D and operations — have given U.S. firms an enduring technical and commercial advantage, making rapid catch‑up difficult for smaller regional rivals. At the same time, Europe’s economic integration with the United States (roughly €1.68 trillion in bilateral trade in 2024) and the reconfiguration of energy and supply chains complicate efforts to disentangle critical dependencies. Practical hedging is underway: recent trade engagements (for example EU‑Vietnam and EU‑India moves), proposals for joint critical‑minerals programmes with the U.S., and targeted procurement incentives all signal a pragmatic strategy of resilience rather than abrupt decoupling. Infrastructure factors are equally decisive. New analysis shows Europe’s data‑centre footprint is set to expand strongly between 2025 and 2031, but projects will cluster where energy certainty, permitting and connectivity align — concentrating investment in advantaged corridors and leaving other regions behind. Energy links also matter: rising U.S. LNG deliveries that filled gaps in EU supplies illustrate how strategic exposures can shift as one dependency is replaced by another. On the demand side, executives and procurement teams increasingly treat supplier provenance and verifiable governance as core selection criteria — particularly for AI and security‑sensitive workloads — which creates conditional pathways for vendors without regional assurances. These procurement dynamics, along with regulatory and legal exposure from extraterritorial access to data, amplify the operational and geopolitical risks of current market concentration. Any credible strategy to change this balance will require sustained public‑private capital, coordinated industrial policy, and policies that favor cross‑border consolidation among European suppliers rather than only protectionist measures. Short‑term instruments (data localisation, procurement preferences, signalling actions on sovereign exposure) matter politically but are insufficient alone; the transition calls for long‑term investments in R&D, skills, grid and data‑centre capacity, and interoperable standards that make regional alternatives commercially viable. The net result is a likely multi‑year, costly rebalancing in which U.S. incumbents defend core segments while selectively ceding niches to regional players that can guarantee provenance, compliance and specialised capabilities.