As global trade tensions escalate, European businesses are reassessing their cloud service choices, balancing geopolitical risks with technical needs. For many, the decision of which cloud provider to use is no longer just about technology—it’s a matter of strategic importance.
Geopolitical Shifts Impact Cloud Decisions
Benjamin Revcolevschi, CEO of OVHCloud, recently highlighted the shift in concerns regarding cloud service providers. Traditionally an IT department issue, the choice of a cloud provider has now moved to the boardroom, with strategic autonomy becoming a key concern. Companies are increasingly focused on ensuring their digital infrastructure aligns with both technical and political priorities.
Data centers, which are vital to the development of AI and digital operations, are mainly controlled by US-based giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. However, as trade tariffs rise and questions about data sovereignty intensify, European companies are seeking alternatives that provide greater control over their data and supply chains.
OVHCloud, with its 43 global data centers, is one of the providers benefiting from this shift, reflecting a growing interest in European-owned cloud solutions. Iliad’s data center arm, OpCore, recently announced a €3 billion investment into AI infrastructure, a clear sign that European firms are ramping up efforts to build local, independent cloud capabilities.
US Providers Under Pressure
The cloud industry’s concerns are closely tied to the broader market unease surrounding tariffs. The new levies on imports into the US and potential retaliatory measures have left digital service companies, including Google, under increasing scrutiny.
Shares in Alphabet, Google’s parent company, have dropped by 6.5% since the latest tariff announcements. This decline highlights investor worries about potential disruptions to Google’s business, particularly in advertising—its main revenue driver. If global trade slows, advertising budgets could be some of the first to be cut, affecting the company’s bottom line. In 2024, advertising accounted for a massive 76% of Google’s revenue.
Moreover, some countries have already implemented taxes targeting US tech giants, with rates between 2% and 5% of revenue. These taxes could increase if trade tensions worsen, adding another layer of financial pressure on US providers.
Google’s reliance on international markets, which accounted for over half of its revenue in 2024, makes it vulnerable to changes in foreign policy. As governments across the globe adapt their regulations, Google’s ability to maintain its global operations could be impacted, potentially making it harder or more costly to do business abroad.
Infrastructure and Global Reputation Challenges
Google’s cloud division could also face challenges related to its infrastructure. The components used to build and run data centers are often sourced internationally, so tariffs on these imports could raise operational costs. With a $75 billion capital expenditure plan for 2025, Google may need to adjust its strategy depending on how trade policies evolve.
Additionally, the perception of US-based cloud providers as politically entangled may push European businesses to diversify their cloud options. Smaller, regionally focused providers like Hetzner and Scaleway may benefit as companies seek alternatives that are less likely to be influenced by US political agendas.
Alibaba Faces Similar Headwinds
China’s Alibaba has also encountered turbulence amid the rising tariff war. After an initial strong start this year, supported by advancements in AI and a collaboration with Apple, the company’s shares have dropped nearly 30% from their March highs. The catalyst for this decline: a fresh round of tariffs, including a 145% levy on certain Chinese imports.
While Alibaba’s exposure to US revenue is smaller compared to other Chinese firms like PDD Holdings, the uncertainty caused by trade tensions has shaken investor confidence. Alibaba is heavily invested in AI, committing $50 billion over the next three years, and its AI models were recently selected by Apple for iPhone features in China. However, the geopolitical landscape may make international expansion for Alibaba’s cloud business increasingly difficult.
The Shift to Regional Cloud Strategies
In today’s climate, cloud infrastructure is not just about cost-efficiency and technical performance. For many European companies, the geopolitical landscape is quickly becoming as important as product specifications and customer support. The moves by OVHCloud, Iliad, Google, and Alibaba signal a broader trend toward regional cloud strategies.
As businesses factor in the risks and rewards of working with global tech giants amid growing trade tensions, the demand for local cloud services that prioritize data sovereignty, autonomy, and security will likely continue to grow.
