European enterprises are increasingly adopting sovereign cloud solutions to navigate stricter regulations, geopolitical risks, and growing demands for data sovereignty and transparency, according to a new report by Information Services Group (ISG), a global AI-focused technology research and advisory firm.
The 2025 ISG Provider Lens Multi Public Cloud Services report for Europe reveals that businesses are elevating sovereign cloud from niche compliance tools to essential infrastructure. Regulatory pressures, cybersecurity concerns, and the acceleration of AI adoption are motivating organizations to deploy resilient, transparent, and locally governed cloud platforms for critical workloads.
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“European enterprises are reclassifying sovereign cloud from a compliance safeguard to core infrastructure,” said Matthias Paletta, director at ISG. “Regulatory enforcement, security concerns and AI adoption are leading organizations to pursue resilient, transparent and locally governed cloud platforms for critical workloads.”
The report highlights that enterprises now prioritize regulatory alignment, operational resilience, and commercial transparency when selecting sovereign cloud platforms, especially in highly regulated sectors. Organizations increasingly demand multizone EU-based infrastructure, customer-managed encryption keys, and policy-driven services that support secure DevOps and disaster recovery. Furthermore, companies expect transparent pricing models that provide clear visibility into infrastructure usage, capacity commitments, and long-term costs, with particular attention to public sector deployments.
As AI adoption accelerates, the demand for sovereign AI infrastructure to support training, inference, and deployment under EU jurisdiction is rising. In response, providers are integrating zero-trust architectures, automated compliance tools, and real-time threat detection to help enterprises minimize risks from insider threats and foreign surveillance.
To enhance cloud security, organizations are implementing air-gapped environments, external key management, and confidential computing. Procurement teams increasingly favor European-owned cloud providers to strengthen governance control, reduce legal exposure, and achieve operational independence from non-EU entities.
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Enterprises now evaluate sovereign cloud options based on data control, governance structures, and alignment with national requirements. Global providers are boosting investment in Europe with locally governed operating models, while regional providers are expanding infrastructure for regulated industries and public sector environments across major European markets.
“European enterprises are embedding sovereign cloud deeper into their IT strategies,” said Meenakshi Srivastava, lead analyst, ISG Provider Lens Research. “Regulations and risk management drive most adoption now, but in the coming years, more companies will expect services to include features such as open-source interoperability and sustainability compliance.”
The report also notes trends such as advanced encryption, compliance automation, and sovereign cloud marketplaces that enable flexible deployment models across Europe.
ISG evaluated 19 providers for Sovereign Cloud Infrastructure Services, naming AWS, Deutsche Telekom/T-Systems, Google, Microsoft, Oracle, Orange Business, and OVHcloud as Leaders. In customer experience, LTIMindtree earned the title of global ISG CX Star Performer for 2025 among multi-public cloud providers, achieving the highest customer satisfaction in ISG’s Voice of the Customer survey.
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