Western Europe Prepares for U.S. Tech Rupture

 

Isn’t Western European gut too thin for that?

 

Yes, based on the current data, Western Europe’s "gut" is indeed considered too thin for a complete rupture from U.S. technology.

 

While the EU is actively seeking "technological sovereignty" to reduce risks, European dependence on U.S. tech is currently profound, with American firms controlling approximately 70% to 83% of the European cloud computing market

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Here is a breakdown of why Europe is vulnerable and how they are preparing:

Why Europe is Vulnerable ("Thin Gut")

 

    Massive Cloud Dominance: As of 2024, nearly $25 billion was spent on infrastructure services from the top five U.S. cloud companies (Amazon, Google, Microsoft, etc.), representing 83% of the European market.

    Lack of Alternatives: European alternatives exist but are, in the words of observers, "like a European bicycle lane besides an eight-wide American highway".

    The AI/Data Center Gap: The rapid expansion of AI infrastructure is financed by revenue from Europe, and the cutting-edge facilities are mostly owned by U.S. firms.

 

    Startup Disadvantage: A complete cut could cause European founders to flee to the U.S. to use better, readily available American tools, leading to further stagnation.

 

How Europe is Preparing (The Strategy)

Despite the reliance, European officials have shifted from "de-risking" China to focusing on tech independence from the U.S. due to fears of service disruptions.

 

    Open Source Alternatives: In Germany, the state of Schleswig-Holstein has replaced most of its Microsoft-powered systems with open-source alternatives, aiming to reduce dependency.

    "Sovereign" Cloud Infrastructure: Projects like Gaia-X are attempting to create secure,, European-governed cloud infrastructure, though they currently hold only 15% of the market.

    Legislative Hurdles: The EU is using the Digital Markets Act (DMA) and Digital Services Act (DSA) to heavily regulate, and in some cases, punish, U.S. big tech firms for stifling competition.

    Regional Collaboration: Countries like France and Germany are partnering to develop digital tools for public administration to ensure data security.

 

The Bottom Line

A complete break would be highly disruptive to the European economy, potentially taking years to recover. Therefore, Europe’s strategy is not an immediate, total severing of ties, but rather a long-term, incremental "de-risking" to build enough capacity to survive a potential crisis.

 

Below is the discussion of this developing drama:

 

“DAVOS, Switzerland -- Rising tensions with the U.S. are spurring new plans in Europe to do something that has long seemed impossible: break with American technology in favor of homegrown alternatives.

 

President Trump this past week dropped his threat to take control of Greenland by force if necessary. But even the possibility of armed conflict with allies has injected new urgency into long-simmering debates in Europe about how to reduce its reliance on U.S. tech infrastructure and tools that support swaths of the economy.

 

The worst-case scenario for European officials? A White House executive order that cuts off the region's access to data centers or email software that businesses and governments need to function.

 

"When you start having these kinds of thoughts, even if they're just thoughts, you have to start thinking: How would that work?" asked Bernard Liautaud, managing partner of Balderton Capital, a European venture-capital firm. "Can you imagine Europe functioning without American technology? It's very hard to imagine."

 

Trump's approach to Greenland has pushed European officials and diplomats to toughen their views on the need for Europe to curb its dependence on the U.S., from tech to defense to trade.

 

The European Parliament on Thursday passed a "technological sovereignty" resolution that supports using public-procurement criteria to favor European products where possible, and proposes new legislation to promote European cloud providers.

 

The European Union's executive arm is working on new legislation aimed at promoting tech sovereignty, said officials familiar with the matter. Security risks posed by U.S. technology have been openly discussed as part of that work, one of the officials said, adding that such talk would have been unthinkable just six months ago.

 

Officials and lawmakers said the bloc's focus on tech sovereignty is about curbing dependencies and boosting European companies, not an attempt to ditch U.S. tech entirely.

 

A potential "decoupling" of Europe and U.S. tech was a hot topic of discussion among business leaders and policymakers at the World Economic Forum in Davos this past week. Many said it would be a complex undertaking given the breadth of U.S. tech used, from chips and cloud services to AI models and other software.

 

The scale of Europe's dependence on U.S. tech has never been so large, particularly for cloud-computing services from companies including Amazon.com, Google and Microsoft. In 2024, European customers spent nearly $25 billion on infrastructure services from the top five U.S. cloud companies, or 83% of the total market in Europe, according to research firm IDC.

 

"Big European companies should use European software," Nicolas Dufourcq, head of French state-owned investment bank Bpifrance, said in a television interview Thursday. "Choosing American digital technology by default is too easy and must stop."

 

While Europe helped lead the mobile-phone revolution with companies including Nokia and Ericsson, the continent has lagged behind the U.S. and China in the internet age -- failing to produce tech giants on the same scale. Over the years, European governments helped finance or promote several homegrown search engines but found little traction to rival Google.

 

Many European entrepreneurs blame Europe's plight on a risk-averse culture, fragmented market and onerous regulations. That is in large part why the EU is now trying to relax some of its digital rules, though progress has so far been slow.

 

European efforts to escape U.S. tech dominance for privacy or commercial reasons have been a recurring theme for decades.

 

The issue heated up in 2013, after former U.S. National Security Agency contractor Edward Snowden leaked information about U.S. surveillance practices -- purportedly including data at U.S. tech giants. This was cited when the EU's top court struck down a trans-Atlantic data-sharing deal.

 

In 2018, under the first Trump administration, European companies and policymakers again expressed concern after the U.S. passed a law that granted law enforcement the authority to request data that American cloud providers have stored overseas.

 

In both cases, U.S. companies kept, and even increased, their European market share by building more data centers to house clients' information on European soil and pledging not to send it elsewhere. In recent years, the tech companies have gone further, adding options to store data with subsidiaries or partners under European control -- something European executives in Davos said they are seeking.

 

Since Trump's re-election, European officials have asked some U.S. cloud providers to ensure that their customers in key sectors, such as energy, can easily move their data-center infrastructure to local providers if a U.S. action interrupts their service, said people familiar with the matter.

 

In Germany, Microsoft recently expanded a deal with Delos Cloud -- a subsidiary of SAP -- to deliver the U.S. company's services under its own ownership and control. Microsoft in the past year has restructured corporate subsidiaries, installed boards filled only with Europeans and taken other steps to establish outposts in the region that can meet customer demands for more localized cloud and AI services, the people added.

 

The stakes are high for U.S. tech companies. They exported more than $360 billion in so-called digitally deliverable services to Europe in 2024, shows U.S. government data. Google parent Alphabet, for example, generated 29% of its nearly $30 billion in third-quarter revenue from Europe, the Middle East and Africa.

 

U.S. tech giants invested significantly in Europe, opening major offices, building infrastructure, acquiring businesses and operating research labs.” [1]

 

1. World News: Europe Prepares for U.S. Tech Rupture. Schechner, Sam; Berber, Jin; Kim Mackrael.  Wall Street Journal, Eastern edition; New York, N.Y.. 24 Jan 2026: A6.