Introduction to Cloud Providers and Geopolitics
Amid rising global trade tensions, European companies are reassessing their cloud provider choices, weighing geopolitical risks alongside technical capabilities. According to OVHCloud CEO Benjamin Revcolevschi, these concerns are starting to shift from IT departments to boardrooms. The choice of a cloud provider is no longer just a technical matter, but also a strategic issue.
Cloud Infrastructure and Data Centers
Data centres are central to AI development and digital operations, yet much of the infrastructure underpinning these activities is owned by US hyperscalers: Amazon Web Services, Microsoft Azure, and Google Cloud. In light of escalating tariffs and concerns over digital sovereignty, European firms are exploring alternatives that offer more control over data and supply chains. OVHCloud, which runs 43 data centres worldwide, is among the providers benefiting from this shift.
Tariffs and Tech: Growing Pressures on US Providers
The cloud conversation is unfolding alongside broader market unease over tariffs. With new levies on imports entering the US, and potential retaliatory measures looming, the implications stretch well beyond hardware makers. Digital service companies like Google are also under scrutiny. Alphabet shares have dipped 6.5% since the most recent tariff announcements, reflecting investor concern over possible headwinds.
Infrastructure and Reputation
On the infrastructure side, Google’s cloud unit could also feel the pressure. Much of the equipment used to build and run data centres is sourced internationally. Tariffs on these components could raise costs, prompting companies to reconsider where they build. There’s also the reputational aspect. As cloud customers—particularly in Europe—look to diversify, the perception of US-based providers as politically entangled could drive them toward smaller, regionally focused options.
Alibaba’s Momentum Slows Amid Escalating Tariffs
China-based Alibaba has experienced its own turbulence. After a strong start to the year—driven in part by AI developments and a collaboration with Apple—the company’s shares have slipped nearly 30% from March highs. The trigger: a new round of tariffs. The United States has imposed a 145% tariff on certain Chinese imports, prompting retaliatory measures from Beijing.
Outlook: A Shift Toward Regional Strategies
What is becoming clear is that cloud infrastructure is more than just technical capabilities or cost efficiency. For many companies, particularly in Europe, the geopolitical backdrop is becoming as crucial as product specs or support offerings. The recent moves by OVHCloud and Iliad, as well as the evolving objectives at firms such as Alibaba and Google, point to a broader recalibration underway.
Conclusion
The cloud market is undergoing significant changes due to rising global trade tensions and geopolitical risks. European companies are reassessing their cloud provider choices, and US-based providers are facing growing pressures. The shift toward regional strategies and homegrown solutions is expected to continue, driven by concerns over digital sovereignty and data control.
FAQs
- What are the main factors driving the shift in cloud provider choices for European companies?
- Geopolitical risks, digital sovereignty, and data control concerns are the main factors driving the shift.
- How are US-based cloud providers affected by the rising trade tensions?
- US-based providers are facing growing pressures due to tariffs, reputational risks, and potential retaliatory measures.
- What are the potential consequences of the shift toward regional strategies in the cloud market?
- The shift may result in a more fragmented global cloud market or greater resilience through diversification.
- Which companies are benefiting from the shift toward regional strategies?
- OVHCloud, Iliad, and other regionally focused providers are benefiting from the shift.
