This story is part of the special report In Search of Sovereignty, on Europe’s effort to support domestic technology.
How can Europe maintain control of its digital future if it’s reliant on foreign companies for technology? That’s the nut Brussels policymakers are struggling to crack, as they make a pan-European foray into online data storage known as “the cloud.”
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Germany and France have launched a platform of trusted cloud providers named “Gaia-X.” But while its member companies are mostly French and German, several of the most important participants are foreign tech juggernauts — raising questions about how much control the EU will ultimately be able to keep.
Launched in June with the backing of Berlin and Paris, Gaia-X is one of Europe’s most far-reaching attempts to assert “sovereignty” over how its data is stored and protected amid fears about U.S. surveillance and espionage by Beijing.
It aims to give EU companies an edge as they seek to catch the next big wave of the digital revolution — using industrial data to innovate and help European companies compete against rivals in the United States, China and other countries.
“Gaia-X is more than just a guinea pig to test Europe’s idea of sovereignty. It’s a litmus test,” said Paul Timmers, former director for cybersecurity at the European Commission who now researches strategic autonomy issues at Oxford University.
Standard-setting
Yet Brussels isn’t aiming to create a European cloud-storage giant that could rival global market leaders like Amazon Web Services or Microsoft. Nor is Gaia-X set up to funnel investment to local cloud storage players like France’s OVHcloud or Germany’s Deutsche Telekom.
Instead, it’s set up as a standard-setting group that aims to write new rules that will allow companies to shift their data more easily and safely between different cloud providers.
Ultimately, Gaia-X aims to let companies and consumers switch between providers based on the degree of security they promise — including whether data is physically stored in Europe, a growing concern among companies that fear spying by foreign authorities if their data is shipped overseas.
The project counts 22 French and German firms and organizations among its founding members — members that are set to write the group’s bylaws and policy rules.
But far from excluding foreign companies, Gaia-X has included them in its work in the early, conceptual phase since late 2019, enlisting juggernauts like Amazon Web Services to provide expertise and hopefully sign on to the project’s goal of making cloud services “interoperable.”
The fact that such firms are not just participants but key to Gaia-X’s success raises questions as to what exactly its founders mean when they talk about “sovereignty.”
“We believe that there are a few shades of sovereignty,” said Cédric Prévost, head of trusted cloud at Orange Business Services, an arm of the French telecom company that is one of Gaia-X’s founding members. “It is very important that only European actors are driving the rules, but that we can make sure to leverage the expertise of non-European actors.”
‘Market failure’
The push to reshape Europe’s cloud market stems from concerns about dependency on U.S. providers for storing sensitive data. Ever since Washington passed the CLOUD Act — which forces U.S. tech companies to hand over data to authorities if legally ordered to do so, even if it is stored in Europe — those concerns have been growing, particularly among industrial giants wary of having their secrets stolen.
The concerns are not confined to U.S. snooping. Chinese cloud providers and telecom-equipment vendors like Huawei have increasingly caught the eye of lawmakers in Europe who raise similar suspicions linked to surveillance laws.
The new European Commission, which took office last year, has thrown its weight behind efforts to bolster the EU’s technological independence via projects such as Gaia-X.
“We need to develop suitable European infrastructures allowing the storage, the use and the creation of data-based applications or artificial intelligence services,” EU Commissioner for Industrial Policy Thierry Breton said at the German industrial fair Hannover Messe last week, calling it “a major issue of Europe’s digital sovereignty.”
But in the cloud market, you have to dig long and hard to find European players able to compete with the world’s tech giants — whether it’s on infrastructure, software or services.
A study by Synergy Research Group showed that Amazon tops the charts in every major national market in Europe, as well as in Europe as a whole, with Microsoft in second place in the same categories. Across the Continent, Google, IBM and Salesforce take up other top spots.
Cloud companies headquartered in Europe have pinned their hopes on national markets where they have a historical and cultural edge: OVHcloud and Orange, two French players, take up spots three and four in France, while German telecom giant Deutsche Telekom takes up the fourth spot in Germany.
In the cloud-technology supply chain, U.S. firms still hold a tight grip, with U.S. software firms like Microsoft and VMWare in top spots and infrastructure and component manufacturers like Dell, Intel, IBM, Hewlett Packard Enterprise and others dominating.
On top of that, existing players like Amazon and Microsoft tend to build silos around their services, creating a lock-in effect that hampers challengers from competing.
“There is a market failure,” said Alban Schmutz, vice president for public affairs at French cloud company OVHcloud.
That’s where Gaia-X comes in. By setting common standards and allowing customers to move their data easily between hosting services, the thinking goes, it will allow EU companies to choose local players over foreign giants.
Gaia-X would “solve the questions that are mostly harming European players,” added Schmutz.
Writing the rules
Even so, the question remains: Who will write the rules that govern cloud computing in Europe, and how can they ensure that those rules benefit European players?
Now that Gaia-X has had its political kickoff, the project is set to start its legal existence as a Belgium-based nonprofit sometime after the summer.
The founding companies are working through language that will determine how European and foreign players weigh in on the decision-making. They released a set of documents including rough “policy rules” last month.
Gaia-X’s backers argue that EU companies will remain firmly in the driver’s seat, and that retaining European control over the project is their top priority.
“The core question for us is how to make sure the governance and process remains in the hands of European actors,” said Prévost.
But foreign companies are present throughout Gaia-X. In the run-up to last month’s launch, the project gathered input from more than 300 companies that participated in surveys and brainstorming on what the project should look like. Technology giants including Amazon, Microsoft, IMB and others all weighed in on the conception of the project.
“Amazon Web Services has participated in multiple Gaia-X technical working groups and will be happy to continue to do so,” a spokesperson for the U.S. giant said.
The participation of such companies is key, Gaia-X’s architects argue, because Amazon will have to allow its systems to become “interoperable” with other companies’ if the project is to fulfill its promise. They also hope that, as the market for cloud computing grows, there will be room for European players to gain market share.
“What we want to do is enable sovereignty for cloud in Europe, but sovereignty for us is not something that is closed — it is open,” said Schmutz.
China on sidelines
No sooner than it will be set up will Gaia-X have to grapple with another tricky question: Whether to let in big players from China.
So far Huawei, which faces a ban on selling 5G telecom equipment in the U.K., has not secured a spot at the table. But executives argue they should be allowed to participate in Gaia-X just like any other firm.
“We’re one of the very few that have the expertise and want to make sure the idea of ‘open cloud’ is actually implemented in Gaia-X,” a Huawei official said, requesting not to be named because he was not authorized to speak on the record.
Once Gaia-X starts setting the cloud industry’s standards in Europe, “we believe this shouldn’t happen without Huawei,” the official added.
For now, Europe’s cloud industry is looking for a way out of crippling dependencies, while keeping commercial ties to leading tech players across the world.
“There’s one misconception driving the debate,” said Timmers, “and that’s that strategic autonomy means you have to do everything yourself. It’s the idea of self-sufficiency. That’s nonsense, of course.”
The alternative gaining pace in Europe, he said, is one of “strategic interdependence,” which would include strategic partnerships with like-minded countries, as well as efforts to push for a global consensus on issues of “global common good,” including keeping an open internet and information exchange across the world.