Regulatory pressures, demand for digital autonomy increase use of cloud services based in the region, ISG Provider Lens report says
LONDON–(BUSINESS WIRE)–European enterprises are accelerating their adoption of sovereign cloud solutions to address stricter regulations, geopolitical risk and growing demands for data sovereignty and transparency, according to a new research report published today by Information Services Group (ISG), a global AI-centered technology research and advisory firm.
European enterprises are reclassifying sovereign cloud as core infrastructure. Regulatory enforcement, security concerns and AI adoption are leading organizations to pursue resilient, transparent and locally governed cloud platforms for critical workloads.
The 2025 ISG Provider Lens Multi Public Cloud Services report for Europe finds that enterprises are expanding their use of sovereign clouds from niche deployments focused only on compliance toward foundational infrastructure to support workloads, services and AI platforms under EU jurisdiction. This shift is reshaping the provider landscape, increasing the momentum of both regional players and localized hyperscale offerings from global players.
“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.”
Regulatory alignment, operational resilience and commercial transparency are emerging as the most important criteria for choosing sovereign cloud platforms, especially in highly regulated industries, the report says. Organizations expect multizone EU-based infrastructure, customer-managed encryption keys and policy-driven services that support secure DevOps and disaster recovery. Enterprises are also placing greater emphasis on clear pricing models that offer visibility into capacity commitments, infrastructure usage and long-term costs, particularly for public sector deployments.
Accelerating enterprise adoption of AI is driving up demand for sovereign AI infrastructure to support training, inference and deployment under EU jurisdiction, ISG says. Providers are responding by embedding zero-trust architectures, automated compliance tooling and real-time threat detection into their solutions to help enterprises reduce exposure to insider threats and foreign surveillance.
To strengthen cloud security, organizations are deploying air-gapped environments, external key management and confidential computing. Procurement teams increasingly favor European-owned cloud providers to tighten control over governance, reduce legal exposure and achieve operational independence from entities outside the EU.
Enterprises seeking sovereign cloud services compare options based on data control, governance structures and alignment with national requirements, the report says. Global cloud providers are increasing investment in Europe with locally governed operating models designed to meet EU requirements. Regional providers are expanding local infrastructure for regulated and public sector environments across key European markets and industries.
“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.”
