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Cloud strategies of German companies under review due to U.S. policies

Cloud services are indispensable for the majority of businesses in Germany, with U.S. providers increasingly relied upon.

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US cloud services are increasingly relied upon by German businesses, effectively keeping their...
US cloud services are increasingly relied upon by German businesses, effectively keeping their operations running. The majority of these service providers hail from the United States.

Cloud strategies of German companies under review due to U.S. policies

In the heart of Europe, concerns loom over excessive reliance on foreign cloud services

Berlin (dpa) - German businesses are growing wary of overdependence on American cloud services, as uncertainties surface regarding the trustworthiness of renowned providers like Microsoft, Amazon AWS, and Google. This paranoia, fueled by recent political shifts in the US, has triggered a reevaluation of cloud strategies among half of German companies utilizing cloud computing, according to Bitkom, a digital industry association.

The study, conducted between mid-March and mid-May, surveyed 604 companies with at least 20 employees on behalf of Bitkom.

Cloud computing encompasses various services – storage, software, and processing power – accessed via the internet without the need for owning or managing the necessary hardware or software. Instead, providers offer these services from vast data centers for on-demand use and payment.

Alarming Dependence

Sixty-two percent of German companies could come to a standstill without cloud services, as per the Bitkom survey. Furthermore, 78% of these companies perceive Germany's dependence on American cloud providers as troubling, and 82% advocate for the emergence of large German or European cloud providers capable of challenging the dominance of market leaders.

Ralf Wintergerst, President of Bitkom, stated, "Germany needs to sever itself from one-sided dependencies, extending to digital infrastructure. Breaking free from these constraints will be a critical task for the incoming federal government." He suggests that Germany could merge the best features of international providers with a "German-made" security layer to ensure data protection and sovereignty.

The Bitkom study reveals that almost all German companies are utilizing or considering the cloud, with 90% currently employing cloud applications – a figure that has risen from 81% within a year. Ten percent more companies plan or discuss cloud usage.

Rising Adoption

Presently, 47% of all IT applications in the German economy are operated from the cloud, up from 38% a year ago. This figure is projected to surge to 58% by 2030. Meanwhile, only 10% of companies currently use fewer than 10% of their IT applications from the cloud. However, this situation will change in five years, as no company will be left untouched by the ever-growing cloud trend.

The Romanian Approach

While Germany mulls over the implications of cloud dependence, neighboring Romania is experimenting with open-source alternatives. Bucharest, the capital, has introduced LibreOffice and Linux, replacing Microsoft products, to reduce dependence on tech titans and advance digital sovereignty.

European Unity

The European Union is also focusing on promoting competition in the cloud market, viewing it as crucial for digital sovereignty and economic development. To this end, AWS plans to establish a European Sovereign Cloud Region in Brandenburg, Germany, by the end of 2025. This move aims to cater to European companies while ensuring compliance with local data sovereignty regulations and the use of cloud services designed under European governance.

These initiatives reflect a broad strategy across Europe to minimize reliance on US-based cloud services and stimulate the growth of local digital ecosystems. Nevertheless, industry analysts caution that severing ties with US hyperscalers entirely may be challenging due to their market dominance.

  1. The paranoia among half of German companies utilizing data-and-cloud-computing, sparked by political shifts in the US, has led to a reevaluation of their cloud strategies, with 82% advocating for the emergence of large German or European policy-and-legislation to challenge the dominance of market leaders like Microsoft, Amazon AWS, and Google.
  2. The European policy-and-legislation is focusing on promoting competition in the data-and-cloud-computing market, viewing it as crucial for digital sovereignty and economic development, as illustrated by AWS's plan to establish a European Sovereign Cloud Region in Brandenburg, Germany, by the end of 2025.
  3. While Germany ponders over the implications of excessive reliance on foreign cloud services, its neighbor, Romania, is experimenting with open-source alternatives, such as LibreOffice and Linux, in an effort to reduce dependence on tech titans and advance digital sovereignty, reflecting a broader strategy across Europe to stimulate the growth of local digital ecosystems.

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