The German multinational Lidl, known for its presence in the food sector, has made an unexpected leap into the world of cloud computing. If Amazon could do it by selling books, why not Lidl? Through its technology division Schwarz Digits, established in 2023, the group has created a business that today has high-profile clients such as SAP, Bayern Munich, and the port of Hamburg, establishing itself as an emerging competitor in the cloud computing market, traditionally dominated by giants like AWS, Google Cloud, and Microsoft Azure.
A project born from an internal need
Schwarz Digits was initially founded to meet the internal needs of the Schwarz Group, which includes both Lidl and Kaufland, among other companies. Christian Müller, co-CEO of the division, explained to Financial Times that “we didn’t start [Schwarz Digits] with a commercial motivation in mind, we just wanted to solve our own needs.” However, the project has taken an unexpected turn by attracting the interest of other major German companies looking for local and secure solutions for their data.
In just one year, Schwarz Digits already has a workforce of 7,500 employees and generates 1.9 billion euros in annual sales, demonstrating its rapid growth and consolidation in the tech sector.
Privacy and data sovereignty: the competitive advantage
One of the main reasons for Schwarz Digits‘s success lies in its focus on privacy and data sovereignty. All stored data is located in data centers exclusively in Germany and Austria, where strict data protection regulations provide a high level of security and control. For Lidl, this was an essential factor: “We have piles of highly sensitive data,” Müller commented, including sales patterns, pricing calculations, customer data, and details about the group’s 575,000 employees. This focus on data sovereignty is particularly appealing to German companies concerned about privacy and looking for alternatives to U.S. cloud service providers.
Expansion in cybersecurity and artificial intelligence
The Schwarz Group, owner of Schwarz Digits, is expanding its ambitions beyond the cloud, also into the fields of cybersecurityCybersecurity solutions are essential in the digital age… and artificial intelligence. In 2021, the group acquired the Israeli company XM Cyber for 700 million euros, reinforcing its presence in the cybersecurity field. Recently, Schwarz also acquired a minority stake in the German AI startup Aleph Alpha, suggesting its intention to develop AI solutions in Europe.
Discretion as a security strategy
In such a sensitive sector as data, Schwarz Digits maintains a low profile and requires a high level of confidentiality from its employees. Candidates must sign non-disclosure agreements to not reveal the location of the headquarters, a measure aimed at mitigating potential security incidents. This infrastructure is key to managing its 4,000 Lidl and Kaufland stores, as well as 220 warehouses and production factories.
A local alternative to tech giants
Schwarz Digits‘s focus on privacy and data localization has allowed it to position itself as an attractive alternative to providers like AWS, Google Cloud, and Azure. This aspect is particularly important for clients like Bayern Munich, who cited digital sovereignty as the key reason for choosing Schwarz Digits as their cloud service provider.
Lidl’s leap into the cloud computing market marks a milestone in the sector, demonstrating how a company traditionally focused on retail and food can transform into a relevant player in the tech field, especially in Europe, where privacy and data sovereignty are growing priorities.
Source: FT, Xataka.