The most uncomfortable fact about European cloud can be summarized in a single line: EU providers have increased revenue by 167% since 2017, but their market share has plummeted from 27% to 13%. This is the paradox captured by Synergy Research Group: a market that in Q2 2022 was already moving €10.4 billion—more than five times the volume of 2017—and yet, each quarter, it is more dominated by three US hyperscalers (AWS, Microsoft Azure, and Google Cloud) which now hold 72% of the regional slice. Europe is growing; what’s outside Europe is growing even faster.
This fact demands honest reading. It’s not a temporary setback or a partial snapshot. Synergy emphasizes that, in the four quarters preceding Q2 2022, cloud infrastructure revenues in Europe (IaaS, PaaS, and hosted private cloud) exceeded €27 billion, a 41% increase over the prior period. Within this pie, IaaS and PaaS account for over 80%, and they’re growing the fastest; in PaaS, areas like databases, IoT, and analytics are soaring. That’s where the platform gravity of hyperscalers isoverwhelming.
The mountain Europe isn’t climbing
John Dinsdale, Chief Analyst at Synergy, states very clearly: cloud is a “scale game” where you need to put billions of euros on the table repeatedly, play the long game, maintain relentless operational excellence, and succeed with products that generate positive dependence—like PaaS. While US providers invest more than €4 billion every quarter in capex within Europe, the “impossible” for a local contender isn’t acquiring more clients: it’s sustaining capex, roadmap, and operations for years until it can shift inertia.
No one of sufficient size is succeeding in this space. According to Synergy’s data, the European players with the ‘best position’—SAP and Deutsche Telekom—each hover around only 2%. Behind them are OVHcloud, Telecom Italy, Orange, and a constellation of domestic and regional actors that are growing, but not moving the overall market share needle. Meanwhile, European companies are utilizing cloud services more than ever and increasingly depend on hyperscalers for data, applications, and compliance.
“The European market will grow regardless of us; the question is who captures the value. The difference now isn’t selling hardware but in the data stack and edge as a platform. If we don’t fund products—PaaS with SLA, observability, data catalogs—and align public procurement with technological sovereignty, we will keep increasing revenue while losing market share. Stackscale sees it daily: customers want speed, governance, and reversibility. Europe can provide that, but it must decide to play that game.” — David Carrero, cofounder of Stackscale
Growing in IaaS, losing in PaaS: the commodity trap
Here’s an uncomfortable truth: competing in IaaS—machines, storage, networks—is fighting on price and scale against those who live off it and have built data centers near every client. But the real business hook—what drives consumption, fosters developer loyalty, and raises exit barriers—is in PaaS (managed databases, message queues, streaming, serverless, analytics) and data services. That’s where the product differential of hyperscalers—breadth of catalog, maturity, ecosystem—is systematic. And that’s where Europe has not yet provided a sustainable alternative.
The result is a vicious cycle: European customers deploy their data on local IaaS but ultimately connect it to managed services abroad (due to functionality, price, or simplicity); the data and application end up linked to the strongest provider, and the market share inexorably shifts toward those with PaaS.
Telcos: from expected edge to resigned co-location
European operators should be capitalizing on edge—5G, proximity sites, thousands of locations—to offer low latency, residency, and compliance. Some, however, have signed co-branding programs with hyperscalers (e.g., Wavelength) or doubled down on own platforms (with pricier licenses, technological dependence, and slower evolution). This weakens their position in the value chain, relegating them to space and fiber rental. If the EU sets targets like 10,000 secure edge nodes and climate-neutral ones by 2030, the window for telcos to lead own edge services isn’t infinite.
The “open source” excuse without European governance
It’s often said that “open source is the answer.” That’s partly true, but only if accompanied by governance and maintenance capacity in Europe. Building a “sovereign stack” based on controlled and largely externally funded projects—no matter how open they are—doesn’t solve the core problem. Sovereignty isn’t just about licenses; it’s about governance frameworks, communities, and local budgets to set roadmaps, security, and release cycles. Europe cannot rely on defensive forks that won’t hold when environmental or market conditions change.
What can Europe do (for real)?
1) Public procurement with teeth. If strategic autonomy is our goal, procurement processes must favor open platforms with European governance and IP, demand data portability and reversibility, and recognize the value of residency and software control. It’s not about outright banning but aligning incentives to foster sustainable alternatives.
2) Serious “European PaaS”. Selling hardware at a good price isn’t enough. We need to invest (public-private) in managed databases, caches, eventing, observability, catalogs, and AI with APIs and business SLAs. The priority isn’t reinvention but curation and consolidation of tools under European governance capable of operating at scale.
3) Edge as a product, not just as colo. Telcos wanting to differentiate should offer edge platforms—not just racks—with managed services and developer-friendly tools: tooling, marketplaces, local data gravity, identity, and security integrated. They should also open up to peer alliances (edge service roaming) to reach critical mass.
4) Stable funding for the core. Beyond one-off projects, Europe needs core teams to maintain platforms (security, QA, release engineering) with multi-year contracts. If the goal is not to depend on external roadmaps, the cost is funding the platform itself.
5) Skills and testbeds. Universities and research centers should run pilot projects on edge cloud for use cases in health, mobility, or energy, training SREs, data architects, and operators capable of executing this vision.
And what about user companies meanwhile?
Pragmatism. Given the market realities, they should optimize present solutions without sacrificing future potential: adopt multi-cloud with data portability and decoupled architectures, avoid unnecessary proprietary dependencies in critical layers (data, identity, observability), and document exit routes (export procedures, service equivalencies). When a serious European alternative emerges for a component in their stack, they should try it; without real adoption, there will be no traction.
The uncomfortable thesis: it’s not a “European cloud fall,” but maturity without ambition
The cloud in Europe is not failing: it grows vigorously. What fails is the ambition (and market share) of our providers. If the strategy is merely to be a national provider serving local needs, that’s okay: there will be business. But it won’t move the needle. Cloud leadership is built brick by brick in PaaS, data, and edge with sustained capex, product love for developers, and impeccable operation over a decade. If Europe isn’t willing to fund and sustain this equation—with aligned procurement rules and a stable industrial framework—then it won’t achieve technological sovereignty, regardless of the local market’s growth.
Synergy’s report isn’t an epitaph; it’s a mirror. It shows that Europeans can grow if they avoid always playing in the other’s territory. Edge offers the initial arena where latency windows, residency, and regulation can become an advantage. Leveraging this is a political, industrial, and crucially, a product decision. Time is running out.
Frequently Asked Questions
Why do European providers lose market share despite revenue growth?
Because the total market is expanding faster, driven by hyperscalers. If your growth rate is below the market’s, your percentage declines even if your revenues increase.
What makes PaaS different from IaaS?
PaaS (managed databases, queues, serverless, analytics) engages developers and drives consumption; it facilitates time-to-market and creates switching costs. Competing only in IaaS leaves you in commodity.
Can edge change the power dynamics?
Yes, because it offers latency, residency, and local context. But only if it’s provided as a platform—not just colo—with managed services, tools, and ecosystem.
What role should public procurement play?
Critical. It should prioritize platforms with European governance, portability, reversibility, and verifiable security, accelerating the uptake of open alternatives within the EU.
Source
Synergy Research Group — European Cloud Providers Continue to Grow but Still Lose Market Share (September 27, 2022).