Dive Brief:
- Microsoft unveiled plans to boost its compute capacity in Europe amid rising tensions between the U.S, and the European Union, according to a Monday blog post published by Brad Smith, the company’s president and vice chair.
- The company aims to increase its European data center capacity by 40% in the next two years, boosting its presence in 16 European nations. “When combined with our recent construction, the plans we’re announcing today will more than double our European datacenter capacity between 2023 and 2027,” Smith said.
- The move is aimed at helping companies in Europe “navigate the uncertain geopolitical and trade environment,” Smith said, as enterprises in the region look for ways to manage risks.
Dive Insight:
Microsoft's planned expansion comes as geopolitical tensions rise and governments spar over trade. Though the EU deferred its retaliatory tariffs on U.S. businesses until July, the levies — if enacted — would significantly impact U.S. tech providers.
Enterprise technology customers are beginning to feel concern over the consequences of this friction, according to Ed Anderson, research VP and distinguished analyst at Gartner.
“There is growing uncertainty in the customer base, about the future relationships between countries, and it's giving rise to interest in more digital sovereignty solutions generally,” Anderson told CIO Dive. “In short, people just want their technology solutions to be closer to their domain of control.”
More than half of multinational enterprises will have digital sovereignty strategies in place by 2028, up from less than 10% today, according to Gartner projections.
In addition to the expansion announcements, Microsoft underlined its commitment to operating in adherence with local laws and pledged to pursue ligation in support of its contracts with European customers.
“Microsoft is seeking to provide assurances to the EU in the unlikely event that the U.S. would ever place a ban on provisioning cloud services to the EU,” said Scott Bickley, advisory fellow at Info-Tech Research Group, in an email. “However, I view this as extremely unlikely.”
In previous years, hyperscalers put forth sovereign cloud products in response to tightening privacy regulations in Europe. Oracle opened new cloud data centers in Germany and Spain in 2023, citing the need to comply with the General Data Protection Regulation.
AWS announced plans last year to invest $8.8 billion (7.8 billion euros) in support of its AWS European Sovereign Cloud through 2040. Microsoft said it will invest “tens of billions of dollars annually” to expand European compute capacity.
