Europe's digital sovereignty alarm

As Washington flirts with retrenchment and American tech giants dominate everything from intelligence to cloud, Europe's leaders are finally sounding the digital-sovereignty alarm. A deep FT dive this week highlighted how Trump's transactional approach to transatlantic relations has nudged Brussels into a strategic rethink.

With Google, Amazon and Microsoft controlling two-thirds of Europe's cloud market — and US law, not EU, often deciding access to that data — policymakers are scrambling to reduce reliance: favouring local firms, promoting sovereign cloud solutions, and reviving long-stalled initiatives like EuroStack. The Commission is preparing a new cloud and AI infrastructure act for later this year, but the risks of sluggish execution, patchy financing and plain market inertia loom large. As Proton CEO Andy Yen bluntly put it: if Europe doesn't build its own tech now, it may be out of the 21st-century game altogether.

Sovereignty, and 'sovereignty washing'

Politicians are catching up with the broader euro-entrepreneurial sentiment about 'tech sovereignty' — the appointment of Commissioner Henna Virkkunen, now with 'tech sovereignty' in her title, signals intent. But domestic tech faces headwinds: Europe lacks scale and funding, with just a few local players in the global top 50, and venture capital lagging far behind the US. Hyperscalers are responding with 'European sovereign cloud' services, but critics warn of 'sovereignty washing' unless structural investment in talent and infrastructure scales up.

The stories that prove it can be done

There are strong stories everywhere, and governments must try harder to pare back the regulatory environment and open tax zones to encourage starting and scaling. France's Mistral AI is one such success — securing backing and delivering EU-centric models — but remains an outlier. Lovable is another: Europe's ninth unicorn of 2025, with the largest-ever Series A in Sweden, its 'vibe coding' platform empowering non-technical users to build production-grade apps through natural-language prompts. Europe stands at a crucial junction. Regulatory and procurement tools offer pathways to autonomy, and with real investment and scaled local alternatives, digital sovereignty can be a viable, positive next chapter for the continent.

Elsewhere this week

• The EU's tech-sovereignty push intensified with a proposed 'Buy European Act' and the €300 billion EuroStack fund.
• OpenAI signed a 'strategic partnership' with the UK to invest in AI infrastructure across justice, defence and education; the UK also struck deals with Anthropic and Cohere as part of a £2 billion AI growth strategy, though critics warn of deepening dependence on US firms.
• Meta refused to sign the EU's voluntary code of practice for general-purpose AI, citing legal overreach, while OpenAI pledged to comply.
• Munich-based Helsing secured €600 million at a €12 billion valuation to develop autonomous drones and AI-driven defence systems.

On the macro: Alphabet shares rose ahead of earnings even as analysts flagged AI-driven threats to its ad revenues, and the UK's AI-audit sector valuation neared £1 billion ahead of incoming standards.