There are growing concerns that EU citizens, businesses and Member States are losing control of their data, their capacity for innovation and their ability to control the digital environment.
Europe’s strategic autonomy has been demonstrated by our lack of power to respond independently to European security challenges.
At the same time, we are entirely dependent on non-European companies to provide strategically important cloud services.
The so-called “public” cloud is actually a very private and very profitable business for a small number of non-European mega-companies. As Jeff Bezos, the founder of Amazon Web Services, the world’s largest cloud provider, so aptly put it: “Your margin is my opportunity.”
Cloud computing has become a large and complex ecosystem of technologies, products and services.
It has spawned a multi-billion dollar economy where cloud providers compete for an ever-expanding market share. The market is worth more than 180 billion euros, roughly equivalent to Hungary’s GDP.
The top five cloud providers are Amazon Web Services (AWS), Google, Microsoft Azure, Alibaba, and IBM.
You will notice that something is missing from this list – no European companies. The United States and China monopolize the company.
AWS alone now generates $62 billion (€60.87 billion) in annual revenue with an estimated margin of 35%. AWS accounts for just 16% of Amazon’s total revenue, but it accounts for the bulk of the company’s overall profits.
The recently concluded French Presidency of the Council of the European Union has made EU digital sovereignty the cornerstone of its efforts to shape the future of the EU.
They want to support the development of a digital infrastructure that helps European innovators thrive and enables Europe to be a benchmark player in the future.
The recently passed EU Digital Services Act will create a safe digital space for citizens and businesses. With 747 billion euros in online sales in the EU in 2020, it is not too early to increase our protections.
Cloud computing is the backbone of all modern business software. If your business uses software, it almost certainly uses the cloud. The cloud is now an established and very profitable technology. Around 42% of businesses in the EU use cloud computing.
To strengthen digital sovereignty and provide EU businesses with a platform for innovation, Europe should build a true public cloud – a digital commons that gives European start-ups and established businesses a place to grow. their products without having their margins eaten away by foreign cloud providers. That would be the cloud as a public service. The huge margins of the current market leaders are our luck.
A public service such as gas or water offers an undifferentiated product between suppliers. The cloud no.
Even the most similar product, a virtual machine, comes in different variations. This is not the case for a utility.
That said, at AWS, which doesn’t break down margins by specific services, it’s widely understood that only a few services make up the bulk of revenue. EC2 – one of the oldest and most popular services – is estimated to contribute up to half.
If we took the current AWS Regions in Europe – Frankfurt, Ireland, London, Milan, Paris, and Stockholm – and mirrored this spread with a public infrastructure offering the five most popular cloud infrastructure services, we could give enterprises and European innovation a huge boost in the arm while ensuring digital sovereignty and autonomy.
Significant initial investments are needed to hire staff and build the data centers, but we should invest in the future.
Either way, European governments and companies are already spending tens of billions of euros on the cloud every year.
We can never achieve this most important part of digital sovereignty unless we take strong action to provide a baseline for European businesses to innovate.
We often have the feeling that public resources are poorly managed. However, in a European context, German trains, French electricity and our own An Post show what can be done if we take a commercial approach to running a public company.
An efficiently run public competitor that seeks to maximize output for users rather than overall profits would allow others to grow and could help us close the innovation gap with our American and Chinese rivals.
We can encode openness, innovation and European standards in a real public cloud. It takes audacity and a real investment.
The potential value is huge and there’s no better time to start than now.
Luke Feeney is one of the founders of TerminusDB, an Irish data management startup.