Analyst(s): Steven Dickens
Publication Date: August 29, 2024
Original Document #: AISD202408
Key Points:
- Sovereign clouds are rapidly gaining traction as major cloud providers such as AWS, Google, Microsoft, and Oracle increasingly focus on these localized infrastructures.
- These clouds address the growing demands for data sovereignty and regulatory compliance, especially in regions with stringent legal requirements.
- In 2024, Oracle and AWS significantly expanded their investments in sovereign clouds, highlighting the rising importance of these solutions in global cloud infrastructure.
The Rise of Sovereign Clouds: Shaping the Future of Cloud Computing – Report Summary
Analyst Take: Sovereign clouds are becoming increasingly important in cloud computing as major providers such as AWS, Google, Microsoft, and Oracle focus on localized infrastructures to meet the growing demands for data sovereignty and regulatory compliance. This trend is particularly significant in 2024, with AWS and Oracle investing substantially in sovereign clouds. These clouds are designed to address the needs of regions with stringent legal requirements, reflecting a broader trend toward localized data storage and processing.
Strategic Importance of Sovereign Clouds: Sovereign clouds are emerging as a critical element of the global cloud ecosystem, driven by strict data protection regulations, privacy concerns, and government mandates. In regions such as Europe, where the General Data Protection Regulation (GDPR) sets high standards for data protection, sovereign clouds provide a compliant solution by ensuring that data remains within a country’s borders. This localized approach helps meet legal requirements while offering security and resilience for sensitive information.
AWS’s Sovereign Cloud Expansion: AWS has shifted its strategy to embrace the sovereign cloud market, committing €7.8 billion to launch the AWS European Sovereign Cloud in Brandenburg, Germany, by the end of 2025. This cloud environment will be entirely separate from other AWS regions, offering enhanced security and compliance features tailored to highly regulated industries and government organizations. AWS’s investment marks a significant move into a market where regulatory adherence is becoming increasingly important.
Oracle’s Entry into the EU Sovereign Cloud Market: Oracle is also making significant strides in the sovereign cloud space with its EU Sovereign Cloud Service, hosted in Spain and Germany. This service provides access to over 100 cloud services while maintaining the same pricing as its other regions. Oracle’s agreement with the European Commission to integrate its Cloud Infrastructure into the EU administration’s cloud offerings highlights its commitment to meeting Europe’s regulatory demands. However, compared to more established competitors such as AWS and Microsoft, Oracle faces challenges, including limited regional availability and customer references.
Microsoft’s Digital Sovereignty Initiative: Microsoft has proactively addressed the demand for digital sovereignty with its Cloud for Sovereignty initiative, aimed at the government sector. This offering provides public sector organizations with the tools and infrastructure to meet their digital sovereignty requirements without additional costs. Microsoft aims to build trust with stakeholders and regulators by aligning with the growing emphasis on data sovereignty, offering a cost-effective solution for government entities.
Google Cloud’s DIY Approach to Sovereignty: Google Cloud has taken a more flexible, do-it-yourself (DIY) approach to sovereignty through its Sovereign Solutions portfolio. This strategy allows organizations to customize their sovereignty requirements using Google’s tools and partner solutions. While this approach offers flexibility, it has been criticized for lacking the comprehensive sovereignty features provided by other hyperscale providers. Google’s focus on empowering customers to tailor their solutions may appeal to those with specific needs. Still, it might need to be more for organizations seeking a fully integrated sovereign cloud environment.
Conclusion
Sovereign clouds are reshaping cloud computing by addressing the growing need for data sovereignty, security, and regulatory compliance. As major providers such as AWS, Microsoft, Google, and Oracle invest heavily in these solutions, the industry’s competitive dynamics are evolving. These investments meet the specific needs of governments and highly regulated industries and reflect a broader shift toward localized data storage and processing. As geopolitical tensions persist, the demand for sovereign clouds will increase, presenting opportunities and challenges for cloud providers and their customers.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Other insights from The Futurum Group:
The Rise of Sovereign Clouds Amidst a Fractured Global Climate
IBM Invests in Canadian Cloud Sovereignty
North Africa’s Cloud Revolution Led by Oracle
Author Information
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the Vice President and Practice Leader for Hybrid Cloud, Infrastructure, and Operations at The Futurum Group. With a distinguished track record as a Forbes contributor and a ranking among the Top 10 Analysts by ARInsights, Steven's unique vantage point enables him to chart the nexus between emergent technologies and disruptive innovation, offering unparalleled insights for global enterprises.
Steven's expertise spans a broad spectrum of technologies that drive modern enterprises. Notable among these are open source, hybrid cloud, mission-critical infrastructure, cryptocurrencies, blockchain, and FinTech innovation. His work is foundational in aligning the strategic imperatives of C-suite executives with the practical needs of end users and technology practitioners, serving as a catalyst for optimizing the return on technology investments.
Over the years, Steven has been an integral part of industry behemoths including Broadcom, Hewlett Packard Enterprise (HPE), and IBM. His exceptional ability to pioneer multi-hundred-million-dollar products and to lead global sales teams with revenues in the same echelon has consistently demonstrated his capability for high-impact leadership.
Steven serves as a thought leader in various technology consortiums. He was a founding board member and former Chairperson of the Open Mainframe Project, under the aegis of the Linux Foundation. His role as a Board Advisor continues to shape the advocacy for open source implementations of mainframe technologies.
