A global service outage affecting Microsoft Outlook and Teams this week has reignited concerns across Europe about the continent's profound dependence on a small number of American technology companies. The disruption, which began on Thursday afternoon European time, impacted users across 74 countries and territories, according to the outage tracker Downdetector. In the United Kingdom, the technical failure caused significant real-world consequences, with some doctors' surgeries instructing patients to contact them via telephone for urgent medical queries.
Microsoft has confirmed that there is currently no evidence of a cyber attack, though the company has yet to identify a definitive root cause for the failure. Services were reported to be undergoing a gradual restoration by Friday. This event marks the latest in a series of service failures for the tech giant, following similar Microsoft 365 outages in January and August. Microsoft has committed to publishing a report on the cause of the outage once full service is recovered.
Tommaso Valletti, Professor of Economics at Imperial College Business School and the European Commission’s former chief competition economist from 2016 to 2019, noted that the episode highlights the inherent risks of relying so heavily on a handful of large US firms. Data from the Synergy Research Group indicates that Amazon, Microsoft, and Google collectively control approximately 70% of the European cloud market. In contrast, European providers hold only about 15% of the market, a decline from 29% in 2017, with major players like Germany’s SAP and Deutsche Telekom holding just 2% each. Previous reports have suggested that nearly 80% of Europe’s digital infrastructure originates from outside the European Union.
In response to these vulnerabilities, European policymakers are pushing for greater digital sovereignty. On Wednesday, members of the European Parliament presented a draft report on the Commission’s proposed Cloud and AI Development Act, which advocates for public authorities to prioritize cloud services from European providers. Dutch Green MEP Reinier van Lanschot warned that critical systems currently rely on external technology that can be switched off at any time. Concerns regarding such a potential "kill switch" were amplified in June when Anthropic suspended access to its Claude Fable 5 and Mythos 5 AI models to ensure compliance with US export controls, though access was later restored on July 1.
The European Commission aims to triple the EU’s data centre capacity within the next five to seven years and recently closed bidding for up to seven EU-backed AI "gigafactories." While Europe lacks a single rival to companies like Microsoft or Amazon, it is developing specialized contenders across different layers of the technology stack. France’s Mistral AI, valued at €21 billion following a September funding round led by Samsung, remains a prominent AI model developer. In the cloud sector, the Schwarz Group’s STACKIT is constructing an €11 billion AI data centre in Brandenburg, Germany. Furthermore, firms including STACKIT, OVHcloud, Scaleway, and Mistral secured positions on the Commission’s sovereign cloud contract, valued at up to €180 million, earlier this year.
Hardware development also remains a priority, with Germany’s Infineon recognized as a leader in power chips for AI data centres, identified at the SEMICON Europa trade fair in Munich as a key area for European growth. Despite these efforts, public and business sentiment remains mixed. Eurobarometer data shows varying willingness to pay for EU-based providers, while a Bitkom survey revealed that 85% of German companies feel the country is too dependent on US providers, even as 71% continue to utilize them. Research from IDC suggests that only 4% of European organizations intend to use local providers exclusively. Meanwhile, US firms are adapting to these concerns, with Amazon Web Services launching its European Sovereign Cloud in Brandenburg this January, managed by a separate EU-based entity. Parliamentary committees are set to discuss the Cloud and AI Development Act on December 1, with votes provisionally scheduled for mid-March and April 2027.
