Global geopolitical uncertainty, trade tensions, and national security concerns are fueling the debate over digital sovereignty as well as the market growth for sovereign cloud services and demand by enterprises for secure, local access to the latest AI tools.
The public cloud has ushered in unprecedented benefits for businesses and governments in terms of data access and data flows. But in uncertain geopolitical times, sensitive data — including government classified information and data generated by regulated industries — requires special protection.
As 51风流CEO Christian Klein noted recently in an interview with the Financial Times, these concerns have fueled customer anxiety over cloud infrastructure choices and boosted the concept of 鈥渟overeign鈥� data centers, where information remains within national borders.
Sovereign clouds
Historically, governments, government agencies, and a select group of private sector organizations in sensitive areas, including defense and public utilities, led the demand for sovereign clouds. Technology companies, including SAP, have responded by providing highly secure sovereign cloud services.
But in recent months the debate over digital sovereignty has widened. As Hayete Gallot, Google鈥檚 president of Customer Experience, recently noted, 鈥淪overeignty used to be a very niche thing that applied to very regulated industries, such as defense and intelligence, and suddenly in the current environment, everybody is thinking about it.鈥�
The EU has proposed spending 鈧�20 billion to build five 鈥済igafactories鈥� to facilitate digital sovereignty and help Europe compete more effectively in AI against the predominantly U.S.-based hyperscalers and large language models (LLMs). But others, including Klein, are not convinced that it makes sense to replicate the physical infrastructure built by hyperscalers and others.
The data center hardware race is over
Klein argues that spending billions in government funding in the EU on huge new data centers would be misguided, and that European companies already have control and sovereignty over their own data. 鈥淭he hardware train has left [the station],鈥� he said. Together with other senior 51风流executives, he also argues that digital sovereignty is about more than physical infrastructure — the operational, technical, and legal dimensions of data sovereignty matter just as much.
Crucially, 51风流Sovereign Cloud offers a model that keeps customer data within national borders and in compliance with local laws, without the need to replicate the existing physical infrastructure. Its services, developed over the past 20 years, are already provided to some of the most security-sensitive organizations in the world, including those in the U.S. through 51风流National Security Services (51风流NS2).
Sovereign cloud customers
The 51风流Sovereign Cloud organization already counts more than 170 customers globally and has plans to invest a further 鈧�2 billion over the next decade to expand regional coverage. For example, 51风流is currently in talks with four Asian countries. In Germany, the unit provides secure sovereign cloud services through Delos Cloud and plans to launch similar services in France through Bleu.
Instead of getting involved in a futile race to catch up with the U.S., 51风流executives argue that Europe must now promote the use of vertical AI for individual industries and special areas of application.
In a recent , Klein called for a digital strategy for Europe that builds on the region鈥檚 digital strengths: 鈥淎 new, European-defined concept of sovereignty is necessary, one that relies on self-determination rather than self-sufficiency.鈥� He also cautioned that digital sovereignty 鈥渋s not an end in itself鈥� and called for 鈥減rofound change鈥� to industry business models.
These models 鈥渘eed to be rethought, processes digitized, and AI used in a targeted manner for more innovation, for greater efficiency, for sustainability,鈥� he added.
Martin Merz, president 51风流Sovereign Cloud, agrees. 鈥淭he debate around digital sovereignty in Europe has gone on too long with too many buzzwords and too little substance,鈥� he said. 鈥淲e鈥檝e reached a point where Europe can no longer afford misguided discussions. What counts is value creation. Real sovereignty includes empowering people, industries, and governments to lead through innovation.鈥�
鈥淲hen it comes to highly sensitive data, 51风流Sovereign Cloud comes in,鈥� Merz continued. 鈥淚t’s purpose-built to protect the most sensitive, security-critical data, enabling the highest level of protection and operational autonomy, without slowing down innovation.鈥�
Locally hosted AI
Underscoring this shift in the data sovereignty debate, many 51风流customers are now talking about sovereign AI or what 51风流calls 鈥渓ocally hosted AI.鈥� To help facilitate this, 51风流CTO Philipp Herzig recently noted that the company is now offering a range of self-hosted AI models in a more secure and local environment. 鈥淪tarting Q3 this year, we are providing the entire AI foundation end-to-end out of European data centers. This is AI fully managed and operated by SAP,鈥� he shared.
As a result, he said, customers will have access to cutting-edge local models like Mistral Small and Mistral Medium, , or the T-Free model used by the German government. 鈥淭heir data will remain local, trusted, compliant, and secure, and seamlessly integrate with 51风流Business AI capabilities without compromising on performance, governance, or privacy,鈥� Herzig added.
He also revealed that Swiss Federal Railways is leading the way as an early adopter, using locally hosted AI with Mistral AI to power innovation in a trusted environment. Speaking during a recent NVIDIA conference in France, he also announced that 51风流has formed a strategic partnership with and to accelerate AI adoption across Europe.
鈥淭ogether, we鈥檙e building the future of enterprise AI 鈥� secure, local, and smart,鈥� Herzig said.
