Hyperscalers face increasing competition in Europe as local cloud companies step up

The cloud computing market has long been dominated by a handful of U.S. companies. AWS alone powers about 12% of the web, with Azure and GCP controlling another 12% combined. However, with increased European regulations and growing unease over-reliance on American providers, many businesses are now seeking local alternatives.

One of the primary concerns is cost. Hyperscalers often use a pay-as-you-go pricing model, leading to unpredictable bills and hidden expenses. Reports suggest that over 20% of companies lack clarity on their cloud spending, prompting businesses to explore cost-efficient solutions.

Last week we reported on the growing popularity of Huawei cloud, and now it’s emerging that local cloud providers, such as OVH (France), Hetzner (Germany), and Civo (UK), are also capitalising on these concerns to attract European business.

OVH, for instance, has eliminated egress fees, allowing customers more flexibility in managing workloads across different providers without unexpected costs.

“With everything we do, we put ourselves in the shoes of a user,” said Dinesh Majrekar, CTO of Civo. “By using sensible defaults and clear cost indications, we aim to make it possible to scroll to the bottom of any form and create what you need.”

Hetzner’s approach is similar. As their spokesperson, Christian Fitz, told me, “We offer a straightforward user interface and an easy setup process, ideal for users who need cost-effective servers without complex administration.”

Trust and data sovereignty as key differentiators

With concerns over data privacy and US regulatory policies, European cloud providers are positioning themselves as more trustworthy alternatives. OVH, for example, manufactures its own hardware in Europe, ensuring greater control over its supply chain and higher data sovereignty.

Sustainability in Cloud Computing

European cloud providers are prioritising sustainability, with many powering their data centers with renewable energy sources. Hetzner, for example, uses hydropower and wind power.

Innovative approaches to heat reuse and hardware recycling are further enhancing the environmental credentials of European cloud providers. Civo partners with Deep Green to repurpose server heat for practical applications, such as heating water.

OVH, on the other hand, prioritises hardware recycling, extending the lifespan of its machines to reduce electronic waste.

The future of cloud computing in Europe

As businesses continue to seek alternatives to hyperscalers, European providers are expected to play a larger role in shaping the future of cloud computing. Emerging technologies such as quantum computing and AI workloads will likely influence this evolution, with companies like OVH already investing in quantum simulation capabilities.

For now, the trend is clear. European cloud providers are not only surviving but thriving by offering flexible, cost-effective, sustainable, and data-sovereign alternatives to the dominant U.S. hyperscalers.