Digital Sovereignty: Why European Companies Must Act Now

European companies currently hold only 23% to 25% of a global software market projected to reach $2.2 trillion by 2035, according to data from Andersen Lab. This gap reflects a structural dependence on non-European technology providers, leading DACH-region firms to prioritize digital sovereignty to mitigate vendor lock-in and geopolitical risks.

Why is Europe losing ground in the global software market?

The global software market is expanding from $830 billion to an estimated $2.2 trillion by 2035. Europe’s share of this market remains between 23% and 25%, according to Andersen Lab.

This disparity results from decades of reliance on technology providers from outside the continent. The lack of independent digital infrastructure, platforms, and AI systems has placed Europe in a secondary role in the global competition.

Did You Know? Approximately 80% of companies that intend to switch cloud providers find the process too complex or too expensive to execute.

What are the risks of vendor lock-in and geopolitical dependency?

Strategic risk arises not from dependency itself, but from “lock-in,” where contracts limit a company’s flexibility for years. According to Andersen Lab, sovereignty is defined as the ability to switch providers as a planned, affordable option rather than an emergency reaction.

Geopolitical incidents have highlighted these vulnerabilities. Examples include damaged undersea cables in the Baltic Sea, cyberattacks on European airports, and US export restrictions on AI chips that impacted European data centers without warning.

The US CLOUD Act allows US authorities to access data held by US companies, regardless of whether that data is physically located in Frankfurt or Dublin. This creates a compliance gap for organizations subject to GDPR, NIS2, or DORA.

Expert Insight: Samantha Carter notes that the shift from “dependency” to “lock-in” changes the business conversation from a political debate to a risk management necessity. When technical portability is absent, compliance with EU law becomes an operational liability rather than a legal formality.

How do EU regulations like NIS2 and DORA drive architectural changes?

A new compliance baseline has emerged over the last five years, starting with GDPR and expanding to include NIS2, DORA, the Cyber Resilience Act, the EU Data Act, and the AI Act. According to Andersen Lab, these laws effectively require “architectural sovereignty.”

NIS2: Mandates risk-based cybersecurity, incident response, and resilience testing for critical infrastructure.
DORA: Requires financial firms to implement ICT risk management and third-party monitoring.
Cyber Resilience Act: Establishes product liability for connected device manufacturers.
EU Data Act: Codifies the right to data transfer and provider switching.

How can companies implement a digital sovereignty architecture?

Sovereignty requires a six-layer architectural approach, according to Andersen Lab. This begins with physical infrastructure, including chips and data centers, supported by the EU Chips Act and EuroStack.

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The subsequent layers include network connectivity (Zero Trust and jurisdiction-aware DNS), platforms and middleware (EU clouds and Kubernetes), and data sovereignty (encryption and residency in EU zones). The final layers consist of sector-specific applications and governance frameworks like the AI Act.

Andersen, an AWS Advanced Partner with over 130 certifications, implements these strategies through modular architectures and the AWS European Sovereign Cloud, which provides jurisdictional isolation at the control level.

What happens next for non-US companies?

Digital sovereignty is moving from a niche trend to a mainstream business requirement. Gartner (2026) predicts that more than 75% of companies outside the US will pursue a digital sovereignty strategy and a corresponding cloud strategy by 2030.

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Companies may increasingly move critical workloads to sovereign infrastructure to ensure operational continuity. The transition is likely to shift from political decision-making to engineering tasks, focusing on validated portability and automated compliance.

Frequently Asked Questions

What is the difference between dependency and lock-in?
Dependency is using a global provider, while lock-in is a strategic risk where a contract or technical barrier makes switching providers too complex or costly.

Which regulations are forcing European companies to change their IT architecture?
Key regulations include GDPR, NIS2, DORA, the Cyber Resilience Act, the EU Data Act, and the AI Act.

What is the role of the EU Chips Act in digital sovereignty?
The EU Chips Act, along with EuroStack, provides the foundation for independence at the physical infrastructure layer, specifically regarding hardware and chips.

Do you believe the shift toward digital sovereignty will hinder innovation or create a new competitive advantage for European firms?