In the new digital economy, data is power. Questions about who controls, processes, and protects it now sit at the center of political and corporate priorities. The year 2025 marks a turning point in Europe’s pursuit of digital sovereignty, driven by tighter regulation and growing geopolitical tension. For enterprises within the EU, digital sovereignty has become a strategic requirement for sustainable growth in an increasingly regulated environment.
The State of Digital Sovereignty in Europe
Digital sovereignty, data sovereignty, and data residency have become part of Europe’s vocabulary. But what do they mean, and how do they differ?
Data Residency refers to the physical location of data centers. It does not necessarily involve legal control by the country where the data is stored. For example, data stored in Germany by a US provider may still fall under US jurisdiction (DataStealth).
Data Sovereignty means that data is subject to the laws and regulations of the country where it is collected, processed, and stored. This ensures that local privacy and access rules apply, even if the service provider is headquartered abroad (IBM Think).
Digital Sovereignty goes further. It is the ability of nations, organizations, and individuals to control their data, technology, and digital infrastructure without relying on external entities. It includes hardware, software, networks, and cloud services, ensuring that European organizations and regulators can define and enforce their own rules (Law Journal Digital).
Europe has long been a leader in data protection, yet its cloud infrastructure remains heavily dependent on US hyperscalers. This creates tension between sovereignty goals and operational realities. The State of the Digital Decade 2025 report highlights several priorities:
- Investment in connectivity, semiconductors, sovereign cloud and data infrastructures, AI, quantum computing, and cybersecurity
- Structural reforms to strengthen the single market and ensure technological autonomy
- Simplified administrative processes to promote innovation
Geopolitical and Legislative Drivers
NIS2 Directive
Effective since October 2024, NIS2 applies to critical infrastructure and mandates comprehensive cybersecurity and risk management across supply chains. It also enforces strict breach reporting timelines. The directive reinforces the need for European oversight of digital operations.
GDPR Enforcement Maturity
Since its introduction in 2018, GDPR has become the global standard for data protection. Enforcement has matured, with authorities focusing on cross border transfers, consent, and transparency. Noncompliance now carries significant financial and reputational risk, making data governance a top priority for enterprises.
Data Residency Requirements
In response to geopolitical uncertainty and extraterritorial laws, the EU is tightening residency rules for sectors such as defense, healthcare, and finance. Critical workloads must increasingly be hosted within EU borders or by providers shielded from foreign legal access.
Big Tech Promises and the Reality
Global hyperscalers are promoting “sovereign cloud” offerings for European customers. In practice, these solutions can still fall under US laws such as the CLOUD Act and FISA Section 702. This means that American authorities can request access to European data even when stored within the EU — a risk we explored in our analysis of the CLOUD Act and EU data sovereignty.
To counter this dependency, the European Commission plans to introduce the Cloud and AI Development Act in 2025. The goal is to triple the EU’s data center capacity within seven years and create a common framework for public sector cloud procurement.
Meanwhile, GAIA-X, the joint initiative by Germany and France, has moved into its implementation phase. More than 180 data spaces are being developed to enable secure data sharing and foster innovation under European control. These efforts support the broader objectives of the European Data Act and AI Act.
Together, these measures aim to strengthen Europe’s digital infrastructure and reduce reliance on non EU providers — a challenge we also outlined in why Big Tech keeps failing Europe on data sovereignty.
Challenges for Enterprises
Despite progress at the policy level, many enterprises still face obstacles in achieving digital sovereignty:
Vendor Lock In
European organizations often depend on US hyperscalers through long term contracts. This makes it difficult to switch to regional providers, increasing exposure to privacy risks — a dynamic explored in our article on Europe’s encryption dilemma.
Encryption Loopholes
Proposed regulations in the US and EU that call for backdoors or message scanning pose a direct threat to secure communication. Initiatives such as the Lawful Access to Encrypted Data Act or the EU’s ChatControl proposal could undermine both privacy and cybersecurity.
Compliance Gaps
Operating across multiple jurisdictions means managing a complex web of regional regulations. Hybrid or multi cloud environments create uncertainty about who can access data and where it resides. Many companies also lack the tools or leverage to guarantee that sensitive information stays within Europe.
Practical Steps Toward Sovereignty
European enterprises can take clear steps to strengthen sovereignty and compliance:
Use Self Hosted Solutions
Organizations in sensitive sectors can install and manage their own servers to maintain full control over data. Hosting data on premise or in verified private facilities ensures compliance with local laws.
Choose European Cloud Providers
There is growing momentum around EU based cloud platforms such as OVHcloud, Hetzner, Scaleway, STACKIT, UpCloud, Exoscale, and Open Telekom Cloud. These providers operate under European law and meet GDPR requirements.
Adopt European Built Software
Enterprises can reduce exposure to foreign surveillance laws by choosing tools developed and hosted in Europe. Explore the best European alternatives to Big Tech collaboration tools.
Implement End to End Encryption and Zero Trust
Organizations should use platforms that secure communications, files, and metadata through end to end encryption and zero trust architecture.
How Wire Supports Digital Sovereignty
Wire helps enterprises and governments protect sensitive communication while ensuring usability and compliance. Built in Europe and trusted by more than 1,800 organizations including EY, BMW, Schwarz Gruppe, and the German government, Wire offers the transparency and control that digital sovereignty demands.
- Servers hosted in Germany with backups in Ireland, protected from extraterritorial access
- Deployment options for on premise and private cloud environments
- End to end encryption using the Messaging Layer Security (MLS) standard
- Zero trust design with role based access controls
- Compliance with EU regulations including ISO 27001, ISO 27701, and NIS2 readiness
Wire combines enterprise grade collaboration with European data protection principles, allowing organizations to collaborate without compromise.
Conclusion
Europe’s digital sovereignty movement is accelerating, and organizations must act now to adapt. Those that invest in sovereign infrastructure, compliant cloud providers, and secure by design communication tools will strengthen both their resilience and their competitive position.
A secure and compliant collaboration platform like Wire helps organizations protect sensitive data, support sovereignty goals, and build trust across borders. Contact our team to learn more.
