European businesses are raising clear alarms. A growing push for EU Digital Sovereignty could hurt profits and weaken the continent’s overall competitiveness. As Brussels works harder to cut reliance on US tech giants, companies across banking and manufacturing are speaking up. They explain that their heavy dependence on American office software, cloud infrastructure and fast-growing AI services simply cannot end quickly. Any sudden shift, they add, would bring major disruption. Furthermore, executives insist that Europe still lacks the ready-made alternatives needed for a smooth transition. As a result, the drive toward greater independence carries real risks, and leaders are urging caution before any big moves.
In Europe today, as Ilse Henne, chief executive of supply chain manager Thyssenkrupp Material Services, points out, firms are not truly in the position to substitute all their IT solutions with European ones. Moreover, she stresses that significant investment and strong political support will be essential to move away from US tech. Top executives at companies such as ASML, Ericsson and Capgemini have echoed this view in recent months. They caution against protectionist reflexes that could raise costs and slow down investment. In addition, these leaders highlight how deeply European operations rely on American platforms for everyday efficiency. Consequently, any rushed change threatens to slow productivity across entire industries.
5 Key Takeaways
- Businesses warn of serious damage if EU rushes digital sovereignty. European companies in banking, manufacturing and beyond depend heavily on US tech (Microsoft, Google, hyperscalers) for office tools, cloud and AI. They lack comparable European alternatives in quality, maturity, scalability and innovation speed. A sudden switch would cause major disruption, extra costs, retraining, software rewrites and lost productivity, risking profits and global competitiveness.
- Geopolitical fears drive the push. Worries about Trump-era “tech decoupling” or a “kill switch” (US cutting services via sanctions/export controls) have accelerated EU efforts. The European Commission is preparing a tech sovereignty package to boost sovereign clouds and software independence. Yet executives say politicians underestimate switching complexity, especially with existing pressures from Chinese rivals, high energy prices and transatlantic uncertainty.
- Practical benefits currently outweigh risks. Commerzbank notes US providers’ superior range and maturity make them the best choice today. Deutsche Bank stresses global partnerships are essential for worldwide clients and warns of systemic risks from over-reliance on few (mostly US) providers. Banks and firms stick with American hyperscalers because they lead in resilience, scale and fast innovation.
- Focus sovereignty on future projects, not existing systems. A smarter path applies independence mainly to new areas like AI over the next 3–4 years, using the best available (often foreign) models rather than building costly full European infrastructure from scratch. This avoids being overtaken by US/Chinese competition while accepting short-term dependence.
- Overreach risks protectionism and isolation. Critics argue heavy-handed sovereignty could become “digital solitary confinement,” cutting Europe off from global innovation. Instead of copying Silicon Valley giants, Europe should build collaborative ecosystems, fix single-market issues, reduce regulation and attract capital, balancing ambition with realism so sovereignty strengthens, rather than weakens, competitiveness.
The Momentum Behind EU Digital Sovereignty
The push for EU Digital Sovereignty has gained fresh momentum lately. This surge stems from worries that US President Donald Trump’s foreign policy might force a tech decoupling. Furthermore, the European Commission plans to present a tech sovereignty package next month. This package aims to expand sovereign cloud solutions and strengthen Europe’s independence in software. However, many companies argue that politicians underestimate the operational complexity and the high costs involved in switching. As a result, the continent’s industrial base already faces pressure from Chinese competition, high energy prices and uncertainty over transatlantic trade. Therefore, executives believe the timing could not be worse for such a major overhaul.
Shifting away from existing infrastructure, as a major European carmaker explains, would involve additional costs and extra time. Moreover, European businesses, especially those with global operations, have built their digital systems on US platforms over decades. Consequently, moving away requires retraining employees, rewriting software, renegotiating contracts and accepting short-term disruption. In addition, many firms note that Europe simply lacks comparable alternatives to replace US software right now. As Francesca Musiani of the French National Centre for Scientific Research observes, multinational companies have spent years constructing their processes, productivity and sometimes even their business models on tech bricks that come from the US. She adds that invoking sovereignty or national security concerns proves harder to justify for private companies than for public organisations, especially if the change costs more or performs less well. Furthermore, private firms operate in a global competition logic where any operational slowing down can quickly translate into losing market share.
Banking Sector Voices Strong Concerns
German lender Commerzbank shares this perspective. The bank points out that the range, quality and technological maturity of services offered by US groups Microsoft and Google are currently available only to a limited extent in the European market. As a result, the benefits of using these providers at this point outweigh the inherent risks. Similarly, Deutsche Bank explains that its partnerships with global technology players reflect its need to support clients around the world. In turn, the bank also works with companies in Germany, Europe and Asia.
Moreover, in its latest annual report published on Thursday, Deutsche Bank warned that the financial sector’s growing reliance on a small number of global cloud and data-centre providers, many located in the US, is increasing concentration and systemic risks. Alexander Schroff at consulting firm Publicis Sapient sums it up clearly: banks continue to rely on US hyperscalers because this is where scalability, resilience and speed of innovation are currently the most industrialized. Therefore, the practical advantages remain hard to ignore.
Fears of a Sudden ‘Kill Switch’
Amid these practical worries, concerns are rising over a possible kill switch scenario. In this case, the Trump administration could force US tech companies to stop providing services to European customers through sanctions, export controls or other legal mechanisms. While most executives see the prospect as unlikely, it has become a recurring topic in boardrooms and government meetings. Furthermore, US tech companies have stepped up efforts to reassure European businesses and governments.
For instance, they offer sovereign cloud solutions and form partnerships with European firms. Deutsche Telekom, for its part, is actively promoting sovereignty through its European platforms such as T Cloud Public and Industrial AI Cloud. At the same time, however, a spokesperson acknowledges that the company will also remain dependent on technologies from abroad. Consequently, even supporters of EU Digital Sovereignty recognize the limits of full independence today.
EU Digital Sovereignty: A Smarter Focus on Future Projects
The European carmaker suggests applying technological sovereignty more in the context of future projects, for example in AI, rather than in existing business processes. In Berlin, an emerging view supports this approach. Officials there describe it as a trade-off between sovereignty and competitiveness. As one German government insider explains, European companies need to focus on applying the best available AI models over the next three to four years. Otherwise, they risk being overwhelmed by Chinese and US competition. Additionally, the insider notes that attempting to build its own cloud infrastructure and foundation systems would require vast sums. Therefore, favouring the implementation of foreign AI models makes more sense for now than chasing complete self-sufficiency at great expense.
For American companies and their allies, the argument is easy. Europe’s sovereignty push risks sliding into protectionism. Alexandre Roure of the Computer & Communications Industry Association, whose members include many Big Tech groups, puts it plainly: we shouldn’t confuse digital sovereignty with digital solitary confinement. Walling Europe off won’t make it safer or more independent; instead, it will just cut the continent off from global innovation. In addition, Michael Kratsios, Trump’s science and tech adviser, stated last month that real AI sovereignty does not mean waiting to participate in an AI-enabled global market until you have tried and failed to build full self-sufficiency. Furthermore, several business representatives warn about the spiralling risks of protectionism. They emphasise that Europe must first fix the basics that would make homegrown alternatives viable, such as a functioning single market, fewer regulatory burdens and deeper pools of capital.
Avoiding the Hyperscaler Trap
Martin Hullin at the Bertelsmann Stiftung in Berlin offers a constructive path forward. He advises Europe to avoid a hyperscaler trap by trying to replicate Silicon Valley giants. Instead, he advocates building ecosystems to achieve shared technological goals and anticipate the next innovation cycle. In turn, Hullin believes there are very interesting opportunities ahead. However, these will materialize only if Europe plays its cards right with the right industrial policy tools. As a consequence, the debate around EU Digital Sovereignty is shifting from pure independence toward smarter, more collaborative strategies. Moreover, companies and policymakers alike are learning that competitiveness and sovereignty can reinforce each other, provided the steps are taken carefully and with full awareness of current realities.
Finally, the warnings from European business leaders are clear and consistent. While the goal of EU Digital Sovereignty holds obvious appeal, the path toward it demands realism, investment and patience. Furthermore, by listening to these voices from banking, manufacturing and beyond, Brussels can shape policies that strengthen Europe without undermining its hard-won competitiveness. As a result, the coming months will test whether the continent can balance ambition with practicality.
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