European IT spending is projected to reach $1.3 trillion, an increase that sounds impressive until you ask what organizations are buying with all that money.
61% of Western European CIOs now want to increase their use of local cloud providers, and around half say geopolitics will restrict their use of global providers. But wanting independence and paying for it are different things.
Feeding the same dependencies
Software will capture more than a third of Europe’s tech spend by 2029. Most of that money flows to the same platforms European organizations have been using for years. Microsoft 365 subscriptions. Google Workspace licenses. Salesforce seats. The vendors change their pricing, add AI features nobody asked for, and the bills go up accordingly.
Instead of investment, companies are feeding a recurring cost with a growth rate attached. Every euro spent on foreign subscriptions is a euro that leaves the European economy and doesn’t build anything you own.
The pattern is visible in every budget cycle: teams request more seats, platforms raise prices, features get bundled with services you don’t need. Finance approves it because switching would be worse. Nobody calls it what it actually is – paying rent on your own operations.
The alternative that actually builds something
Some European organizations are redirecting that spending differently. The European Commission is procuring up to €180 million of sovereign cloud services. SAP plans to invest €20 billion in its sovereign cloud. The German state of Schleswig-Holstein completed migration of 40,000 employee email accounts from Microsoft Exchange to Open-Xchange and Mozilla Thunderbird.
Businesses are now making strategic shifts that convert operational spending into infrastructure investment. Instead of paying Microsoft or AWS forever, you’re funding platforms that remain under European control and building capacity that serves European organizations first.
The European Commission’s Cloud Sovereignty Framework measures sovereignty across eight concrete objectives. That specificity matters. When procurement decisions get evaluated against actual sovereignty metrics rather than just feature checklists, spending patterns change.
What budget growth should buy
Rising IT budgets create room to rebalance spending from dependencies to capabilities. Government agencies implementing sovereign infrastructure are choosing where license payments go. Enterprises moving to European platforms are deciding what gets built with their money.
The technical work of connecting Microsoft tools to sovereign infrastructure like Nextcloud doesn’t eliminate software costs entirely. You’re still paying for something. But you’re paying to build infrastructure that strengthens European technical capacity instead of enriching foreign platforms that extract value while providing diminishing returns.
Spending on datacenters in Europe is set to grow 38.2 percent in 2025 to reach $83.6 billion. Some of that goes to AWS and Azure building European regions they ultimately control. Some goes to European providers building infrastructure that stays in European hands.
The difference compounds over time. Subscription payments reset every year. Infrastructure investment accumulates. Domestic capability grows. Technical expertise develops locally instead of concentrating in Seattle or Silicon Valley.
The question you should ask
Every budget cycle, somebody asks whether the organization is getting value from its software spending. The better question is whether that spending builds anything the organization owns.
Platforms that treat European markets as revenue sources while keeping operational control elsewhere aren’t partners. They’re landlords. Rising IT budgets shouldn’t just mean bigger rent checks.
Organizations converting license fees into infrastructure payments are making a different calculation. They’re asking what percentage of their IT spending actually builds capability they control. What portion develops European technical capacity. What amount stays in the regional economy instead of flowing to foreign shareholders.
The global sovereign cloud market is projected to reach over $250 billion this decade. That market exists because organizations are tired of paying for dependencies that look permanent.
Budget growth creates opportunities. Whether those opportunities go toward feeding existing dependencies or building strategic capabilities depends on what organizations choose to buy. The spending increase is already happening. The only question is where the money goes.
