Europe's cloud challenge: Building an Airbus for the digital age
Feature More than half a century ago, a consortium of European aerospace businesses from the UK, France, Germany and Spain joined forces to take on America's Boeing. Fast forward to the 21st century and the countries are applying the same model needs to the world of cloud computing, giving the continent a fighting chance to reduce the digital domination of Big Tech.
It took Airbus decades to compete with rivals on a global stage, achieving an operating profit only at the end of 1990. Due to the success of the A320, it reported an overall net profit five years later. Long-term thinking, as is more typical in China, is how Catherine Jestin, executive vice president of digital at Airbus, views what's needed now.
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There are some big players in Europe, albeit not in the same ballpark as AWS, Microsoft, or Google. "If we are able to build on them, maybe we have a chance to reach - not tomorrow, but maybe in one or two decades - something that is getting closer," she told The Register.
"It's a long game," she added. "And if you look at the way China is approaching it, it takes time. It takes political will and the alignment of the industry. Easier to attain in China than in Europe."
Digital sovereignty isn't a new topic, though under Trump 2.0, interest in the subject continues to balloon. This isn't lost on the big three US cloud giants. Despite their size, they're moving quickly to protect their patch. Europe represents big business for them, and with the safety of hosted data a priority for customers in the region, AWS, Microsoft, and Google are promoting their own digitally sovereign services.
President Trump has created mistrust of American institutions in Europe. The US - once seen as the leader of the free world - isn't perceived this way now. The CLOUD Act further sows the seeds of doubt, worrying customers about US authorities getting access to their data. The International Criminal Court incident, when the ICC chief stopped being able to access email after he was sanctioned by Trump, has left some wondering if they'll find themselves in the same boat.
AWS, Microsoft, and Google insist these fears are blown out of all proportion.
Jestin says lawyers still haven't come back with a definitive answer to the question of whether customers in Europe are immune to extraterritorial laws, when using their digitally sovereign services.
Over-reliance on America is something GAIA-X was founded to address. The European Commission-backed initiative was conceived in 2019, the brainchild of France and a more cautious Germany that wanted to back a digital champion, but not at the cost of upsetting trade relations with the US.
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Jestin, who is chairwoman at GAIA-X, says it was never the organization's intent to fund a European David to take on the Goliaths in the US. "The idea was more to foster the creation of it and to put in place the conditions for this to emerge. This has not been completely successful."
"I think that the creation of Airbus was a political decision," she added. "What we were missing at the launch of GAIA-X was this backing from political institutions. And there were probably too many people and companies that wanted to become champions. The number of players is just too high."
Just as Europe has started to find common ground in defense, so too is it finding some unification in the provision of sovereign data spaces. Signs of this were evident at the Franco-German Digital Sovereignty Summit in Berlin on November 18, an event focused on AI, the cloud, chips, and using open source software to create an independent digital infrastructure.
However, just as the US supports its tech companies with IT contracts in the federal sector, governments across Europe need to put their money where their mouth is and start backing local IT providers. At present, more than 70 percent of cloud computing contracts in Europe go to the big three. That needs to change, says Jestin.
"If the European governments only rely on private funding and hope that all the European large organizations will be the ones funding the creation of a champion, we will not be successful. It has to be joined together. We will have to make choices. We need to pick a few players, bet on them, invest in them, and bring public funding."
Not subsidies, but government service contracts.
Thiebaut Kleiner, director of Future Networks at DG Connect at the European Commission, who was among the attendees at the event in Berlin, spoke on stage at the GAIA-X conference in Porto during November, which The Register attended.
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The "problem," he said at the event, is that many European tech providers might be national or not have the scale of "international competitors" and so are less visible. But the concept of a "European technology stack where we complement each other" is "exciting."
Technological sovereignty should be discussed more widely at the next European Council, Kleiner said. "But in the future, we should not even ask ourselves. We should simply do it and really use European providers first."
GAIA-X has itself taken six years to create a framework for digital sovereignty. It's a complex, multi-faceted initiative that involves four layers denoting varying levels of digital sovereignty compliance, each with increasingly stricter conditions.
The strictest requirement, Level 3, necessitates corporations be headquartered in Europe to truly offer data solutions that can be considered digitally sovereign under the sovereignty index. Level 3 will be applicable to circa 10 percent of customers in the region who need this level of data sovereignty guarantee. Military and highly regulated industries will opt for this, and it likely won't come cheap.
Industries including aviation, automotive, and nuclear are among those creating data spaces - a standardized software platform to exchange sensitive data digitally in a protected way between suppliers for collaboration purposes. This is about demonstrating compliance with the principles of digital sovereignty. More than 150 projects in total are underway, although only a handful of the data spaces are operational today.
Companies in the finance, agricultural, and pharmaceutical sectors are also making progress in this respect. The concept is intended to comprise all suppliers that work in a specific vertical market. Airbus, for example, works with 10,000 suppliers globally in the design and production of aircraft. French energy provider EDF is building six new nuclear plants and is creating a data space for 2,500 suppliers in its ecosystem that will help to build and manage the nuclear facilities.
"It's coming, slowly," said Jestin of the data space proliferation.
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With much of the technology in the world produced outside of Europe, it isn't realistic to rely on a European stack now. But the idea, via the European CHIPS Act and related initiatives, is to nurture the creation of one over time.
American companies are trying to partner with European digital providers - Google with Thales in France, Google with T-Systems in Germany, and Microsoft with Orange and Capgemini in France. These alliances are not perfect, says Jestin, but they are also an opportunity.
"I see that as an opportunity to develop skills, to develop knowledge, and that's a little bit like what Airbus did after the Second World War. We learned about aeronautics by working under license of US products. And then, thanks to that, we were able to develop our own skills and industry around it. So I see that also as a way for Europe to really understand and build skills, build competencies, and maybe tomorrow, build something that will be able to compete."
American and Chinese big tech are members of the working group of GAIA-X and can influence the standards, but they "respect the rules of the association," said Jestin. They are not on GAIA-X's board, which is comprised only of Europeans tasked with making the strategic decisions.
Minutes of every meeting where decisions are made are publicly available for transparency purposes, and Jestin urges detractors to take a look. Achieving certification to provide GAIA-X label Level 3 - 100 percent digital sovereignty - requires service providers to be headquartered in Europe.
AWS is itself setting up a European organization, so will it comply? "My view is, at this stage, I still don't understand," said Jestin. "I know that they claim they are immune to extraterritorial laws. I still don't understand how it is possible. And for me, if they are still subject to extraterritorial laws, they will be excluded from Level 3, because that is the big criteria."
Lawyers are working on this review process.
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Forrester senior analyst Dario Maiso told The Register that the tech market remains "heavily dependent on hyperscalers," with some 70 percent of the cloud market in the hands of the big three.
"Their clients are already accustomed to cloud migrations, so as sovereign solutions become available, it is likely that one of the preferred ways to realize sovereignty will be to migrate from the non-sovereign to the sovereign solution of the hyperscaler.
"However, we also see clients switching from hyperscalers to local cloud vendors at a cost to get rid of the dependency on foreign jurisdictions. This opens up a more complex problem though, as clients will have to migrate the SaaS stack and the workspace suite too, something that is sometimes not even technically possible."
GAIA-X has amassed a catalog of services - 600 as of November - provided by fifteen European service providers, and these will be used to create the data spaces. The services will be selected based on the four security levels specified.
The data spaces concept, based on the GAIA-X sovereignty index, is also being exported to Japan, Korea, Brazil, and Canada. This framework, we're told, respects local legislation but enables global interoperability of data.
One country that has yet to show firmer interest is the UK. GAIA-X CEO Ulrich Ahle says GAIA-X has not made real progress there in the past three years, despite some discussions with officials from the UK government.
"So far, we have not established the right contacts in the UK to really get the support from the government. And from my perspective, we have not been successful yet to convince the UK on the benefits of data spaces as an enabler to create sovereign data operations," he told us.
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The UK was one of the major forces behind the creation of Airbus, and yet the country continues to award public sector contracts to US hyperscalers. Central government departments have 41 live contracts with AWS alone, totaling £1.1 billion. More agreements are headed in the direction of AWS, including a £600 billion contract from HMRC, with additional departments distributing tenders.
With European leaders admitting it will take years for European cloud providers to get the scale to compete, there is a risk that AWS, Microsoft, and Google will have an even tighter stranglehold on the sector.
Ernst Stoeckl-Pukall, head of unit digitization and industrie 4.0 at the Federal Ministry for Economic Affairs and Energy in Germany, said at the GAIA-X event in November that he is "totally committed" to GAIA-X, that it is about a federation, interoperability, and "strong communities."
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That said, he admitted Europe does not yet have a "strong decision process" across the continent to push GAIA-X forward and this is "why we lose so much speed."
It may be that too many factions have a vested interest in promoting their national digital champions.
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"We will need to make choices," said Jestin. "And maybe we will need to make joint ventures and create associations."
"When we created Airbus more than 50 years ago, it was a political decision to take the German champions, the French champions, the Spanish champions, the UK champion, and bring them together. And maybe we need to do that on digital also and pick a few big players and ask them to work together for a goal that is going beyond their current mission."
"I don't know if it is feasible - maybe I am just dreaming - but I think that is the way it needs to work, because otherwise there are too many players who will try to get the support."
One thing is certain: with Trump in the White House for three more years at least, the topic of digital sovereignty won't be going away anytime soon. ®