SAP: Sovereign Data Infrastructure in Europe—Essential, or Not Even the Main Issue?

AI Infrastructure as a Strategic Factor

Although having its own infrastructure is only one element of a strategy for digital sovereignty, European politicians and policymakers have argued that without domestic data centers, Europe runs the risk of becoming dependent on U.S. and Chinese providers of key AI technologies.

This concern is shared by some industry leaders—particularly in finance and regulated sectors—who increasingly view AI infrastructure as the foundation for economic security. Specifically, they argue that sovereign data centers enable companies to comply with strict European regulations on data protection and AI governance. They say that a locally operated infrastructure ensures that data remains subject to European law, thereby reducing the risk of being subject to foreign legal systems and strengthening trust between customers and regulatory authorities.

Security and Compliance Requirements

European executives also view AI infrastructure as a safeguard against geopolitical risks. They believe that reliance on external providers leads to greater vulnerability, whether due to legal risks, supply chain disruptions, or political tensions.

As Christian Klein, CEO of SAP SE, noted last month at SAP Sapphire in Madrid, many European customers operate in the public sector or other highly regulated industries. “Geopolitical risks are a growing concern,” he said. “What if sanctions suddenly block the flow of data across borders? Or what if the latest large language models (LLMs) cannot be used in certain regions?”

Christine Lagarde, President of the European Central Bank, also highlighted this concern in her November 2025 speech titled “The Transformative Power of AI: Europe’s Moment to Act,” noting that in critical areas such as data centers and computing power, Europe “must avoid dependence on individual components whose failure would lead to the failure of the entire system.”  

Proponents of a sovereign AI infrastructure are also convinced that it can foster broader economic growth. Data centers often support ecosystems of startups, research institutions, and industrial applications, enabling Europe to benefit more from AI infrastructure.

From a technical perspective, proximity is also important. Locally based data centers reduce latency and improve performance for AI applications, particularly those requiring real-time processing or integration into industrial systems.

Yet despite these supposed advantages, many European business leaders have called on policymakers to adopt a more moderate, nuanced approach to handling sovereign data. What concerns them is not data sovereignty in and of itself, but rather the way it is being implemented—namely, primarily through the accelerated construction of new, domestically controlled AI data centers. They emphasize that data residency (storage location) is only one element of the four pillars of a data sovereignty strategy, which also includes legal sovereignty (sovereign control), operational sovereignty (independent operation), and technical sovereignty (data control).

In discussions with policymakers, European executives from various industries warn that it is unrealistic to reduce dependence on U.S. technology too quickly. This reflects a structural reality: Europe remains heavily dependent on non-European providers of cloud infrastructure, chips, and AI platforms.

According to a study by the Swiss cloud provider Proton, around 75% of publicly traded European companies rely on U.S. technology services (primarily Microsoft and Google) for critical infrastructure, including email, cloud, and software. However, switching providers quickly could disrupt operations without offering any real alternatives.

Obstacles and Concerns

Even the most ardent advocates of a sovereign AI infrastructure admit that major practical hurdles must be overcome to build massive AI data centers in Europe, including challenges related to energy. AI data centers are extremely energy-intensive, and Europe is already grappling with grid bottlenecks, high electricity prices, and lengthy permitting processes.

Without significant investment in energy systems, some European business leaders warn, projects for new data centers could be delayed, prove more expensive than planned, or be scrapped.

Another concern is that sovereignty-focused policies centered on infrastructure could distort markets. Critics warn that infrastructure subsidies could flow to less competitive domestic providers, which could lead to slower innovation and a misallocation of resources toward politically motivated rather than economically viable projects.

Accordingly, there is a risk that sovereignty will become industrial policy for its own sake, rather than a driver of efficiency or innovation. But perhaps the most important criticism is that the focus on infrastructure distracts from a more pressing issue: the use of AI.

In the past, Europe has tended to be hesitant when it comes to adopting digital technologies. Some executives, such as Klein of SAP, believe it is more important to drive the adoption of AI across all industries and point out that infrastructure alone will not lead to productivity gains. If infrastructure is overemphasized at the expense of sovereignty, this could lead to a slower adoption of AI due to additional complexity and costs. Klein stressed that it would be a mistake to place the primary focus on infrastructure if the development of AI applications and software suffers as a result.

Europe, he said recently, should prioritize investment in applied AI and software solutions rather than infrastructure. At the World Economic Forum in Davos earlier this year, top executives from major European companies such as Capgemini and Ericsson also warned against an overly protectionist approach. Excluding or restricting global providers would drive up prices, slow the adoption of technologies, and weaken competitiveness.  

The Corporate Perspective

From a corporate perspective, AI is rapidly evolving into a universally applicable technology, and the costs of AI infrastructure have a direct impact on productivity. If a European AI infrastructure is more expensive, there is a risk that European companies will fall behind their global competitors.

While data residency and other elements of digital sovereignty are essential for some companies operating in sensitive and highly regulated sectors, there is a risk that the debate on sovereignty in Europe oversimplifies what is fundamentally a global industry. Or as Henna Virkkunen, Chief Technology Officer of the European Commission, put it: “No one can be competitive on their own.”  

However, since AI development depends on globally integrated supply chains—including semiconductors, software, and skilled workers—a fully localized infrastructure may be neither feasible nor desirable.

Instead of building additional infrastructure to support AI development, Europe should focus on its true competitive advantage, which may lie in its treasure trove of operational data—a resource that is often difficult to access due to overly restrictive regulations and rules governing data access. The call for reform is therefore growing louder among business leaders across Europe.

Simplifying and standardizing data access rules would help European companies leverage this resource and compete more effectively with international rivals as they embark on the next phase of AI adoption—the path toward the autonomous enterprise.

– – – – – 

Related Links

👉 www.sap.com   

Photo: unsplash