Finger on the Kill Switch
Why Europe's €300 Billion Cloud Computing Gamble is Doomed
The art of threatening allies may sound like a Trump invention, one of those unthinkable tactics he normalized. But calm, steady presidents have used the same method before. In 1956, President Eisenhower threatened to collapse Britain’s economy in what may have been the first act of financial warfare in U.S. history: Eisenhower opposed the British, French, and Israeli invasion of Egypt during the Suez Crisis, fearing it would destabilize the Middle East and open the door to Soviet influence.
Eisenhower pressured the IMF to deny Britain financial support and threatened to dump America’s pound-sterling bonds unless London backed down from Suez. By 1956, Britain was deeply overleveraged and dependent on international credit.
A sell-off would have triggered a collapse in the pound’s value, dried up Commonwealth credit lines, and plunged the country into a liquidity crisis. Without access to credit, Britain couldn’t have imported vital oil and food. Its trade capacity, capital formation, and ability to run deficits would have disintegrated, resulting in a substantial decline of living standards.
Eisenhower’s message gave him what he wanted: Britain pulled out within days. It seems the willingness to use tools like this depends less on the temperament of the sitting president, and more on whether a partner is seen as strategically aligned.
Unplugged
Beyond financial levers, the U.S. now has a tool it can deploy with more precision: cloud infrastructure which powers everything from email to industrial systems and government communication. U.S. providers Amazon Web Services (AWS), Microsoft Azure, and Google Cloud collectively account for as much as 92% of the European cloud market. Recently, the U.S. showed it’s more than willing to use this leverage when it deems necessary.
In February, President Trump imposed sanctions on the International Criminal Court (ICC) in The Hague after its judges issued arrest warrants for Israeli Prime Minister Benjamin Netanyahu and former Defense Minister Yoav Gallant. As a result, ICC chief prosecutor Karim Khan lost access to his Microsoft-hosted email account, reportedly leaving the court unable to function.
In response, calls for a genuine European alternative to U.S. tech infrastructure are growing louder. Politico quotes Francesca Bria from University College London:
You can feel that you are one executive order away from losing access to critical technology and infrastructures. It’s become clear that Europe must not depend on any external power with the ability to pull the plug.
One industrial policy initiative gaining steam as a way to break the U.S. stranglehold comes with a €300 billion price tag. Authored by a group of tech experts and economists, the so-called “EuroStack” initiative aims to make Europe self-reliant in digital infrastructure.
The usual parade of platitudes (bold, value-driven, innovative) can’t hide the scale of the challenge. Dismantling decades of U.S. tech entrenchment won’t be easy. After all, vendor lock-in is real. The city of Munich spent years trying to switch from Windows to Linux, only to abandon the effort due to compatibility issues. The experiment ended up costing around €100 million.
But the more fundamental problem lies in energy and infrastructure. Let’s explore how realistic the EuroStack goal is through this lens and what these constraints mean for Europe’s relationship with the United States over the next decade.
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The Cloud is a Factory
“Cloud computing” may sound ethereal, all software and light. But the cloud is built on industrial reality. Data centers are physical facilities that require massive amounts of energy for both computing and cooling. Energy costs typically account for 30–60% of a data center’s operating expenses. That’s a problem for Europe. In 2023, industrial electricity prices in the EU were 158% higher than in the U.S. Among developed economies, only the U.K. is even more expensive.
Cloud providers are under pressure to seek cheap locations. But within Europe, options are limited. Only the Nordics offer access to large-scale low-cost hydroelectric power.
As a result, the number of European hyperscale capacity remains small. Hyperscalers are data centers built for high-volume, high-performance workloads like AI and machine learning. According to an August 2024 report from Synergy Research Group, 13 of the top 20 hyperscale data centers are in the U.S., four are in the Asia-Pacific region, and only three are in Europe.
The rise of AI will make it especially difficult for the EU to achieve cloud sovereignty. That’s because critical digital infrastructure will increasingly depend on the hyperscalers Europe lacks. Take email, for example: as malevolent AI bots flood the web with ever more sophisticated spam, the safety of your inbox depends on advanced AI defenses.
But it isn’t just cost. Physical supply and grid infrastructure also pose a hard limit to EuroStack’s cloud ambitions.
Gridlocked
In mature markets (Frankfurt, London, Amsterdam, Paris, and Dublin), securing a grid connection for a large facility can exceed 3 to 5 years according to McKinsey. Other sources state it can take up to 13 years. And communities start pushing back against “power-hungry” data centers that strain local grids.
There’s another problem: uptime. Cloud services require near-perfect reliability. With renewables (primarily wind and solar) providing 42.5% of net electricity generated in the EU in Q1 2025, intermittency is a growing concern.
Operators typically hedge this with diesel or gas backup. In Ireland, where data centers could consume 30% of national electricity by 2030, some are bypassing the grid by connecting directly to gas infrastructure for on-site generation. But while current policy allows existing contracts, additional gas connections are not being provided. New gas-powered data centers are effectively blocked.
Other member states are even more strict. Germany, for example, requires that, starting in 2027, any data center with at least 300kW of grid capacity must use 100% unsubsidized renewable power. That means expensive battery arrays to guarantee 24/7 uptime. In essence, Europe’s insistence on “green data centers” prices them out of reality.
One way to meet the electricity demand without CO₂ emissions is nuclear power. In theory, France’s nuclear fleet could supply the electricity needed to power all of Europe’s data centers, whose consumption is expected to nearly triple to 150 TWh by 2030. But in practice its grid is already showing signs of strain during winter peaks. New nuclear projects could eventually ease the pressure, but they take time. Even under optimistic timelines, significant new capacity won’t come online before the mid-2030s
However, one piece of this story seems to contradict the electricity argument: U.S. cloud providers already operate data centers in Europe. They do so to comply with data protection laws and reduce latency. On the surface, that seems to undercut the idea that electricity prices are a barrier. If Amazon and Microsoft can do it, why not European firms?
Nobody Asked For This
The comparison between U.S. and European cloud services doesn’t hold. These American giants run global operations. Their high margins in the U.S. and Asia give them room to accept thinner margins in Europe without losing profitability. European-owned alternatives typically don’t have that cushion. In other words, building and operating sovereign EU cloud services at significantly higher energy costs only works if the market wants them.
And that’s the real problem: the market isn’t asking for this. There simply isn’t enough demand for EU-based providers to push AWS, Azure, or Google Cloud out of the bloc anytime soon. And if the market doesn’t want a large-scale EU-only cloud, that means governments are forcing it. But forced demand rarely ends well.
Europe’s track record here is telling. The Gaia-X “sovereign cloud” project has stalled amid bureaucracy and poor adoption. Quero, once pitched as a European alternative to Google, flopped entirely. Even the EU’s bizarre €387,000 metaverse launch party drew just 6—yes, six—people.
European officials seem well aware that true cloud sovereignty is a distant dream, if not an illusion. When the ICC prosecutor lost access to his email, the response from Brussels was deafening. The European Commission, typically loud in its Orangemanbad outrage, didn’t voice a single comment or objection this time. Microsoft, meanwhile, put on a show: It vowed to fight any future U.S. suspension orders in court and laid out plans to place control in European hands. But let’s be real, this is theater.
The Switch in the Room
The U.S. has decades of practice using pressure tools like secondary sanctions, punishing foreign firms for doing business with the “wrong” parties. Pretending Washington won’t compel Microsoft—an American company—to act when the stakes are high is pure fantasy.
That doesn’t mean EU officials will suddenly lose access to their emails, or that Europe’s industries are about to be cut off from vital cloud services at the flick of a switch. That kind of prediction is too crude and misses the real shift.
What matters is that the threat is now in the room, and it’s a lever that can be pulled whenever it becomes useful. This kind of power is unlikely to be exercised in the digital domain. In fact, that’s probably the last place it will show up. Levers like this are rarely used where they’re held. Pressure is applied across domains, because when both sides push in the same arena, escalation becomes hard to contain. And coming from an unrelated area, the pressure allows the target to comply without losing face.
That’s why it wouldn’t be surprising to see the EU align more closely with the U.S. on contentious issues: China, a Ukraine settlement, the tariff fight. New ones can pop up at any moment. Eisenhower didn’t need to dump the bonds to bring Britain to heel. He just had to let Britain know he might. Trump doesn’t need to cut off Europe. Showing the switch is enough.
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Europe went with conveniences of American tech due to their ties,to the empire, which, until recently, supported their views. The change of guard in the White House woke the EU to the fact that on so many levels - digital, energy, economy, military - American presence cannot be removed in a year. The building of a robust infrastructure and independent service takes decades, and no European country is capable of shifting US tech monopolies on their own, not with current political class and with current crop of people. Linux and free software is only a part of the story, because as you said, data centres and energy don't just get set up, which would require digital and industrial policy Europe simply does,not have.
As always, brilliant analysis.
Mandating the use of unsubsidized renewable power? Do they also command the Earth to spin slower while Germany is in daylight hours?
Germany is our first post-developed nation, having abandoned industrial civilization and the knowledge that got them there.