European Cloud demand is rising: Key Takeaways from our SlashData Report and Webinar

The cloud landscape is changing. While US-based hyperscalers have long dominated the market, our recent study together with SlashData highlights a significant and accelerating shift: the rise of European cloud providers and a growing global appetite for multi-cloud strategies.

In our recent webinar, Pawel Piwosz (UpCloud), Alvaro Ruiz (SlashData), and Miguelángel Fernández (UpCloud) dissected the findings of report, “2025 Cloud Landscape in Europe and the US” revealing surprising user behavior, critical data sovereignty concerns, and where cloud providers need to focus their innovation.

The webinar is now available.

Hybrid cloud is now global strategy 

The survey data highlighted that the adoption of European Cloud Service Providers (CSPs) is not limited to Europe but rather its a global trend.

The report breaks down cloud usage into three categories: European-only, US-only, and Hybrid (using both European and US CSPs).

While US-based CSPs still hold over 90% market penetration globally, the hybrid adoption rate suggests an intentional move toward cloud diversification with 42% of both European and US organizations already using a hybrid approach.

Fernández expressed his surprise and optimism about this US data point stating “To see now that actually, that mix already includes European cloud providers is brilliant.”

The regulatory imperative

For European companies, the low rate of European-only cloud use (6%) is “concerning” according to Fernández, given the legal landscape. The conversation highlighted a critical distinction in that simply storing data in a European region isn’t enough, the provider’s legal jurisdiction is the key.

The EU Data Act (2024), GDPR, and the US Cloud Act create significant data sovereignty risks for European entities using US-based clouds for sensitive data. This forces decision-makers to focus on the provider’s ownership and legal footing.

“With the Cloud Act and all these geopolitical, legal and regulatory concerns, the fact that the data is just physically stored in Europe might not be enough.”

Alvaro Ruiz, Market Research Analyst at SlashData

Performance and privacy drive adoption

The report and subsequent webinar explored the primary drivers for adopting European CSPs and the most common reasons for rejecting them. Arguments for adoption included increased performance with 29% citing it as part of their top 3 reasons to adopt, in addition to data privacy and residency (28%) and reliability and uptime (25%).

On the other hand, reasons to reject the adoption of European CSPs centralised on cost concerns, security threats, and performance issues.

Adding clarity to cost concerns, Fernández added that European cloud providers generally offer “very competitive pricing.” He cited the common practice of US hyperscalers charging significant egress fees (for transferring data out of the cloud), which can add tens of thousands of dollars to a large company’s bill.

“When I mentioned that in UpCloud we do not charge egress fees, he wouldn’t believe me… This perception that European Cloud providers are somehow more costly, I honestly don’t know where that comes from.”

Miguelángel Fernández, Lead Product Manager at UpCloud

AI is a priority, but performance is fundamental

When asked about priorities for the next one to two years, AI was the top answer, but the margin was much smaller than expected.

• 33% Integrating AI into cloud infrastructure and processes
• 30% Improving performance and speed of cloud services
• 32% Scaling to meet future business demands

The speakers suggested that after the initial hype, decision-makers may now be focusing on the fundamentals. While they want to use AI, it’s useless without the underlying infrastructure to support it.

As Alvaro noted, the question allowed respondents to select up to three priorities. This implies that while AI is important, it cannot be achieved without the “basics… of scalability, performance, [and] optimizing.” Fernández agreed, stating, “I think it might be that companies are realizing that they need to simply get back to basics, right?”

“You cannot forget about the fact that your systems need to be able to scale, that they need to perform, that you need to optimize cost…”

Miguelángel Fernández, Lead Product Manager at UpCloud

European cloud is here to stay

The key takeaway from the report is clear – European cloud is establishing itself as a serious and competitive alternative. Driven by regulatory necessity and surprisingly high hybrid adoption in the US, European providers are gaining traction by focusing on superior performance, excellent support, and transparent, competitive pricing.

As Fernández summarized: “The European cloud is here to stay. It’s a reality. It’s growing ever more rapidly. And you should… be seriously considering adding European Cloud to your mix.”

Get the full report! Download the full, comprehensive report, “2025 Cloud Landscape in Europe and the US“ for a deeper dive into all the findings and charts discussed in the webinar.

Or watch the webinar now! Let us know what was your biggest surprise from this data?