German enterprise software leader SAP just threw down a €20 billion gauntlet in Europe's sovereign cloud battle, announcing a decade-long investment to challenge Amazon and Microsoft while keeping European data firmly within EU borders. The move signals SAP's bold pivot from traditional enterprise software to infrastructure-as-a-service, targeting companies seeking AI capabilities without compromising data sovereignty.
SAP just made the biggest bet in its 53-year history, committing over €20 billion to transform itself from Germany's enterprise software stalwart into Europe's answer to Amazon Web Services and Microsoft Azure. The decade-long investment, announced Tuesday, positions SAP as the champion of European data sovereignty just as AI demand explodes across the continent.
The timing couldn't be more strategic. European companies are caught in an impossible bind: they need cutting-edge AI capabilities to compete globally, but existing cloud giants store data on US servers, creating regulatory nightmares under GDPR. SAP's sovereign cloud promises to solve both problems simultaneously.
"Innovation and sovereignty cannot be two separate things — it needs to come together," Thomas Saueressig, SAP's board member leading customer services, told reporters during a virtual press conference Tuesday. His message was clear: European companies shouldn't have to choose between technological advancement and regulatory compliance.
The investment fundamentally reshapes SAP's business model. Beyond its traditional enterprise resource planning software, SAP will now offer infrastructure-as-a-service (IaaS) — the foundational cloud computing layer that Amazon and Microsoft have dominated for over a decade. SAP's twist: all data stays within EU borders, with new on-site options allowing customers to use SAP-operated infrastructure within their own data centers.
This sovereign cloud push reflects broader geopolitical tensions reshaping the tech landscape. As trade wars and security concerns mount, countries worldwide are on-shoring computing infrastructure needed for AI training and deployment. Amazon and Microsoft have already launched to appease European regulators, but SAP's advantage is being European-born.