Omdia, an independent analyst and consultancy firm, recently published its market radar paper on the sovereign cloud market and how cloud service providers (CSPs) are adapting to this trend. The study found that the top five Western public cloud providers – AWS, Azure, Google, IBM, and Oracle – dominate 86% of the cloud market, with a presence in 33 countries as of 2024. Despite the global availability of cloud services, infrastructure remains regional, with North America leading in data centers followed by Europe and China.
The report highlights the rise of new formats like edge cloud and sovereign cloud, as well as an increased focus on environmental sustainability. Omdia predicts that more players will enter the market in response to these trends. Additionally, the research indicates that CSPs will face growing pressure as China-based providers expand globally.
The EU is leading in data protection and sovereign cloud initiatives, with regulations like GDPR and Gaia-X setting the standard. Other regions, such as the Middle East, are also developing similar regulations, with initiatives like Saudi Vision 2030 driving growth in local infrastructure.
The emergence of genAI has led to the concept of “sovereign AI,” which involves developing and running AI within national borders to maintain control over data. This presents challenges for CSPs that do not offer local facilities, potentially causing them to lose business opportunities to locally-based data centers.
Looking ahead to 2026/27, Omdia expects AI development to be a key focus, with the concept of “sovereign generated data” gaining traction. This raises complex questions about digital ownership in the AI era.
To address the challenges posed by sovereign cloud requirements, Omdia has proposed a six-level model that reflects increasing levels of control and compliance. This model addresses data residency, processing, privacy, generated data access and control, cloud resiliency, and treating the cloud as important infrastructure.
CSPs are responding to the demand for sovereign cloud solutions by implementing strategies like full isolation with region-specific offerings and partnership models. These approaches allow CSPs to comply with regional regulations and offer customers the right level of control, compliance, and privacy.
In conclusion, as the sovereign cloud market continues to evolve, CSPs must adapt their offerings to meet the diverse needs of customers and comply with local laws. The optimal approach will vary depending on individual customer requirements.
