Is digital dependency Europe’s new Nord Stream?
Updated: Oct 29
In 2022, Europe realised that becoming dependent on Russian energy, whatever the benefits of that cheap energy for our economies, had been a mistake. Because strategic dependency means strategic vulnerability. The goal was set to achieve independence from Russian energy by 2027.
At the same time, however, we have allowed another dependency to emerge, less visible but no less important, and now it is time to address it.
Europe’s digital backbone relies on non-European technology
While at its peak Russia supplied 40% of Europe’s needs, in the digital world the situation today is considerably worse.
Around 74% of listed European companies depend on US information technology for their business.
Every year, the European Union imports around EUR 200 billion worth of digital services from the US (and this figure does not include most hardware).
92% of Western data sits on the infrastructure of US companies.
According to various sources, large American companies control 65-92% of the European cloud services market.
Europe accounts for 7% of global investment in artificial intelligence (the US and China together for 80%).
Infrastructure that is essential to the functioning of our society is not under our control.
The only positive difference worth noting is that, in the US, Europe does not depend on a strategic adversary for its digital backbone. It does, however, depend on an economic competitor and a partner whose values are drifting ever further from ours.
Europe learned a harsh lesson on energy dependency. The question is whether we can also respond quickly to the problem of digital dependency and move towards mitigating the risks.
Three levels of dependency
Today, Europe’s dependency on digital technology shows above all in three layers:
Infrastructure dependency: Europe’s digital infrastructure runs predominantly on US cloud and hardware platforms such as AWS, Azure, Google Cloud, Dell, Cisco, HPE, Fortinet and others.
This increases supply chain risk, as any disruption in licensing, component availability or export controls can paralyse local operations.
It also creates financial risk: pricing and licensing models are decided by global monopolies whose cost structure depends neither on the European market nor on European interests.
Legal dependency: even when data is stored in Europe, it is often subject to US jurisdiction through laws such as the CLOUD Act and the Patriot Act.
This means legislative and regulatory risk: foreign laws can interfere with European data protection and privacy standards. At the same time there is political risk, as strategic or security tensions in relations with the US can quickly spill over into the digital space.
Cultural and ecosystem dependency: European IT education, tools, certifications and procurement frameworks are closely tied to American technology ecosystems.
This shapes mindsets and market behaviour, creating lock-in (through training, certifications and migration costs) and supply chain vulnerability, as local providers often cannot compete, or even integrate, without US technology. The result is a vulnerable digital monoculture.
Together, these layers form a dependency deeper than the gas pipelines ever were. Switching suppliers no longer means simply replacing hardware or licences: it means reshaping entire infrastructures, retraining the workforce and updating legal frameworks.
And as Europe learned with energy, such changes are always easier to start before a crisis than during one.
An asymmetric relationship
Dependency is not critical when it is based on balanced mutual dependency, for example when both sides need each other equally and risks and influence are shared.
The current technological relationship between the US and Europe, however, does not offer this balance. Europe depends critically on US cloud and cyber infrastructure, while the US has practically no reciprocal dependency on European technologies.
This asymmetry means that all four risks (supply chain, financial, regulatory and political) are one-sided.
Is the answer purely European technology and isolation?
Replicant IT’s aim is to help its clients mitigate the risks arising from technological dependency: supply chain, financial, regulatory and political risk. This does not mean that we want to see Europe as a region isolate itself, or public bodies and companies move 100% to European information technology. That is neither realistic, economically sensible nor necessary.
What we would like to see as the solution:
Awareness of the risks
More informed technology choices and avoiding lock-in to mitigate risk
The public sector leading the way in adopting European technology alternatives
Preferring European technology where strong solutions exist
Increasing intra-European investment in Europe’s own technology champions and preventing acquisitions from outside Europe.
In fact, the points above are all interconnected. Aware of the risks, public sector organisations are already making more informed technology choices in favour of European technologies. More forward-thinking private sector IT leaders have also started to review their choices. The wider market will follow these frontrunners, which makes European technology vendors more attractive to investors.
Why should an Estonian private company care?
The text above may give the impression that this is such a high-level strategic problem that an Estonian private company can do nothing about it for now, and has nothing to gain from the change. That impression is mistaken.
First, why should an Estonian company think about digital sovereignty at all?
Costs: a real opportunity to save money by freeing yourself from lock-in contracts and technologies.
Business continuity: can my company keep operating if one of the risks above materialises?
Regulatory compliance: does my digital infrastructure comply with GDPR and other EU regulations?
Economic environment: my business is in Europe: when the European economy does better, so do I.
How can Replicant IT help?
If this topic matters to you, get in touch!
We will help you assess your current level of technological dependency and put together a plan for gradually reducing it. In everything related to IT infrastructure and cybersecurity, we are happy to offer and implement the best European information technology for your organisation.
