European alternatives to US hyperscalers

“Technological sovereignty is essential: Unfortunately, we can no longer rely on products and services from the United States continuing to be available to us on reasonable terms,” says Prof. Holger Hoos, AI professor at RWTH Aachen University and co-founder of CAIRNE (Confederation of Laboratories for Artificial Intelligence Research in Europe). The higher the level of integration of services, the greater the dependency. This applies to many solution areas, but in the field of AI the tension is particularly strong.

From Hoos’s point of view, there is also the fact that the technologies around large language models do not meet European quality standards and requirements. “At present, there are no significantly better alternatives in Europe, but there is ambitious work being done on them,” Hoos states. To support this development, it is important that companies commit to actually wanting to use these solutions. He warns against quickly integrating a solution deeply into one’s own corporate structure now for reasons of hype and efficiency.

“In the committees it can be seen that interest in and concern about data sovereignty among machine and plant manufacturers has risen very sharply over the past two years,” notes Maximilian Moser, advisor for industrial security, product security, OT security and open source software in industry at VDMA. Roughly estimated, up to 80 percent of the solutions come from US providers. “The situation with the USA is increasingly leading customers to actively search for solutions themselves and to look around for European alternatives,” confirms Serge Efremov, head of strategy at IT service provider Nelpx GmbH. 

But fear of vendor lock-in is also a strong driver for taking a closer look at the open-source environment. To meet this need, the service provider is focusing on German and European alternatives that offer full digital and technological sovereignty.

Putting all your eggs in one basket can become problematic

“Only if we retain control over our data will we retain the freedom to shape our digital future in a self-determined way,” is the conviction of Bernd Wagner, chief sales officer at Schwarz Digits. The digital unit of the Schwarz Group (Lidl, Kaufland) offers the Stackit cloud infrastructure and sovereign solutions for cybersecurity, AI, communication, and workspace.

"We see that companies, for example, are putting everything on AWS. If AWS were ever offline, then that company would effectively be offline as well. Large solutions like Salesforce or VMware are often deeply rooted in the infrastructure and cannot easily be replaced," says Efremov, who previously worked for around ten years at the consulting firm Bechtle. Here, it is necessary to take a close look at how individual areas can be swapped out, for example with open-source solutions.

The IT expert is convinced that it is not enough to rely on the European clouds of US providers. "On the positive side, the major European hyperscalers such as Ionos, Stackit, Hetzner, or OVHcloud can offer really good technology and integration partnerships with major manufacturers and US hyperscalers," Efremov observes. This did not exist in the past, which is why migration from the AWS cloud, for example, used to be strenuous or in some cases hardly feasible. Many companies have already dared to make the move and, despite hurdles, the experiences have been predominantly positive. "If a company has a very strong vendor lock-in and relies on a single provider to cover many business units within the company, migration still does not work so well in some cases," the IT expert qualifies. "In our experience, the move is straightforward thanks to open standards and modern interfaces. As long as no modifications have been made to the open standards, applications and data can be moved between cloud providers without any issues," reports Wagner from practical experience.

Email, office and collaboration à la Teams

Efremov sees proven alternatives in the area of email messaging in the form of the open-source email platform OX App Suite or VNClagoon from Switzerland. Proton Mail, also from Switzerland, is expected to introduce a Teams alternative soon. From Moser’s point of view, LibreOffice and OpenOffice have proven themselves as alternatives in the office world. For collaboration, conferencing and messaging, Nextcloud offers a mature platform that can be implemented via self-hosting. He also sees Proton Mail as a proven, privacy-focused email tool that involves less tracking and provides effective end-to-end encryption. There are now many examples of the use of office alternatives and collaboration tools such as Nextcloud in mechanical and plant engineering. Demand for webinars, training and use cases at VDMA has increased significantly.

At Schwarz Digits, they offer a workplace environment beyond Microsoft. The Schwarz Group, with its nearly 600,000 employees, is also switching to “Workspace by Stackit,” which is based on Google Workspace. Access by Google is ruled out by the concept, explains Wagner. The data is hosted exclusively in Europe and secured by client-side encryption. Instead of WhatsApp, which has no place in companies anyway, they rely on the privacy-focused communication platform Wire. Encryption takes place on the end device, and the cloud provider stores the keys exclusively in Germany. As an alternative solution in the event of a failure, OpenDesk on Stackit is available, a browser-based open-source workplace solution that is compatible with Wire.

New territory: large language models and agentic AI

Agentic AI is about automating processes based on large language models. LLMs learn deep interrelationships, for example from product development and production processes that contain sensitive knowledge and intellectual property – so using this data with AI involves particular risks. “When large US language models are trained or queries are submitted to them, it is generally always the case that the models memorize this data and, under conditions that are not yet really well understood, can also ‘spit it out’ again,” warns Holger Hoos. That is problematic, and there is no one hundred percent certainty that the data will not be reused. If, in the future, there were a trustworthy open-source model, for example in a European research consortium, that would be a game changer.

“Ultimately, it is about protecting trade secrets when, for example, CAD and process data are involved. Even if hosting by an American company takes place in Germany, the metadata is still often synchronized with servers in the US,” Efremov also explains. Despite the data protection assurances given by US providers, many customers fear a loss of control when data is analyzed and shared by tools such as MS Copilot. Ideally, data sovereignty should therefore lie on-premise or with a European hyperscaler.

Securely integrating large language models

The Aleph Alpha on Stackit solution is designed to help companies use their knowledge securely, in line with European standards, to create value. “Data and queries are neither stored nor used for training models. Users choose the LLM that suits them best,” says Wagner. Seamless integration into applications is possible via an API.

Apparent alternatives also require close attention. For example, Mistral AI from France has made a name for itself as an OpenAI alternative. However, the founders come from Google and Meta, and most of the venture capital comes from the United States. Microsoft has a stake in the startup and the models run on Azure infrastructure. The approach is different, though, and aims for a high level of transparency. Companies are also intended to be able to run the models in-house, unlike the proprietary U.S. models, which can easily lead to lock-in.

Open source as an alternative – especially for operating systems

Most mechanical engineering companies have been working with open-source software for some time. “Because the code is publicly accessible in open source, the software can be audited, unlike proprietary solutions. Software becomes more secure because it is transparent where telemetry data is flowing,” Moser says, naming some advantages of open-source solutions. The software can be further developed independently of the original provider, and open source enables better cost control, both with regard to license fees and protection against sharp cost increases.

In the area of operating systems, Moser sees the Linux world around Debian and classic Ubuntu as an option that is already widely used. “In recent years, the open-source world has become much better in terms of reduced integration effort and compatibility with other ecosystems. A switch is actually almost always possible, no matter what the application,” summarizes Maximilian Moser. For example, Linux is increasingly being used in production environments, with machine architectures and industrial PCs being migrated to open-source components.

“At its current stage, open source is not yet a cure-all. Proprietary all-in-one solutions can bring a great deal of convenience – and that often makes a switch to alternatives more difficult,” says Moser. In fact, employees’ resistance to embracing new systems is one of the biggest hurdles on the path to greater data sovereignty.

Neatly efficient integration versus independence

The second major hurdle is saying goodbye to integration served “on a silver platter.” The main value proposition of large vendors lies in the tight integration of many software components on a single platform and the associated efficiency gains. At present, it is not possible to replace such a far-reaching level of integration as that offered by, for example, MS Copilot, says Serge Efremov. Nevertheless, there are LLM models that can each be used in specific sub-areas.

From Holger Hoos’s point of view, it should be critically questioned whether a single provider can actually offer the best solutions for everything from the operating system and office software to the AI system. For example, large mainframe systems worldwide prefer not to run on commercial operating systems but, due to higher reliability and technical robustness, on various Linux variants. “Aren’t we much better off putting together our own systems from components that are each better than what you get in a deeply integrated all-in-one package – and sovereign?” the expert concludes.