The Deglobalization and Fragmentation of the Cloud

The cloud used to be messy, and then it got boring. In the early days, the hosting market was fragmented: colocation, on-prem, little server resellers everywhere. Then came the hyperscalers. AWS, Google Cloud, Azure. They brought economies of scale, virtualization, and global infrastructure that changed everything. It was a consolidation wave that ate the market. And almost all of them? American. For a long time, nobody [1] really cared. If you had your data in a Frankfurt data center, and your vendor had the right certificates, you were good. Enterprises signed their DPA agreements and moved on. The hyperscalers dominated. But that era is coming to an end, and not for purely technical reasons. AWS, Google Cloud, and Azure hold 67% of the market. Source: Synergy Research Group. [1] Nobody is a simplification. Some people always cared, but it was certainly less mainstream than it is today. From Rational to Emotional Until recently, cloud decisions, especially around privacy and compliance, were mostly rational. You needed GDPR compliance? No problem. SOC 2? ISO 27001? Get the paperwork in order, and your US-based cloud provider could still be a safe choice. Legally speaking. But something changed. It is not just about compliance anymore. It is about trust, jurisdiction, and uncertainty. And that shift is emotional as much as it is legal. You can see it in how people talk about US tech companies now. The concern is not “do they meet GDPR” — it is “what happens if Trump does a weird thing again and changes everything?” Or “what if US surveillance laws get more aggressive?” There is no clear policy rationale here. There is just unease. And unease is driving purchasing decisions. This fear cannot be fixed with more certificates. It cannot be solved with a “European region” on AWS. It is about wanting a European company, one that is bound by European law, run by people in your own jurisdiction, and disconnected from American politics entirely. The New Fragmentation So here we are again: fragmenting. Not because the tech got worse, but because the emotions got stronger. The same hyperscaler cloud that offered safety and simplicity is now being questioned. Not just by governments or regulators, but by businesses, large and small, who no longer feel comfortable putting their trust in someone they cannot predict or influence. Of course, the hyperscalers have noticed. They are trying to respond. AWS has its “sovereign cloud” offerings. Microsoft tried to build a "German Cloud". Google promises works together with Telekom to try and win goodwill: If this shift is emotional, those moves will not be enough. A subsidiary is still a subsidiary. A US company, even if wrapped in a German shell, is still subject to US laws. And just as importantly, US politics. For many businesses, that is not acceptable anymore. And not for entirely rational reasons. Why This Is Good News for Startups Historically, the whole “we need strong data privacy” discussion was an enterprise problem. Big companies needed compliance guarantees, so they chose big local providers like StackIt, the enterprise-focused German cloud. Those providers had the time and budget to collect every ISO, SOC, and compliance document imaginable. If you were a startup, you could not compete. You could not afford those certifications. You could not get in the door. But now, that is changed too. Because if the fear is emotional, not legal, then compliance is not the main buying factor anymore. Especially for smaller companies, the priority is no longer “do you have SOC 2” - it is “are you German?” Small businesses are not demanding 100 page audit reports. They are demanding proximity, familiarity, and jurisdictional alignment. And that gives an opening to companies like Sliplane. “I do not need SOC 2. I need to know they will not send my data to Virginia.” We do not have the features of AWS. We do not have the certifications of StackIt. But we are a German company, operating entirely within the EU, and that alone is enough for many of our customers. In fact, a large percentage of our customers explicitly cite that as a reason for choosing us. Not pricing. Not features. Not certifications. Just trust and proximity. The Cloud Is Getting Messy Again So where does this go? The hyperscalers are not going anywhere. They will still dominate much of the global and probably even the European market, especially for massive enterprises and hyper growth startups with global ambitions. But the idea that everyone ends up on an US based hyperscaler eventually is dying, at least in Europe and for smaller companies. We are entering a new era where local cloud providers have a real shot. Not because they are technically better, but because they are trusted. That opens the door to a new wave of cloud platforms: focused, scrappy, and regionally rooted. It is the deglobalization of the cloud. And in that mess, ther

May 7, 2025 - 13:20

The Deglobalization and Fragmentation of the Cloud

The cloud used to be messy, and then it got boring.

In the early days, the hosting market was fragmented: colocation, on-prem, little server resellers everywhere.

Then came the hyperscalers. AWS, Google Cloud, Azure. They brought economies of scale, virtualization, and global infrastructure that changed everything. It was a consolidation wave that ate the market.

And almost all of them? American.

For a long time, nobody [1] really cared. If you had your data in a Frankfurt data center, and your vendor had the right certificates, you were good. Enterprises signed their DPA agreements and moved on. The hyperscalers dominated.

But that era is coming to an end, and not for purely technical reasons.

AWS, Google Cloud, and Azure hold 67% of the market. Source: Synergy Research Group.

[1] Nobody is a simplification. Some people always cared, but it was certainly less mainstream than it is today.

From Rational to Emotional

Until recently, cloud decisions, especially around privacy and compliance, were mostly rational. You needed GDPR compliance? No problem. SOC 2? ISO 27001? Get the paperwork in order, and your US-based cloud provider could still be a safe choice. Legally speaking.

But something changed.

It is not just about compliance anymore. It is about trust, jurisdiction, and uncertainty. And that shift is emotional as much as it is legal.

You can see it in how people talk about US tech companies now. The concern is not “do they meet GDPR” — it is “what happens if Trump does a weird thing again and changes everything?” Or “what if US surveillance laws get more aggressive?” There is no clear policy rationale here. There is just unease. And unease is driving purchasing decisions.

This fear cannot be fixed with more certificates. It cannot be solved with a “European region” on AWS. It is about wanting a European company, one that is bound by European law, run by people in your own jurisdiction, and disconnected from American politics entirely.

The New Fragmentation

So here we are again: fragmenting.

Not because the tech got worse, but because the emotions got stronger. The same hyperscaler cloud that offered safety and simplicity is now being questioned. Not just by governments or regulators, but by businesses, large and small, who no longer feel comfortable putting their trust in someone they cannot predict or influence.

Of course, the hyperscalers have noticed. They are trying to respond. AWS has its “sovereign cloud” offerings. Microsoft tried to build a "German Cloud". Google promises works together with Telekom to try and win goodwill:

If this shift is emotional, those moves will not be enough.

A subsidiary is still a subsidiary. A US company, even if wrapped in a German shell, is still subject to US laws. And just as importantly, US politics. For many businesses, that is not acceptable anymore. And not for entirely rational reasons.

Why This Is Good News for Startups

Historically, the whole “we need strong data privacy” discussion was an enterprise problem. Big companies needed compliance guarantees, so they chose big local providers like StackIt, the enterprise-focused German cloud. Those providers had the time and budget to collect every ISO, SOC, and compliance document imaginable.

If you were a startup, you could not compete. You could not afford those certifications. You could not get in the door.

But now, that is changed too.

Because if the fear is emotional, not legal, then compliance is not the main buying factor anymore. Especially for smaller companies, the priority is no longer “do you have SOC 2” - it is “are you German?”

Small businesses are not demanding 100 page audit reports. They are demanding proximity, familiarity, and jurisdictional alignment. And that gives an opening to companies like Sliplane.

“I do not need SOC 2. I need to know they will not send my data to Virginia.”

We do not have the features of AWS. We do not have the certifications of StackIt. But we are a German company, operating entirely within the EU, and that alone is enough for many of our customers.

In fact, a large percentage of our customers explicitly cite that as a reason for choosing us. Not pricing. Not features. Not certifications. Just trust and proximity.

The Cloud Is Getting Messy Again

So where does this go?

The hyperscalers are not going anywhere. They will still dominate much of the global and probably even the European market, especially for massive enterprises and hyper growth startups with global ambitions.

But the idea that everyone ends up on an US based hyperscaler eventually is dying, at least in Europe and for smaller companies.

We are entering a new era where local cloud providers have a real shot. Not because they are technically better, but because they are trusted. That opens the door to a new wave of cloud platforms: focused, scrappy, and regionally rooted.

It is the deglobalization of the cloud. And in that mess, there is opportunity.

Cheers,

Jonas, Co-Founder of Sliplane