The cloud market in France: American hegemony, European strategy

The cloud market in France is a financial manna for American giants. European digital players have developed new strategies to capture market share and stay in the race, sometimes making surprising choices.

American hegemony in the French cloud market

Amazon Web Services (AWS), Microsoft Azure and Google Cloud would hold nearly 70% of the European cloud market by the end of 2019. France is in this trend as the three American giants would own 71% of the market share, according to a study conducted by the firm Markess by Exaegis. The same study states that by 2021, these three players have captured 80% of the growth in spending on the French cloud market, representing 400 million euros. It should be noted that the growth of the sector in France is estimated at 37% per year and could therefore represent 27 billion euros by 2025.

The three GAFAM champions

The French cloud podium is shared between three American champions:

• Amazon Web Services: 46% of market share.
• Microsoft Azure: 17% of market share.
• Google Cloud: 8% of market share.

Amazon Web Services

The leader in France of cloud services is without doubt Amazon Web Services. During the COVID-19 pandemic, the American giant chose to ride the wave of telecommuting in order to offer companies innovative solutions to manage remote work. The company created by Jeff Bezos has conquered hundreds of VSEs and SMEs by providing a new digital dynamic.

At the same time, AWS can count among its customers large French companies such as Veolia, Engie, Mano Mano, Doctolib, etc.

Microsoft revises its aggressive position

In March 2022, Microsoft faced a complaint for abuse of dominance. It was filed with the European Commission by several European players in the cloud market such as OVHcloud. The practice denounced before the European Union authorities is puzzling. The licensed software of the Office suite, offered by Microsoft, are of a very high quality. They appeal to many companies that are looking for an excellent office solution. However, Microsoft charged hosting providers a higher price for the acquisition of Office licenses when they did not offer its cloud services.

Microsoft reacted before the European Commission decided to investigate. The company intends to allow its customers to use its Office licenses even if they have a European cloud service. Competitors in the Old Continent should also be able to host some Microsoft services on their infrastructure. For its CEO Brad Smith, the U.S. firm has “not paid enough attention to the smaller players in the sector,” meaning European companies.

Google’s momentum in France

Google Cloud wants to accelerate its deployment in Europe with the establishment of three data centers in France, from June 2022. This deployment strategy fits perfectly with the development of partnerships with major French digital players such as Orange, Thales or OVHCloud.

Strategies put in place by the European resistance

Faced with the GAFAM monopoly, several European cloud players have written an open letter to the European Commissioner for Competition. At the end of March, the latter judged that the American giants did not represent any competitive threat in the cloud sector. Among the entrepreneurs who have taken up the cause are Yann Lechelle (Scalway) and Quentin Adam (Clever Cloud).

In March 2022, the two European leaders in the sector, OVHCloud and NextCloud, filed a complaint with the European Commission against Microsoft for its anti-competitive practices. We have seen that this initiative has relieved the pressure of the American giant on “small players in the sector”.

Niche markets in the sights of European clouds

The various European cloud companies have to share the remaining 29% of the French market. With reduced growth, these players have the obligation to find efficient strategies to limit the growth of GAFAM. The markets targeted by the Europeans are:

• cybersecurity.
• Hybrid cloud and multicloud management.
• application platforms.
• the sovereign cloud, renamed “trusted cloud”.

Developing a “trusted cloud“

The “Cloud Confidence” is an initiative of the French government to offer companies, organizations and administrations in France cloud solutions that provide protection against the Cloud Act. This legislation allows the U.S. government to request access to information stored on the clouds of GAFAM.

The “cloud trust” label certifies service providers based on two major elements:

• Efficient fight against the risks of cyber-malware and cyber-crime.
• Solutions that comply with French and European standards.

Other restrictions aim to frame the obtaining of this trust label. The cloud solution must host the data in France. The cloud services must operate from a European country, and it is a European company that must provide these solutions. This company is necessarily owned by European players.

To create these trusted solutions, French companies do not hesitate to use the services of GAFAM. The latter provide some major tools while it is French companies that operate and manage the cloud service, thus circumventing the American Cloud Act.

The American temptation

The Franco-American cloud synergy

OVHcloud, which in 2022 denounced Microsoft’s abuses to the European Commission, formalized a strategic partnership with Google Cloud in 2020. The aim of this alliance is to offer European organizations efficient technologies. The challenge for these organizations is to be able to ensure strict control over the data hosted, optimal security, transparent service while ensuring optimal confidentiality. To this end, Google offers the technology while OVHcloud manages the new infrastructure. The French company wants to offer a “trusted cloud” in France.

Orange develops Bleu

In 2021, Orange and Capgemini chose Microsoft Azure to develop Bleu, a company that wants to offer public administrations and private companies a cloud platform capable of providing a secure and confidential data service. Microsoft provides Bleu with the power of Azure and the operationality of the Office suite.

Thales: a player in data defense

The year 2021 has seen the conclusion of a new partnership that has a whiff of a setback for European clouds. French defense and security group Thales has teamed up with Google to develop a “trusted cloud” offering.

The French cloud market is dominated by three American players. To try to overcome this hegemony, European players have had to develop a strategy of conquering niches. In some cases, this means forging alliances with giants such as Microsoft and Google to develop synergies that meet French and European standards. It is clear that in order to exist on the French market, European companies need the technologies of firms from across the Atlantic.