Evroc/cloud computing: challenger aims to break US dominance in big data

In Europe, the power of large data sets rests with a remarkably small group of companies. Together Amazon, Microsoft, Google and IBM control more than three-quarters of the regional market for public cloud computing. A European champion is long overdue. But big ambition is required.

Private equity has stepped in to help. With venture backing from listed PE firm EQT, Sweden’s evroc wants to rise to the challenge. The start-up plans to build two hyperscale data centres at a total cost of €3bn over the next few years. It so far has seed investment only in the millions.

Blame data oversight. EU General Data Protection Regulation forces reliance on storage or private cloud services to comply by collecting and storing plenty of bits. Demand for cloud services growing at about a fifth annually highlights the opportunity. Companies can buy their own cloud network (private) or rent a public service from a provider.

Scale is vital. Unlike private clouds, the public versions more efficiently share processing power among many users. In this way, evroc can shift demand around its European servers to optimise its use of renewable electricity.

A capability in software underpins US big tech’s public cloud dominance. Developers want an online ecosystem to test, launch and run cloud-based applications quickly and easily. Most European providers come from a background in hardware.

Take France’s OVHcloud, which started in web hosting. It has a small but fast-growing public cloud business. Revenues in the segment rose 24 per cent in the first half of the year to €74mn. Even as Europe’s largest, OVH’s market share is paltry compared with US peers.

Competition is understandably fierce. OVH’s adjusted ebitda margins in public cloud fell 7 percentage points to 43 per cent in the six months to February. Accordingly, shares have halved since a 2021 IPO.

Taking on such a strong oligopoly will require plenty of time and capital. Amazon and its rivals have little to fear.