SAP to invest over 20 billion euros in 'sovereign cloud' in boost to Europe's AI ambitions

German software giant SAP on Tuesday announced it will invest over 20 billion euros ($23.3 billion) into its sovereign cloud capabilities in Europe over the next 10 years.

The company said it was expanding its sovereign cloud offerings to include an infrastructure-as-a-service (IaaS) platform enabling companies to access various computing services via its data center network. IaaS is a market dominated by players like Microsoft and Amazon.

It will also roll out a new on-site option that allows customers to use SAP-operated infrastructure within their own data centers.

The aim of the initiative is to ensure that customer data is stored within the European Union to maintain compliance with regional data protection regulations such as the General Data Protection Regulation, or GDPR.

"Innovation and sovereignty cannot be two separate things — it needs to come together," Thomas Saueressig, SAP's board member tasked with leading customer services and delivery, said during a virtual press conference Tuesday.

He added that it was important for European companies to be able to access the latest technological advancements such as artificial intelligence "in a full sovereign context."

Technological sovereignty is a topic that has been gaining momentum in the last year or so as geopolitical frictions have forced companies to assess their reliance on foreign technologies.

Countries around the world are increasingly looking to on-shore computing infrastructure needed to train and run powerful AI systems. That has led to major global tech players like Amazon and Microsoft to announce new sovereign cloud initiatives to ensure the data of European users is stored within the EU.

The European Commission, which is the executive body of the EU, has made AI a top priority for the bloc as it looks to ramp up competition with the U.S. and China. Europe has long lagged behind both countries when it comes to technologically more broadly.

Earlier this year, the Commission unveiled plans to invest 20 billion euros in the creation of new so-called "AI gigafactories," facilities equipped with vast supercomputers to develop next-generation AI models.

Saueressig said that SAP is "closely" involved in the creation of the new AI gigafactories but would not be the lead partner for the initiative.

He added that the company's more than 20-billion-euro investment in Europe's sovereign cloud capabilities will not alter the company's capital expenditure for the next year and has already been baked into its financial plans.