“How Lidl accidentally took on the big guns of cloud computing” — this article published yesterday in the Financial Times caught my attention. It shed light on an unexpected player in the cloud computing arena — Lidl, the European discount retailer known for its no-frills approach to groceries.
Remember the story of how AWS started some 20 years ago, as the Amazon retailer wanted to solve its own IT infrastructure needs? Now Lidl and its owner Schwarz Group is pulling the proverbial AWS play, and spinning off its internal IT unit, Schwarz Digits, into a standalone operating division, which competes with AWS. According to FT, it positioned itself as a credible regional challenger against the likes of AWS, Google, and Microsoft.
This move is not just an isolated case but part of a broader trend in Europe towards sovereign cloud computing.
As I pointed out in my previous blog post about the shifts in AWS, the one-stop-cloud-shop approach has shown cracks. Amazon, Google, Microsoft, Alibaba et al. won’t be able to cover all grounds, neither in tech domains, nor in geo’s.
This realization comes at a time when European countries, led by Germany and Austria, are increasingly prioritizing stringent privacy and data protection laws. GDPR compliance is non-negotiable, and businesses are demanding cloud services that operate entirely within the EU’s borders and address these control and sovereignty needs. In essence, Europe is looking for its own “EuroCloud”.
This demand isn’t just theoretical. The EU has already taken concrete steps with initiatives like Gaia-X, which sets the framework for what an EU cloud should look like — sovereign, secure, and compliant with European regulations.
This push for a EuroCloud is why a grocery chain like Lidl can suddenly emerge as a cloud player, grabbing market share from AWS. Schwarz Digits generated €1.9 billion in sales last year and has signed on major clients like SAP and Bayern Munich. This is no fringe experiment. The StackIT page features a service list ranging from the basic compute-network-storage through managed databases, messaging, Kubernetes, monitoring, security and more.
This is something AWS is scrambling to address with its recent announcement of a €7.8 billion investment in an AWS European Sovereign Cloud, expected to launch its first region in Germany by the end of 2025. But will that be enough to regain the trust of European corporations?
The pricing factor is another interesting angle. Lidl disrupted the retail market with its low-cost groceries; can it do the same in cloud computing? With Schwarz Digits, could Lidl become the low-cost EuroCloud alternative that businesses are looking for? AWS’s challenge will be to convince these businesses that its new European Sovereign Cloud can offer the same level of trust, security, and affordability.
As we watch this play out, it’s clear that the days of one-stop-cloud-shops are numbered. The market is fragmenting, and specialized, regionally-focused providers like Schwarz Digits are stepping in to fill the gaps left by global giants.