EU’s Push for Data Sovereignty Is Fueling the Bare Metal Cloud Boom, Report Says

A new Market Research Future reports that the bare metal cloud market is projected to hit $58.7 billion within the next 10 years, which is more than seven times its size today.

Finance, healthcare, and government are what’s mainly driving bare metal cloud adoption. But Market Research Future forecasts that the high-performance computing, AI training, and gaming sectors are also interested in the same benefits bare metal offers.

Bare metal has always been marketed as the most controllable and performance-reliable way to host heavy and sensitive workloads, but its growth actually points to another reason.

Isaac Douglas, Chief Revenue Officer at servers.com, told us: “Tighter laws are pushing companies toward bare metal, giving them full control over where data sits and how it’s secured.”

Sovereignty and hosting can sound abstract. Hosting, after all, is just data on someone else’s machines. But Europe has been pushing back on that view for a long time now:

• GDPR forced companies to rethink data collection
• NIS2 enacted a 24-hour breach reporting rule
• The new AI Act brings stricter documentation and oversight requirements

“Stricter EU and US regulations are forcing businesses to focus on minimizing compliance risk and keeping full visibility over where and how their data is stored,” Douglas explained. “Bare metal is an answer to this.”

Hyperscalers are taking that hint and running with it: Oracle has already committed $3 billion for new sovereign data centers in Germany and the Netherlands; AWS launched a European Sovereign Cloud of its own; Microsoft expanded its Sovereign Cloud programs as well.

“These regulations are keeping businesses alert about the risks of storing data in jurisdictions with different compliance requirements,” Douglas explained. “Potential fines, audits, and a risk to reputation are driving companies to be more deliberate about where their data lives.”

The issue isn’t whether the U.S. can offer compliance. It absolutely can — but the issue is that under recent data privacy laws, like the CLOUD Act, the federal government has the ability to access it.

And most international clients aren’t thrilled about a foreign government having access to their information.

The famous Microsoft vs. United States case only proved that concern when, in 2013, U.S. prosecutors demanded access to emails stored on Microsoft’s servers in Ireland.

Microsoft argued that a domestic warrant shouldn’t apply overseas, but when Congress ultimately passed the CLOUD Act, U.S. authorities had the right to demand that data after all.

The truth is bare metal isn’t something every mid-level host can roll out. The Oracles and AWSs of the world have more than enough capital to build billion-dollar sovereign programs.

And yet, Charlotte Webb, Operations and Marketing Director at Hyve Managed Hosting, argued that shouldn’t mean smaller or regional providers are out of the picture.

“In addition to compliance issues, organizations are concerned about the reduced control, vendor lock-in and unpredictable costs associated with solutions provided by hyperspaces,” Webb told us.

This suggests that mid-level hosts can still find a place in the bare metal cloud market by doing what they’ve always done: offering the niche advantages hyperscalers can’t.

Hyperscalers are notorious for random cost hikes — and most companies admit they struggle to predict the cost, with 64% expecting to exceed their cloud budgets in 2025.

Smaller hosts can take that pain point in stride by pitching to customers that they can offer flat rates or visible pricing and billing.

Support is not much better, where Big Cloud customers are often queued through AI chatbots and self-service systems, with no guarantee they’ll actually speak with someone who understands their setup.

Regional hosts can do what hyperscalers aren’t prioritizing: human-to-human support backed by teams that recognize their clients.

Though pricing and support are obvious pain points, they’re not the only ones. Webb believes what ultimately decides the market is whether a host can match what customers are actually asking for.

“Clients [don’t] come to us asking specifically for ‘bare metal.’ Instead, they name focus features that matter most to them — such as isolation, control, or compliance,” she said. “Often, that leads to bare metal being the best fit, but the starting point is always the customer’s requirements rather than the technology label.”