Why European Businesses Should Choose EU-Hosted SaaS in 2025

The question of where your business data resides has never been more consequential. Since the landmark Schrems II ruling by the Court of Justice of the European Union in July 2020, the legal foundation for transferring personal data from the EU to the United States has been on shaky ground. The Privacy Shield framework was invalidated overnight, leaving thousands of European businesses relying on Standard Contractual Clauses as a stopgap — a mechanism that itself faces ongoing legal scrutiny. For any organisation processing personal data of EU residents, choosing where your software is hosted is no longer just a technical decision. It is a legal and strategic one.

The US CLOUD Act, enacted in 2018, compounds this uncertainty. Under the CLOUD Act, US law enforcement agencies can compel American technology companies to hand over data stored on their servers, regardless of whether that data physically resides in the United States or on a server in Frankfurt or Amsterdam. This creates a direct conflict with GDPR’s principles of purpose limitation and data minimisation. Even if a US SaaS provider operates data centres within the EU, the parent company remains subject to US jurisdiction. European businesses using these services face the uncomfortable reality that their customer data, employee records, and business-critical files could be disclosed to a foreign government without their knowledge or consent. Read more about this in our guide on the US CLOUD Act and what it means for European businesses.

This is precisely why a growing number of European organisations — from SMEs to government agencies — are migrating to EU-hosted SaaS alternatives. The European software ecosystem has matured significantly in recent years. Products like Nextcloud for file storage, Proton Mail for email, Hetzner Cloud for cloud infrastructure, and Penpot for design offer feature parity with their American counterparts while providing genuine data sovereignty. These providers are incorporated under European law, operate data centres exclusively within EU or EEA member states, and are not subject to the CLOUD Act or FISA Section 702 surveillance provisions. When you choose a European provider, your data protection officer can provide clear, defensible answers about where data is stored, who can access it, and under which legal framework.

Adopting EU-hosted software is not about anti-American sentiment or technological isolationism. It is about risk management. GDPR fines can reach up to four percent of global annual turnover, and data protection authorities across Europe — from the French CNIL to the Austrian DSB — are increasingly willing to enforce these penalties. Beyond compliance, there are practical advantages: European SaaS providers typically offer support in local languages, operate in European time zones, and build products with European business practices in mind. The cost of switching is real, but the cost of a data sovereignty incident — regulatory, reputational, and operational — is far greater. For European businesses serious about protecting their data and their customers, the choice is becoming clear.

Where to start

If you are looking to make the switch, here are the most popular alternatives by category:

• File Storage: Nextcloud and Tresorit replace Google Drive and Dropbox
• Email: Proton Mail and Tuta replace Gmail
• Cloud Hosting: Hetzner Cloud and Scaleway replace AWS and Google Cloud
• Analytics: Plausible Analytics replaces Google Analytics
• Design: Penpot replaces Figma
• Email Marketing: Mailjet replaces Mailchimp and SendGrid
• Databases: Baserow replaces Airtable

Browse all GDPR-compliant software by category or explore European software by country.