The news of semiconductor giant Broadcom’s acquisition of cloud leader VMware sent shockwaves throughout the VMware ecosystem four years ago.

It was a textbook example of what we term “cloud shock” and a watershed moment in enterprise IT.

Following the merger, VMware customers reported price hikes ranging from 300% to more than 1,000%. The worst affected were mid-sized enterprises and already underfunded education and government entities.

As I write this, over two years after the partner program overhaul was completed, I sadly predict that sorry tales of IT disruption and spiraling costs will become all too familiar.

We would be naive to believe that hyperscalers prioritize local customer needs. Unfortunately, their focus is on meeting the demands of global giants. And the poorly-resourced groups I mentioned above will bear the brunt of a market that is built on vendor lock-in.

The current cloud model is extractive rather than innovative. For the last decade, the cloud was sold as a tool for innovation with providers acting as partners. These partners offered cheap infrastructure that gave businesses the flexibility to scale without owning hardware.

But now the “big three” hyperscalers, and legacy giants like Broadcom, are pivoting to the extractive phase, having achieved high levels of market concentration in the U.K.

This has led to an era of cloud feudalism. We now have a system whereby a few lords own the digital land and businesses merely exist as serfs. The serfs don’t own the tools of their own production and instead have to pay a never-ending tribute for the right to operate.

Instead of trying to win business through new features, their focus is now on profiting from their users’ dependency.

Businesses that were sold the promise of total convenience now face a liquidity crisis of control, which could mean enormous financial and technical debt to the incumbents.

The aforementioned renewal cost spikes – due to IT systems that have been woven into the fabric of the company – will be compounded by the hostage scenario of high egress fees and proprietary moats. Respectively, this means massive charges to take your data out, and even bigger charges to move to a competitor, thereby creating the cloud lock-in scenario. Essentially, you’re forced to pay increased rent because it’s cheaper than moving homes. In the cloud feudalist system, the economic barriers to leaving the manor are designed to be prohibitively high.

The sovereignty illusion

This cloud shock is compounded when financial dependency erodes national agency. While legacy giants like Broadcom exploit the economic inability to move, hyperscalers are sovereignty-washing, thereby creating a deep, permanent form of lock-in. They do this by masking foreign control by rebranding their infrastructure as local.

For example, the U.K. Ministry of Defense recently signed a £400 million deal with Google Cloud for sovereign AI capabilities. Although Google’s air-gapped solution is physically in the U.K., the underlying architecture and models remain U.S.-owned intellectual property.

Under the U.S. Clarifying Lawful Overseas Use of Data (CLOUD) Act, Washington, D.C. can compel domestic firms to provide data access regardless of a server’s location. Consequently, U.K. data remains legally tethered to foreign jurisdiction. This creates a dangerous reliance on Google for patches and specialized hardware; should geopolitical relations fray, the U.K.’s infrastructure could become unmaintainable and obsolete. In an era of cloud feudalism there are even more vulnerabilities when the lord resides in an altogether different kingdom.

The European response

The U.K. needs to wake up, as its European neighbors have done.

It is estimated that Amazon Web Services (AWS) and Microsoft control up to 90% of the U.K. cloud computing market. And while the recent U.K. Competition and Markets Authority (CMA) decision to investigate Microsoft is encouraging, much more needs to be done to establish true digital sovereignty in the U.K.

The French government's “Cloud au Centre” strategy mandates that sensitive data stay on European soil, maintained by local employees under providers with “SecNumCloud” certification. This policy now includes a sovereignty clause that effectively locks out U.S. tech giants. France’s commitment is proven by the migration of 1.2 million education staff to Nextcloud, away from Microsoft and Google.

Other countries like Germany are also following unplugging measures, specifically through the launch of the German Government Cloud in March 2025, which acts as a secure, state-owned digital territory that hosts sovereign software like openDesk, which is Germany’s open-source answer to Microsoft 365. By doing this Germany has ensured that vital data remains completely within its domestic jurisdiction.

Reclaiming the backbone

The U.K. stands at a crossroads as we enter the AI industrial revolution. Every penny spent on U.S.-hosted large-language model (LLM) infrastructure is a drain on the U.K.'s future. It is capital, talent, and innovation permanently leaving British shores.

The danger is that we are building an advanced digital economy on a plot of land we don’t own. When we build on proprietary foreign stacks, every technical breakthrough and every insight gleaned from our national data is baked into the provider’s software, not ours. We are effectively training the models of our competitors.

To reclaim our digital backbone, we must look beyond sovereignty-washing and mandate true workload portability.

This requires the CMA to move faster to dismantle the structural lock-in that still defines the market. While its recent move to force AWS and Microsoft into waiving certain switching fees is a welcome first step, we cannot rely on voluntary commitments made outside a formal regulatory framework. As it stands, focusing primarily on Microsoft’s licensing while leaving AWS largely unchallenged risks a regulatory imbalance that prolongs uncertainty. We need an integrated approach that applies the same high standards to all hyperscalers, ensuring that domestic innovation is encouraged rather than stifled by foreign dominance.

Regulation, however, is only half the battle. We must follow the lead of our European neighbors by investing in homegrown, sovereign IP. The UK is currently trading its long-term autonomy for short-term convenience.

But as the Broadcom acquisition proved, convenience is a fleeting commodity in a market built on dependency. The U.K. needs to choose freedom over dependency. It is time to stop being a nation of digital tenants and start becoming digital landlords.

To achieve this, the U.K. must shift its strategy from simply building data centre shells to fostering homegrown IP. The government should mandate that a percentage of its cloud spend is diverted to U.K.-owned providers who own their entire software stack. By investing in domestic capabilities the U.K. can ensure its AI future is built on its own soil, under its own laws, and for its own prosperity.