America Inc has a tight grip on allied governments

“I MISS nothing,” declared Dirk Schrodter, the digitisation minister for the German state of Schleswig-Holstein.

Over a video-call using OpenTalk, a German alternative to Microsoft’s Teams, he explained the way he has moved some 30,000 of the state’s civil servants from the American company’s collaboration and productivity tools to open-source alternatives in the past two years.

He has now begun the process of moving staff from Windows to Linux, an open-source operating system.

The move has attracted the attention of public officials elsewhere, who are also keen to cut ties with America’s tech giants.

“Every week, we have questions from other states, other cities and governments inside and outside of Europe,” he said.

The growing interest in open-source software reflects a new geopolitical reality.

America has long used its commercial prowess to hurt its enemies, such as imposing sanctions against Iran and Russia. But now, even allies worry that it could cut off their access to critical technologies, or at least threaten to during, say, a trade negotiation.

Governments abroad are examining the extent to which their ability to operate depends on American suppliers.

Fears were stoked in May 2025 when Karim Khan, then the International Criminal Court’s chief prosecutor, lost access to his Microsoft e-mail account.

This was after US President Donald Trump brought sanctions against the court over its issuing of an arrest warrant for Benjamin Netanyahu, Israel’s prime minister. Microsoft says it did not cut its service.

Another jolt came in June 2026, when Trump forced Anthropic, an artificial intelligence lab, to temporarily cut off access to its latest models in foreign countries.

America’s allies also took note, when it twice paused its supply of weapons to Ukraine in 2025.

US companies win a small share of the contracts tendered by governments abroad. But their products and services often underpin critical government functions.

Various efforts are thus under way to reduce reliance on American suppliers and nurture domestic alternatives. In many cases, however, doing so will be enormously difficult.

Europe’s efforts to flush America out

Europe in particular has emerged as a centre for efforts to flush America Inc out of government supply chains.

France’s national government is planning to ditch Microsoft Teams and wants to move some computers to Linux.

Local governments, including the cities of Reus in Spain and Aarhus in Denmark, have turned to European cloud providers such as Nextcloud and Hetzner, both from Germany.

In June 2026, the European Commission unveiled a plan to boost the continent’s “technological sovereignty” that, among other things, aims to shift the processing of sensitive government data to such providers.

In 2025, Spain cancelled an order for F-35 fighter jets, supplied by America’s Lockheed Martin.

British politicians are urging the prime minister to implement a break clause in a contract between Palantir, an American analytics company, and the National Health Service.

Our estimates suggest that, at an aggregate level, American companies account for a modest share of public spending abroad.

We calculated that, of the US$25 trillion in sales generated in 2025 by listed American companies, perhaps US$500 billion, or 2 per cent, came from foreign governments.

That is equivalent to roughly 7 per cent of government procurement in Organisation for Economic Co-operation and Development countries other than America, which accounts for an overwhelming majority of the spend.

Some countries are more dependent than others.

Measured by the number of government contracts won by American companies in 2025, Australia (6 per cent of contracts) and Britain (4 per cent) are more reliant than France (2 per cent) and Germany (1 per cent), going by figures from TenderAlpha, a data provider.

Outsized role in critical governmental areas

Yet, American companies play an outsized role in critical areas of government. An estimated two-fifths of the business that they generate from foreign governments is in IT and defence.

Pharmaceuticals and medical equipment, purchased by public health systems around the world, make up another large chunk.

Often, that is because there are few good alternatives.

Alphabet, Amazon and Microsoft control two-thirds of the global cloud-computing market, said Synergy Research, a company of analysts.

Forrester, another research group, reckoned that American providers account for between seven and nine of the 10 largest vendors in most segments of enterprise software.

Those substitutes that do exist are frequently inferior. Sometimes, the loss is negligible: On OpenTalk, users cannot send emojis flying across the screen. But other shortcomings are more serious.

LibreOffice, the open-source productivity-software package for which many governments are opting, lacks the AI features offered by Microsoft, a weakness that will only become more pronounced as the technology advances.

OVHcloud, a French cloud-computing provider that is Europe’s biggest such company, generates about one-hundredth the revenue of Amazon Web Services, making it difficult to compete on price or keep up on innovation.

Similarly, governments that want the most advanced air-defence system must turn to Lockheed and RTX, another American arms maker, which together produce the Patriot.

Switching costs can be hefty, too.

Lockheed supplies F-35s to governments from Norway to Belgium. These countries could instead opt for a European jet, such as the Rafale or Typhoon, even if these are less advanced.

But that would require a vast operational overhaul, including retraining pilots and support crews and replacing weapons inventories, a tough sell when huge sums have already been spent on Lockheed jets.

Or consider patient-record systems in hospitals. The hefty cost of swapping to a new vendor is partly why Norway’s parliament voted in June to keep using Epic, an American provider of healthcare databases, despite dissatisfaction with the product among doctors.

The dependence of local companies on American suppliers further complicates matters. Roy Illsley of Omdia, another research company, said that much of the software OVHcloud runs on comes from VMware, which is owned by Broadcom, an American company.

Governments that do shun America’s suppliers risk irritating its tempestuous president, which could make the superpower an even less dependable ally.

Pieter Wezeman of Stockholm International Peace Research Institute, a think tank in Sweden, noted that in July 2026, Denmark plumped for maritime-patrol aircraft made by Boeing, an American aerospace giant, over European alternatives.

He read it as a signal that the country does not want to alienate America, despite clashes over Greenland.

For consolation, America’s allies should remember that there are plenty of dependencies in the other direction.

Much of America’s federal government runs on software provided by Germany’s SAP. And American companies selling to foreign governments often depend on global supply chains.

The rear fuselage of every F-35 is built by BAE Systems, a British weapons manufacturer, in Lancashire.

The most advanced chips used in cloud computing are made in facilities operated by Taiwan Semiconductor Manufacturing Company, using gear from ASML, a Dutch company.

America’s allies might usefully focus on making themselves even more indispensable. ©2026 The Economist Newspaper Limited. All rights reserved