MILAN/PARIS, March 19 (Reuters) - Scaleway, a cloud

service provider owned by France's Iliad, will open a new cloud

region in Milan and is planning a further European expansion, as

it seeks to compete with U.S. technology giants dominating the

European market, it said on Thursday.

Europe lacks large homegrown cloud computing companies, known as

hyperscalers, and rising tensions ranging from foreign policy to

regulations have fuelled calls within the European Union to

reduce reliance on U.S. hyperscalers.

Amazon Web Services, Microsoft Azure and

Google Cloud control around 70% of the EU cloud

market, according to a study published by the European

Parliament in December.

Scaleway, which already operates cloud regions in France,

Poland and the Netherlands, hopes to win over clients seeking a

Europe-based alternative that fully complies with local

regulations. It also plans to add soon two more cloud regions,

in Sweden and Germany, with the locations yet to be chosen.

"Europe cannot rely entirely on foreign hyperscalers to

power its digital economy," CEO Damien Lucas said in a

statement.

Cloud regions are locations where providers house the

infrastructure that supports applications and stores customer

data. Milan, with its abundant infrastructure and role as a hub

for global corporations, has become a preferred location for

power-hungry artificial intelligence data centres in Europe.

While Scaleway's product catalogue broadly matches what larger

competitors offer, its scale remains smaller, and achieving the

expansion needed to close that gap requires heavy capital

spending.

Iliad disclosed plans last year to invest 3 billion euros ($3.45

billion) in artificial intelligence infrastructure.

($1 = 0.8688 euros)