I work in a European government institution. This is definitely a risk we care about, and we would switch to sovereign clouds in a heartbeat if we had any good ones in Europe.
TBF (and the subject of government tech and procurement aside) there are good ones in Europe.
The problem tends to be how much of the US-cloud cool-aid your organisation has drunk.
If you've drunk the whole bottle, i.e. the random alphabet-soup of interdependent microservices, then sure you'll have a tough time finding a like-for-like equivalent.
But if you've still got old-school IT brains in your IT team, then its perfectly feasible to find equivalence in Europe.
Not only that, but you'll probably pay at least 10x less in Europe because you're not paying through the nose for the alphabet-soup of random interdependency.
Also the EU providers price sheets are clear and it is easy to reliably forecast how much you will be paying. As opposed to the US provider's muddy price sheets full of small-print and all sorts of random invented proprietary billing units that are nigh on impossible to reason about.
Do other institutions care? Some people and some institutions do, but how many?
What about the private sector? Even if you moved all government services entirely away from the US, your economy can still be reliant on American suppliers and communications between the government and the private sector and individuals will too.
> we would switch to sovereign clouds in a heartbeat if we had any good ones in Europe.
What is wrong with the options you have in Europe? That comment suggests to me you do not care enough to do anything that takes effort.
So you basically confirmed that being located in Europe isn't enough.