Not only will the San Francisco-based company add two new European offices next year to its current roster of three, but it will also build new infrastructure for storing data within the EU.
Customer requirements in the region have evolved, explained Thomas Hansen, the company's global vice president of sales and channel, in a post on the Dropbox for Business blog.
"This will not only build on the technical lead we have over competitors," Hansen wrote, but "will also give our customers more options about where their data is stored."
Amazon and Microsoft are also among the cloud providers racing to offer new European storage options for customers worried about data sovereignty, or the question of which country has jurisdiction over the data.
Data sovereignty has long been a key concern for companies in Europe because of the region's strict data-protection laws. Since the EU's top court struck down of the Safe Harbor Agreement in October, however, it's become a hot-button issue. That agreement had ensured EU-level protection for European data processed in the U.S., so its defeat left numerous companies floundering.
For Dropbox, the pressure is surely significant. Seventy-five percent of its users are outside the U.S., Hansen said, including "tens of thousands of European companies." Sharing activity in the region increased 200 percent this year, he said.
If Dropbox wants to do serious business in Europe, establishing regional data centers is a necessity because of the strict compliance regulations there, said Charles King, principal analyst with Pund-IT.
Increasing concerns about individual privacy are also an issue, he said, particularly given how "cavalier" American intelligence agencies have been about demanding access to information stored in U.S.-owned data centers, "no matter where it originates or who might own it."
The recent terrorist attacks in Paris will likely only strengthen that attitude, he said, making it difficult for U.S. technology companies to attract foreign clients without having facilities and staff in those markets.
So, "Dropbox's move isn't just good for business -- it's necessary for the company's growth and survival," King added.
Dropbox didn't specify the number of European data centers it plans to build, or their locations. Its new European offices will be in Hamburg and Amsterdam, joining those it already operates in London, Paris and Dublin.