The European observability stack: Grafana Labs, Coralogix EU, and the Datadog renewal question
The renewal conversation that keeps surfacing
A pattern in European mid-market engineering organisations through 2025 was that the Datadog renewal conversation kept landing on the CTO's desk. The licence had grown to a six-figure or seven-figure annual cost. The product was excellent. The architectural lock-in was real. The renewal team had no leverage in the conversation. The CTO was asked, repeatedly, whether there was a credible alternative.
The honest answer through 2023 was that the credible alternatives were narrower than the marketing of the alternatives suggested. New Relic had its own commercial problems. The open-source observability stack required engineering investment most mid-market teams could not justify. The European-headquartered alternatives were smaller, less feature-complete, and less integrated into the broader CI/CD and incident response tooling the engineering team had built around Datadog.
What changed through 2024 and 2025 was that two alternatives matured into serious competitors for European mid-market accounts. Grafana Labs, the British-incorporated company that has been building an open-source observability stack for over a decade, reached commercial maturity with Grafana Cloud and a meaningful European customer base. Coralogix, the Israeli-Tel Aviv founded company with a strong European go-to-market and a Dublin data centre, made its commercial pitch on cost-per-event economics that were substantially cheaper than Datadog for high-volume log workloads.
What each company actually does
Grafana Labs built around the LGTM stack: Loki for logs, Grafana for visualisation, Tempo for traces, and Mimir for metrics. The open-source posture gives the European mid-market a procurement-friendly story. The hosted Grafana Cloud product gives the same teams a path to managed deployment without the engineering investment in self-hosting. The 2024 acquisition of Pyroscope added continuous profiling. The 2025 release of Grafana Asserts added the LLM-driven incident analysis features that compete with Datadog Watchdog. The product is now broad enough that an engineering organisation can run on Grafana Cloud for the same set of observability use cases that previously required Datadog.
Coralogix took a different positioning bet. The product's strongest selling point is the Streama architecture that processes log events without indexing them, which produces materially lower storage and query costs for high-volume logging. For an engineering organisation generating fifty or one hundred terabytes of logs per month, the cost differential against Datadog is not marginal. The Dublin data centre gives European customers the data residency story Datadog has had to work harder to defend.
Sentry, the open-source error tracking and performance monitoring company with a hybrid US-and-European footprint, occupies the application-monitoring slice of the same procurement conversation. The 2024 release of Sentry's session replay product and the 2025 expansion into AI-powered issue analysis put Sentry in competition with both Datadog APM and the application-tier features of Grafana Cloud. The European mid-market accounts that have moved from Datadog APM to Sentry plus open-source profiling have reported the migration was less work than they expected and the cost savings were substantial.
The data residency conversation
Datadog's data residency posture has evolved. The EU region exists. The data does stay there if configured correctly. The procurement question that has become harder to answer is the architecture below that. Whether the company's US headquarters, the structure of the SaaS multi-tenancy, and the implications of US law on data accessibility produce a posture that meets the standards European DPAs increasingly apply. The legal answer is debatable. The procurement implication is that several mid-market European companies in 2025 made the explicit choice to move observability to vendors whose corporate structure and data architecture made the question simpler to answer.
A real case. A €200M ARR German SaaS company moved off Datadog over nine months in 2025 to a combination of Grafana Cloud for metrics and traces, Coralogix for logs, and Sentry for application monitoring. The reported licence saving was substantial, in the high six figures annually. The reported engineering effort was moderate. The reported procurement story for the DPO and the board was meaningfully cleaner than the Datadog renewal conversation would have been.
What the next renewal cycle requires
For European mid-market engineering leaders facing the next Datadog renewal, the productive question is not which single vendor to move to. It is which architectural shape to move toward. The most defensible shape for most mid-market teams in 2026 is a mix of Grafana Cloud for the visualisation and metrics layer, Coralogix or an open-source equivalent for the high-volume log workload, and Sentry for application errors and performance. The mix is operationally more complex than Datadog. The cost savings and the data residency posture are substantial enough that the operational complexity is acceptable.
The alternative path is to renew Datadog with negotiated savings and a documented data residency posture. The vendors that have produced this kind of contract are doing so because the customer has credible alternatives. The negotiation leverage that the European mid-market did not have in 2022 is now real. The CTOs landing on the Datadog renewal in late 2026 will be doing so with substantially more options than the cohort of 2022 had, and the contracts will reflect that.