Currently, over 90% of the world’s data is stored on cloud servers owned or managed by companies headquartered in just a few countries. Most of this information is hosted by major American technology companies, such as Microsoft, Google and Amazon, which together dominate the global cloud computing market.

The concentration of data control in the hands of a few corporations and nations raises significant concerns about data sovereignty.

Data sovereignty is the principle that data should be subject to the laws and governance of the country in which it is collected or stored. As businesses increasingly rely on digital infrastructure and data technology, questions are being asked about who truly owns, controls and protects that data.

Understanding the Core of Data Sovereignty

First, let's have a closer look at the principles of data sovereignty, shall we?

The core concept of data sovereignty relates to territorial control: any data collected must be stored or processed within the country's borders. For instance, information stored in a London data centre must be processed in Great Britain. 

Local laws then govern access to, exploitation of, and the privacy and security of the data. In the European Union, data is subject to GDPR amendments. Furthermore, organisations must support and adhere to national data policies.

Data sovereignty involves ensuring that companies, particularly multinational corporations, comply with national data protection regulations and are transparent about how they handle user information.

The location in which data is stored often provokes debate, as countries mandate that certain categories of data, particularly sensitive information, must be kept within their borders. This poses challenges for global businesses that rely on cross-border data flows and centralised cloud infrastructures.

Implications of Data Sovereignty for Governments, Businesses, and Users

At first glance, data sovereignty can be beneficial for individuals, as it protects user privacy, improves national security, and maintains economic control over collected data.

However, it also presents several challenges that cannot be ignored. For international businesses, for example, it makes it more difficult to deploy a global data flow to facilitate collaboration within their internal processes.

From a user's perspective, they may find it more difficult to access global services as they will encounter a fragmented market.

Technically, companies must adapt their cloud infrastructure to comply with regulations in multiple jurisdictions, which incurs additional compliance and architectural costs.

For governments, data sovereignty could cause diplomatic issues related to data exploitation, limiting international cooperation and information sharing. Countries may struggle to balance protecting national interests with the need for global connectivity, potentially leading to disputes over cross-border data access, surveillance, and regulatory alignment.

The Cooperative Path to Data Sovereignty

If data sovereignty proves effective in safeguarding privacy and ensuring national security, it could also be employed to regulate the economy and control data flows within national borders.

However, some argue that it restricts innovation, complicates global operations and limits data-driven research.

A middle-ground approach might therefore involve international cooperation and standardised data protection frameworks.

The European Union has achieved this by adopting common data protection laws. This has eased the process of implementing a single data regulation across its 27 member states.