Data sovereignty refers to the principle that data is subject to the laws of the country in which it’s collected or stored. So, if a German company collects data from its German customers but then wants to store and process it in its Californian office, it must still ensure the data is subject to GDPR (EU) requirements.
How We Arrived at Data Sovereignty
The regulation backing up data sovereignty has been one of the most fast-changing areas in digital law. The European Union led the way with GDPR, with the California Consumer Privacy Act and several others following suit. And, even in the instances of Britain in a post-Brexit world, their laws remain aligned with GDPR.
However, the varying regulations between borders do pose a problem for international companies. They must be up to date on compliance for all countries they operate in or collect data from.
In 2023, the EU proposed GDPR Procedural Regulation which helped streamline the enforcement and cooperation between the member states’ data protection authorities. Other nations like Switzerland also coordinated in line with the EU. Though, the US and its many states remain fairly independent and unaligned.
Cloud Hosting Causing Concern
There is a mass migration towards cloud hosting because of its scalability benefits which are fairly cost-efficient and promote flexibility. Data sovereignty, however, hasn’t yet been fully solved.
Cloud hosting means that hosting is in global data centers, meaning it then becomes subject to the laws of several jurisdictions. This brings with it some compliance difficulties, and serious considerations about where your cloud host provider is based. Selecting the best web hosting provider is going to be important as they provide some level of data sovereignty services and potential flexible storage.
Data residency regulation may mean storing data in only specific countries, and this can impede the performance of the cloud services. And, of course, adding more security measures to ensure compliance surrounding how data is access and shared.
Strategies for Ensuring Data Sovereignty in the Cloud
To work towards a compliant, data sovereign cloud environment, companies must implement a data classification framework that identifies sensitive data and applies the appropriate security measures. Encryption is a key tool here, as well as access controls, allowing the company to protect data both in transit and at rest.
Hybrid and multi-cloud architectures are a possibility here. They allow data sovereignty by distributing data across several different cloud providers (and on-premise), meaning they can keep certain sensitive data within specific jurisdictions. Ultimately, it gives you more choices and more ways to solve the problem.
Cloud providers do offer sovereign cloud solutions that adhere to local regulations, and this makes sense for the same reasons for being on the cloud in the first place. Regular audits are needed regardless though, and organizations should regularly review their compliance process.
How Data Sovereignty May Be Solved in the Future
Blockchain has something to say for itself concerning data sovereignty, as its decentralized nature and immutable ledger can mean its both secure yet transparent. Smart Contracts could be used to manage data access across borders, which may either be provided or bespoke and built in-house. This opens the door to fewer administrative burdens too if automated.
Privacy-enhancing techniques on the other hand use tools like homomorphic encryption and multi-party computation, meaning data processing and collaboration can occur securely without privacy worries.
In other words, it allows computations to be performed on the encrypted data without ever decrypting it for you, meaning information remains protected. And, multi-party computation just means more parties can jointly compute these functions without decryption.
Edge computing is another possibility in the future, which is simply the processing and storing of data closer to its source. This refers to the “edge” of the network, meaning fewer data gets transferred over borders. This helps eliminate the need for multi-jurisdiction compliance as the edge computing locally processes data.
Conclusion
Organizations will undoubtedly continue to move to the cloud, particularly with the shift towards remote work and rapidly scaling up. Likewise, data regulators will also work towards the common goal of both data privacy and, likely, alignment. However, there will likely always be the issue of regulatory alignment, particularly between continents or outside of trading blocs. Therefore, best practices need to be taken seriously today, but with one eye on emerging solutions within blockchain and elsewhere that tackle this problem at a lower cost.
