With artificial intelligence poised to revolutionize society and industry, along with rising global tensions and competing legislative priorities, companies are increasingly concerned about maintaining control and security over their data and infrastructure. In an article called “The geopolitics of AI and the rise of digital sovereignty”, the Brookings Institution reports that “Growing mistrust between nations, however, has caused a rise in digital sovereignty, which refers to a nation’s ability to control its digital destiny and may include control over the entire AI supply chain, from data to hardware and software.”
This article explores the concept of digital sovereignty, the growing importance of digital sovereignty for businesses, the problems it solves, the benefits it offers in terms of data privacy, security, and compliance, while also examining potential challenges.
“By 2028, over 50% of multinational enterprises will have digital sovereignty strategies, up from less than 10% today.”
What is Digital Sovereignty?
Digital sovereignty refers to a country or organization’s ability to control its digital destiny. In the context of enterprise business, digital sovereignty focuses on improving a company’s ability to autonomously control and manage its digital assets, data, and technology infrastructure by reducing dependence on external factors.
For example, many enterprises rely heavily on cloud service providers (CSPs) like Amazon Web Services (AWS), Microsoft Azure, or Google Cloud Platform (GCP) for their core infrastructure and applications. While these providers offer scalability, reliability, and cost benefits, they also introduce a degree of dependence.
In the event of a major cloud service outage, enterprises can experience significant disruptions to their operations. They have limited control over how quickly the issue is resolved, potentially impacting customer service, revenue generation, and overall business continuity.
Cloud service providers regularly update their platforms and services. While these updates can bring improvements, enterprises might have limited influence on the timing or specific features of these updates. In some cases, forced migrations or compatibility issues can disrupt established workflows and require additional resources for adaptation.
In this example, a digital sovereignty strategy could help mitigate dependence on cloud service providers by:
Exploring multi-cloud deployments: By distributing workloads across different CSPs or even using a combination of cloud and on-premises infrastructure, enterprises can potentially minimize downtime during outages that affect a single provider.
Prioritizing regional solutions in disaster recovery plans: This means having backups or failover mechanisms within a specific geographic area, potentially reducing reliance on a single CSP’s global infrastructure in case of a widespread outage.
Engaging “sovereign cloud” solutions: These cloud environments meet specific data residency and regulatory requirements. (Data residency refers to the physical location where your data is stored at rest.) While still relying on a provider, these solutions can offer enterprises more control over update timelines and features compared to standard public cloud offerings.
Exploring open-source software alternatives for specific functionalities: While not a complete replacement for cloud services, open-source software gives enterprises more control over the codebase and update schedules, potentially reducing disruptions caused by forced migrations or compatibility issues with proprietary cloud services.
Key aspects and benefits of digital sovereignty
Digital sovereignty as a concept aims to empower enterprises to regain control and make informed decisions regarding their digital footprint in the face of limitations. Essentially, digital sovereignty empowers countries and organizations to:
- Enhance security and data protection, potentially minimizing the risk of unauthorized access or data breaches.
- Improve compliance with data privacy regulations that dictate data storage location and processing practices.
- Reduce reliance on third-party vendors, allowing greater flexibility and potentially reducing vendor lock-in.
Digital sovereignty doesn’t necessarily eliminate external influence entirely, especially when it comes to strict data privacy regulations. However, it can offer some key advantages in navigating those regulations:
- Digital sovereignty allows companies to choose where their data is stored and processed. This can be crucial for complying with regulations that dictate data residency. For example, a company subject to GDPR (General Data Protection Regulation) in the EU might prioritize storing customer data within the EU to ensure compliance.
- Even when adhering to regulations, digital sovereignty allows companies to maintain some control over how they collect, use, and manage customer data. This can be achieved through internal policies and user consent mechanisms that go beyond the minimum requirements of a regulation.
- By proactively managing data residency and user privacy practices, companies can minimize the risk of hefty fines and legal issues associated with non-compliance with data privacy regulations.
- In some cases, digital sovereignty can provide leverage when dealing with foreign governments that might request access to user data. Companies can point to their data residency practices and strong internal controls to demonstrate their commitment to user privacy.
While digital sovereignty offers advantages, it doesn’t negate the need to comply with all applicable data privacy regulations. Companies still need to adhere to the core principles of these regulations, such as transparency, user consent, and data security.
Challenges of digital sovereignty
Achieving digital sovereignty presents some challenges. Maintaining on-premises data centers or using regional cloud solutions can be more expensive than relying on public cloud services offered by major international providers. Managing a distributed IT infrastructure across different regions or using multiple vendors can require additional technical expertise. And on-premises infrastructure may not be as easily scalable as cloud solutions.
Digital sovereignty for enterprises is a balancing act. Companies need to weigh the benefits of increased control and security against the challenges of cost, complexity, and scalability to determine the optimal approach for their specific needs.
A growing legislative trend
Digital sovereignty is a complex issue with both technological and legislative aspects. Here’s why:
Increased focus on data privacy
Data privacy concerns are on the rise globally. Citizens and governments are becoming more aware of how their data is collected, used, and potentially misused. This has led to a wave of data privacy regulations like GDPR (Europe) and CCPA (California) in the US. Digital sovereignty complements these regulations by giving countries and businesses more control over data residency and processing practices.
Geopolitical tensions and cybersecurity threats
Rising tensions between countries can lead to concerns about data security. Governments want to ensure that sensitive data is not accessed or controlled by foreign powers. Digital sovereignty empowers them to take steps like promoting domestic cloud service providers or restricting data transfers to certain countries.
Economic considerations and technological independence
Some countries want to reduce their reliance on foreign technology companies and promote domestic innovation. Digital sovereignty can encourage the development of local cloud infrastructure and software solutions, potentially boosting the economy and fostering technological independence.
Examples of legislative initiatives
The European Union’s (EU) focus on data residency: The EU’s GDPR regulation and other initiatives promote data residency within the EU, reflecting their commitment to digital sovereignty.
China’s data localization requirements: China has strict regulations that require certain types of data to be stored within the country. This aligns with their broader goals of digital sovereignty and control over their digital infrastructure.
The US CLOUD Act: This act clarifies the legal process for US law enforcement to access data stored by US companies, even if it’s located outside the US. This can be seen as an effort to protect US cloud providers and maintain some level of control over data stored by American companies.
Is digital sovereignty data security with a fancy name?
While there is some overlap between digital sovereignty and data security best practices, digital sovereignty goes beyond just security. Here’s how it adds value:
Focus on Geopolitical Context:
- Data security best practices are essential for any organization, but digital sovereignty adds a geopolitical layer. It allows companies to consider the broader political and regulatory landscape when making decisions about data storage, processing, and access.
- For instance, a company might choose to prioritize storing data within a specific region to comply with data residency laws or avoid potential government surveillance concerns.
Control Over Technology Choices:
- Security best practices are typically focused on implementing strong security measures within a chosen technology stack. Digital sovereignty empowers companies to have more control over the technology choices themselves.
- This could involve choosing domestic cloud providers over international ones or opting for open-source software solutions to reduce reliance on specific vendors.
Transparency and User Trust:
- Data security best practices are crucial, but building trust with users requires transparency as well. Digital sovereignty, when implemented thoughtfully, can be a way for companies to demonstrate their commitment to responsible data management.
- By prioritizing data residency and user control over data, companies can build trust and differentiate themselves in the marketplace.
So, there is some overlap with data security, but digital sovereignty offers a broader perspective on how companies manage their data in an increasingly interconnected and complex world.
Conclusion
Digital sovereignty addresses a key problem for businesses operating in a digital and globalized world: lack of control over their data and infrastructure. Digital sovereignty helps businesses maintain compliance with data privacy regulations, reduces the risk of data breaches and security threats, maintains data privacy, improves transparency and trust, and reduces reliance on foreign providers.
However, digital sovereignty is not a silver bullet. Focusing on data residency within a specific region might limit scalability for businesses with global operations. Finding solutions that adhere to digital sovereignty principles while also enabling global reach can be a challenge. And depending on the chosen region, data storage and infrastructure solutions that comply with digital sovereignty regulations might be more expensive than readily available global cloud services.
Digital sovereignty empowers businesses with greater control over their data, but it’s a strategic decision that requires careful consideration of regulations, security needs, and potential drawbacks. Strict regulations in a country might still limit a company’s control over data practices. Achieving true digital sovereignty can be complex and expensive, especially for smaller companies.
