What is Sovereign Cloud?
What is sovereign cloud?
A sovereign cloud is a cloud computing environment that is designed to ensure that all data—including applications, stored data, and data that travels across networks—is stored, processed, and managed within a certain country or region and is in compliance with the data sovereignty laws and regulations of that country.
Data sovereignty is the concept that digital data is subject to the laws and governance of the country where it is collected, stored, or processed—even if it’s managed by an organization in another country. Sovereignty is essential to protecting and securing data, especially for government agencies and organizations in highly regulated industries, such as finance or healthcare.
With a sovereign cloud, organizations get complete data control, security, and transparency and can prevent foreign access or influence. Sovereign clouds are usually operated by national entities or enterprises in partnership with trusted local cloud providers to ensure legal and operational sovereignty over digital infrastructure and data.
For enterprises, a sovereign cloud is critical to maintaining compliance with digital sovereignty requirements.
Sovereign cloud explained
The most common type of information that is protected under sovereignty laws is personally identifiable information (PII) about individuals. It can also sometimes include intellectual property, trade secrets, business practices, financial data, and more.
Sovereign clouds are typically located in large data centers owned by hyperscalers and can be accessed by authorized users either through a secure internet connection or through dedicated communications links that are “air gapped,” or not connected to the internet.
It’s important to note that when discussing data sovereignty, the term “data residency” pops up a lot. They’re not the same thing. The difference is that data residency simply refers to where data is physically stored. Even if your data resides on servers in Germany, it’s not automatically clear who can access it. That’s where data sovereignty comes in. It mandates that your data is subject to the laws and regulations of the country where it resides. So even if your organization is based in the U.S., if your data resides in Germany it must comply with Germany’s rules.
With a sovereign cloud, organizations can gain maximum control over their data, infrastructure, and operations while maintaining compliance to national laws and regulations. The key characteristics of a sovereign cloud include:
Restricted access – This puts limits on who can access and use the cloud and it’s typically based on geography, organizational roles, security clearances, or even an individual’s citizenship. Only trusted users can get into the data and systems inside a sovereign cloud.
Data location and residency – Organizations can dictate where different collections of data must reside, from a particular country to a specific region or even down to a single data center.
Strict compliance standards – Based on national or industry-specific regulations, these standards include technical controls over data as well as how data is to be handled, stored, and protected.
Operational support policies – These can require cloud provider staff to meet specific criteria, such as citizenship, residency, and security clearance. Any staff not meeting those criteria would not be able to work with the sovereign cloud.
Dedicated and secure networking – This is a must for sovereign clouds and can range from isolated air-gapped environments to private VPN configurations. This keeps the sovereign cloud separate from regular network traffic and the risk of unauthorized access.
Advanced encryption – This essential component protects data in sovereign clouds from outside users. It’s common for an organization to manage their own encryption keys, meaning that the cloud provider has no visibility or control over data in the sovereign cloud.
Benefits of cloud sovereignty
Compliance with local regulations
Sovereign clouds are built to fulfill legal requirements of specific countries and regions where data is stored. Organizations must follow data protection laws, industry-specific standards, and regulations around government privacy, security, and access control. Organizations that store data within defined legal boundaries under local jurisdiction through sovereign clouds can reduce legal risks while staying audit-ready and building trust with regulators and customers.
Data security and privacy
Sovereign clouds boost data security and privacy through strict access controls, advanced encryption, and dedicated infrastructure that prevents unauthorized access by foreign entities. Sovereign clouds operate under national and local jurisdictions, which reduces the risk of data exposure because of foreign laws and international surveillance programs. The high security standards and privacy features of sovereign clouds make them a critical IT component for organizations that work with confidential or classified data, including government agencies and critical infrastructure providers.
Reduced risk of data breach
Sovereign clouds can ward off potential data breaches because they adhere to authorized user restrictions within specific regions—in combination with strict security clearances and local legal and regulatory compliance. The infrastructure stays isolated while dedicated networks and customer-managed encryption keys work together to reduce exposure and prevent unauthorized access. Other security measures can help reduce attack exposure beyond public cloud infrastructure, which makes it tough for external and foreign actors to access the data.
Operational flexibility
With a sovereign cloud, organizations can customize their cloud services to fulfill their unique legal requirements, security needs, and business objectives. Organizations can choose where their data is stored and define who has access based on citizenship, clearance, or role within the company. Sovereign clouds also provide flexibility in how they’re deployed, whether an organization needs a fully isolated environment or a hybrid configuration. This flexibility allows organizations to retain control over their data, while still being able to benefit from the scalability and innovation of the cloud.
Challenges of cloud sovereignty
Compliance and regulatory complexity
Because laws and standards vary widely across different countries and industries, added complexity in staying compliant can be a challenge. Not only do organizations have to manage a complex landscape of legal requirements that include data residency, access controls, encryption, and more—but those standards are often frequently revised. Most organizations invest in legal consultants, specialized infrastructure, and regular audits to ensure they maintain compliance.
Another layer of difficulty is added when trying to align with both national and international compliance guidelines—for example, an organization having to stay compliant with Germany’s laws as well as those of the larger European Union. All of this complexity makes it harder to adopt sovereign clouds.
Interoperability issues
Interoperability can be a challenge with sovereign clouds because by nature they are often isolated to meet compliance requirements. This isolation restricts integration with many cloud services, as well as third-party applications and multicloud environments. A variety of standards and APIs, combined with regional regulations make it difficult for data sharing and system compatibility across clouds. Moving workloads between sovereign and non-sovereign clouds is also a challenge. These interoperability issues reduce agility and complicate an organization’s overall cloud strategies.
Dependence on local providers
It’s easy for organizations to rely heavily on a single provider when building and deploying a sovereign cloud. So much of that work involves customizations for the organization’s unique sovereignty needs. And while these customizations help enhance security and compliance, they reduce flexibility and can create roadblocks to switching providers or platforms. Moving to a different cloud service could require substantial re-engineering of applications and the need for re-certification. Vendor lock-in ultimately tends to increase costs, reduce speed of innovation, and hinder an organization’s agility.
Factors to consider when adopting a sovereign cloud
Data security and privacy
It’s important to find a sovereign cloud provider that offers the control policies and encryption standards your relevant regulations demand. Those regulations can vary from industry to industry or country to country, so be sure to gain a good understanding of the provider’s expertise and capability to provide what you need.
Cloud provider selection
There are different types of sovereign cloud providers, including those that are backed by governments, those backed by the private sector, and hybrid providers that work with both. Government-backed providers typically prioritize national security, data sovereignty, and adherence to local laws but may be less well-versed or concerned about commercial considerations. Private-sector providers often partner with local agencies and tend to offer a bit more scalability, modern features, and innovation. However, they may present issues with foreign ownership or influence. Hybrid providers combine elements of both other types, and often involve collaboration between governments and commercial companies. A hybrid provider can balance governmental compliance with more technological flexibility.
Scalability and flexibility
Regulations will continue to evolve—and so will technology. You want to be able to embrace new technologies as they emerge, so your sovereign cloud provider should offer solutions that deliver the scalability and flexibility your organization will need in the future. As your organization grows, your sovereign cloud will need to change to accommodate advancements in AI, machine learning, big data, real-time analytics, as well as tomorrow’s technologies we don’t even know about yet.
Cloud sovereignty in Europe
In Europe, the issue of cloud sovereignty is becoming increasingly prominent as concerns grow over data privacy, security, and control—especially in light of the U.S. CLOUD Act and the world’s rising reliance on digital data. The EU has introduced regulations like the General Data Protection Regulation (GDPR), which applies across all member states and sets strict guidelines on how organizations should handle, store, and transfer data.
Complicating that, however, is the fact that individual countries are also introducing their own laws and regulations around sovereign clouds. For example:
France’s "Cloud de Confiance" initiative requires that certified cloud services are hosted by EU-based providers, to stay free from non-EU legal influence.
Germany is interested in strict data localization and has collaborated with private partners through programs like Gaia-X, a federated data infrastructure project.
Other countries, such as Italy and Spain, are pushing for national or EU-based cloud services to reduce dependency on foreign tech giants.
The details of these emerging national regulations vary across countries, which certainly increases complexity for organizations that operate in multiple EU countries. Businesses must navigate both EU regulations and country-specific standards, which can affect their cloud strategy, vendor selection, and compliance operations. Staying compliant often requires partnering with local or hybrid providers to ensure legal alignment while still retaining the ability to access modern cloud capabilities.
The future of sovereignty
Growing regulatory pressure
As cloud sovereignty evolves, the world will almost certainly experience increasing regulatory pressure. Governments and industries will continue to create stronger data protection and localization laws, which will drive organizations to increase demand for sovereign clouds to stay compliant and prevent unauthorized data access.
Hybrid and multicloud approaches
To stay agile and enable flexibility, innovation, and scalability, organizations will increasingly implement hybrid and multicloud sovereignty solutions. Sovereign clouds can house an organization’s most sensitive data while it uses public clouds for workloads that don’t fall under such strict regulations.
It would benefit organizations and regulators alike to develop international standards and frameworks to simplify compliance and enable global interoperability between sovereign clouds and other global cloud environments.
