Understanding Sovereign Cloud: Ensuring Data Security and Compliance

A Sovereign Cloud is a cloud computing environment designed to guarantee data residency, security, and control within a specific national or regional jurisdiction, strictly adhering to local regulations and preventing unauthorized foreign access. It mitigates risks associated with extraterritorial data laws (such as the U.S. Cloud Act) by relying on local infrastructure, operators, and governance frameworks. This approach gives organizations greater strategic autonomy and reduces dependence on global hyperscalers.

A sovereign cloud is fundamentally a cloud environment that enables an organization to meet its digital sovereignty obligations while still realizing the benefits of the cloud model. It can be hosted in a facility owned by a cloud provider and accessed by an organization’s users and non-cloud IT systems either over the public internet or via dedicated, non-internet-connected links. Alternatively, a sovereign cloud can be deployed as a distinct, “cloudlike” environment within a large organization’s own data center; in this case, the environment operates as a cloud and is managed by the cloud service provider, but remains physically isolated from external networks. Because of the shared responsibility model inherent to cloud computing, security and privacy are jointly managed by the provider and the customer, making it essential to choose a provider that can support your specific sovereignty requirements.

Key Takeaways

• Sovereign clouds ensure that data handling complies with local laws, enhancing security and compliance for sensitive industries like government, healthcare, and finance.
• Key benefits of sovereign clouds include operational flexibility, legal risk reduction, and robust data security features such as strict access controls and encryption.
• Adopting sovereign clouds presents challenges, including compliance with varying local regulations and interoperability issues, which organizations must navigate carefully.
• Implementing digital sovereignty via a sovereign cloud helps with data compliance, business continuity, supply chain efficiency, and geopolitical resilience.
• The challenges of cloud sovereignty include finding a service provider that knows all the rules, can help determine the necessary levels of protection, and holds the relevant certifications.
• Sovereign clouds are generally connected to the internet and accessed by secure, encrypted links and protocols. In some cases, an air-gapped cloud may be required.
• Data sovereignty requires that data be encrypted with an approved set of protocols, whether it’s stored in a database or file system or being transmitted over a network.
• Assume that digital sovereignty laws and regulations will increase in number and complexity and that there will be significant financial and criminal penalties for failing compliance audits or breaches that expose regulated data.

How does sovereign cloud differ from private and public cloud

Sovereign cloud differs from private and public clouds primarily in its emphasis on jurisdictional control, data residency, and compliance with national laws, rather than just access exclusivity or shared resources. Private clouds offer dedicated infrastructure for a single organization, often on-premises or hosted, prioritizing security and customization without multi-tenancy. Public clouds provide scalable, multi-tenant services from global providers like AWS or Azure, optimized for cost-efficiency and broad accessibility.

Benefits of Cloud Sovereignty

Establishing a sovereign cloud can be a complex undertaking, even with a capable provider. However, it pays off in a variety of ways. First and foremost: compliance. Cloud sovereignty broadly addresses geographic, political, and industry regulations, data portability, and compliant data transfers within and between regulatory domains.

In addition, a sovereign cloud delivers the following benefits:

• Technical solutions and expertise companies may not have in-house: Digital sovereignty can pose difficult changes on the technical front, especially if an organization wishes to maintain interoperability and portability. A well-constructed sovereign cloud offers both regulatory compliance and open standards.
• Operational best practices: A sovereign cloud provider will have in place strong operational controls, such as authorized key access for customers or the ability to bring your own keys, as well as administration, logging, and technical support. This is critical for a range of organizations, such as the intelligence community.
• Business and continuity assurance: A sovereign cloud installed and maintained by a top-tier provider offers all the scalability, business continuity and disaster recovery, redundancy, portability, and performance of a first-class cloud—with digital sovereignty as well.
• Supply chain sufficiency: A cloud service provider that offers a sovereign cloud can often go beyond a single customer organization’s ability to source servers, networks, chips, cabling, and the energy, facilities, staffing, and training required for round-the-clock availability.
• Geopolitical resilience: A sovereign cloud service provider with global reach can help organizations weather challenges posed by military conflicts, economic hardships, climate change, and other large-scale disasters, assisting with sustainability.

Challenges of Cloud Sovereignty

Sovereign cloud service providers have an interest in helping customers meet their regulatory, legal, and technical requirements. Still, despite the benefits, establishing cloud sovereignty requires an organization’s IT team to overcome some obstacles, including the following:

1. Finding a service provider that knows the rules

Digital sovereignty laws and regulations are complex and becoming more so constantly. Whether organizations use a sovereign cloud or a traditional data center, the regulatory landscape makes it difficult to know what's compliant and what isn’t. A full-service sovereign cloud provider will have both expertise and processes in place to keep its offerings up to date as regulations change.

2. Determining the necessary levels of protection

Does an organization merely need to ensure that personally identifiable information (PII) is properly encrypted and stored within national boundaries, or does regulatory compliance extend to the servers housing a document repository, the control systems, and the citizenship and security clearances of all staff with physical access to the hardware? You can’t comply until you know what’s required.

3. Designing a disaster recovery architecture

Cloud sovereignty applies to not only the primary data center but also all backup recovery sites and facilities, which means the cloud service provider must have sufficient resources to offer such facilities within the defined jurisdiction.

4. Robustness and completeness of the sovereign cloud

Some service providers have built specialized sovereign cloud offerings. As a result, the applications, features, and services they offer in their public clouds may not be available, or fully available, in their sovereign clouds.

5. Acquiring a full set of certifications and legal entities

Some regulatory regimes require the sovereign cloud to be owned and operated by a service provider headquartered and owned within the specific geographic region. Ensure that a global cloud service provider has the right partnerships, licenses, and legal frameworks in place to meet those requirements.

Key Features of Sovereign Clouds

Companies looking to establish sovereign clouds will need to consider their requirements for these five key features, in addition to any industry-specific or competitive factors at play.

1. Location

Carefully select the location of your sovereign cloud data center and backup locations based on both compliance regulations and business considerations. Data points to collect include the location(s) of the provider's cloud data centers, the location(s) of other data centers owned by partners, and whether a dedicated sovereign cloud inside the customer’s own facility is feasible.

2. Access control

An organization should always be able to choose which companies, partners, customers, and software and services can access its cloud environment. In some cases, such as when national security is at stake, the customer may choose a fully dedicated facility.

3. Operations and support

An organization should control which administrative and technical staff, from both the cloud provider and its partners, may have access to their systems, as well as to metadata about those systems, such as performance and utilization metrics.

4. Regulatory compliance

Sovereign cloud deployments must be flexible when enabling compliance with regulations and security standards to reflect the possibility of overlapping jurisdictions, each with its own requirements. In some cases, a customer may have unique needs for specific regulatory controls and accreditations.

5. Internet connection or air gap

For many or most customers, an encrypted connection to the public internet may be the best, most affordable compliant network link. However, some customers or applications may require air-gapped regions totally isolated from the internet or other networks.

Digital Personal Data Protection (DPDP) Act

The DPDP Law refers to India's Digital Personal Data Protection (DPDP) Act, 2023, and its accompanying DPDP Rules, 2025, forming a framework to protect citizens' digital personal data, giving individuals rights (Data Principals) and placing responsibilities (Data Fiduciaries) for lawful data handling, consent, security, breach notification, and significant penalties for non-compliance, with phased implementation aiming for full operationalization by 2027. 

Key Aspects of the DPDP Law: 

• Scope: Applies to processing digital personal data within India, and outside if offering goods/services to Indian residents.
• Core Principles: Emphasizes consent, purpose limitation, data minimization, and security.  
• Data Principal Rights: Includes the right to access, correct, erase, and port data, and the right to withdraw consent.
• Data Fiduciary Obligations: Mandates lawful basis for processing (consent or legitimate use), security safeguards, breach reporting to the Board (DPBI) and affected users, and specific rules for children's data.
• Penalties: Substantial fines for violations, up to ₹250 crore for failing security safeguards or breach notification failures.
• Enforcement: Establishes the Data Protection Board of India (DPBI) to oversee compliance, impose penalties, and handle grievances.
• Phased Rollout: The Act was enacted in 2023, with the detailed Rules notified in November 2025, and full compliance expected by May 2027, allowing businesses time to adapt.

  What it Means for Businesses & Individuals: 

• For Businesses: Must review data practices, get explicit consent (usually), secure data, report breaches, and provide clear privacy notices.
  
• For Individuals: Greater control over personal data, preventing forced sharing (like phone numbers for shopping) and ensuring data is handled responsibly.

Best Practices for Sovereign Cloud Deployment

Deploying a sovereign cloud requires careful planning and best practices to ensure compliance and operational efficiency. Organizations should familiarize themselves with the data protection laws and compliance requirements of the hosting jurisdiction to avoid legal pitfalls. Flexibility to comply with overlapping jurisdictions and regulatory needs is critical for successful deployments.

Operational sovereignty is another crucial aspect. Sovereign clouds provide:

• Robust disaster recovery capabilities
• Business continuity through Business Continuity Disaster Recovery (BCDR) or Disaster-Recovery-as-a-Service (DRaaS) plans
• Robust backup and disaster recovery plans that ensure recovery and failover stay within compliance areas
• Protection against unauthorized access

Educating employees about the usage and importance of sovereign clouds is also crucial. A culture of security awareness and compliance can significantly enhance the effectiveness of sovereign cloud deployments, ensuring that all stakeholders are aligned with the organization’s data sovereignty goals. By following these best practices, organizations can maximize the benefits of their sovereign cloud solutions while minimizing risks.

How to perform a cost comparison between sovereign and public cloud