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Overseas enterprises and US sovereign clouds

Tuesday September 2, 2025. 11:00 AM , from InfoWorld
In recent years, the global conversation around cloud computing has shifted from a focus on technology to geopolitics. Data sovereignty, privacy, and control are now top concerns for enterprises outside the United States—especially across Europe, the UK, Asia, and Africa. Regulations and shifting political winds are prompting companies to reassess the risks of storing their data in the hands of foreign—most notably, American—companies.

It’s not just about where data resides, but who ultimately owns and controls the infrastructure. For example, after Brexit, the UK encouraged companies to keep sensitive data within the country’s borders, supporting local players like Ark Data Centres. Germany, with its historical wariness of external surveillance, is seeing big firms turn to companies such as Deutsche Telekom for cloud services. France has invested in “trusted cloud” initiatives to keep critical workloads within national reach. In India and China, strict localization rules mean foreign tech giants must partner with (or defer to) local operators. Meanwhile, rising African cloud infrastructure companies such as Liquid Intelligent Technologies further illustrate a desire for data autonomy.

Hyperscalers launch their own sovereign clouds

Faced with these pressures, US-headquartered hyperscalers are working to flip the narrative with new sovereign cloud offerings.

AWS offers data residency controls and locally managed regions, alongside advanced AI services via custom silicon.

Microsoft provides Azure Local, Azure Arc, and Microsoft Sovereign Cloud for governance across regions and was a pioneer in integrating AI services with its products.

Google focuses on partner-operated sovereign offerings and advanced AI solutions, though it faces consistency challenges for its support.

Oracle offers a wide range of sovereignty options and integrates AI into its applications; it operates its cloud regions in 24 countries worldwide.

These sovereignty services promise data residency, regulatory compliance, and local operational controls, sometimes in partnership with trusted regional providers. Microsoft, for example, offers Azure-based sovereign clouds designed specifically for EU governments, ensuring that data processing and storage stay within required borders. Google Cloud collaborates with European partners on sovereign frameworks, while AWS recently announced the AWS European Sovereign Cloud, a regionally isolated model staffed by EU residents.

These offerings are designed to help governments and businesses leverage hyperscaler technology safely, avoiding unauthorized access by foreign authorities. The goal is clear: to address both compliance and perception concerns while providing access to top-tier cloud services.

Ownership versus location

A sticking point remains. Many enterprises—particularly those operating in strict regulatory or political climates—aren’t convinced that sovereign clouds owned by American companies fully resolve the sovereignty dilemma. Under US laws, such as the CLOUD Act (Clarifying Lawful Overseas Use of Data), US companies may still be compelled to provide access to customer data, even when it is stored overseas. This legal “back door” keeps concerns alive for many European and Asian regulators.

This is why European initiatives like Gaia-X focus on true independence, championing cloud solutions that are not only locally run but locally owned. In Asia, governments in China and India have also steered business and infrastructure toward national companies, thereby minimizing exposure to foreign control.

Despite local options, it’s hard to ignore the innovation gap between global hyperscalers and smaller regional clouds. Features like artificial intelligence, integrated security, and global infrastructure attract enterprises with ambitions that go beyond their own borders. In industries where these tools are business-critical, U.S. hyperscalers with their sovereign cloud add-ons remain a compelling choice.

The most likely outcome is that enterprises will partition workloads by risk: Ultra-sensitive data may land with national or European cloud providers; everything else could leverage the scale and features of the big US clouds—provided those offerings meet evolving sovereignty standards.

Tips for enterprises outside the US

Enterprises operating outside of the United States face some of the most complex decisions yet when it comes to cloud strategy. The intersection of tightening data sovereignty regulations, unpredictable geopolitical events, and rapid advances from both global hyperscalers and local providers means that organizations must take a proactive, well-informed approach right now. Here’s what needs to be prioritized:

Conduct a comprehensive regulatory and risk assessment. Businesses must thoroughly map all applicable data residency, privacy, and sovereignty requirements in each jurisdiction where they operate. This includes national laws (GDPR in Europe or India’s data localization mandates) as well as sector-specific regulations that might limit where data can be stored or processed. Legal teams and IT leaders should work together to understand not just the letter of the law, but also the spirit and the future direction of evolving regulations.

Review and classify all data and workloads by risk profile. Enterprises should inventory their cloud workloads and data, segmenting them by sensitivity, legal exposure, and business criticality. Highly sensitive or regulated data should be identified for special handling, such as hosting within a local or fully independent cloud provider. Less sensitive workloads may be suitable for deployment with foreign-based hyperscalers, especially if sovereign cloud offerings can demonstrate sufficient legal and operational isolation.

Challenge your vendors and ask hard questions. Whether it’s a hyperscaler’s sovereign solution or a smaller regional provider, enterprises must rigorously vet their vendors. Ask about control structures, data access, incident response, and the legal status of the cloud environment. For foreign-owned cloud offerings, scrutinize safeguards against extraterritorial access and clarify contract language regarding data sovereignty.

Don’t take a single-cloud approach. Build for resilience. The safest and most flexible path today is a multicloud or even hybrid cloud model. This lets enterprises deploy highly sensitive data with local providers while leveraging the innovation and scale of hyperscalers for less regulated workloads. Building applications with portability in mind will pay dividends if the regulatory landscape continues to shift or if geopolitical disruption demands sudden change.

Stay informed and agile. This is a fast-moving, politically influenced field. Enterprises must continually monitor legal, political, and technological developments in every market they serve. Regular policy reviews, security audits, and scenario planning exercises will help organizations respond quickly and confidently to new risks or requirements.

It’s a crucial time for all businesses to develop and implement plans for adaptability regarding regulatory compliance. New regulations are constantly emerging that will impact almost every company worldwide. The multifaceted approach I’ve outlined here will minimize sovereignty risks and provide a true strategic edge in an unpredictable world.
https://www.infoworld.com/article/4049339/overseas-enterprises-and-us-sovereign-clouds.html

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