Data sovereignty and how it relates to GDPR

In this article, Tim Freestone, Chief Strategy and Marketing Officer at Kiteworks, explores what data sovereignty is, why it is important, some of the landmark cases to date, and what can be done by businesses to ensure they don’t fall foul of crippling fines.

In today’s increasingly digital and global business environment, organisations large and small must navigate complex regulations around data privacy, security, and sovereignty.

With more sensitive content being created and shared across borders and jurisdictions than ever before, understanding data protection concepts like sovereignty has never been more crucial.

By gaining insight into data sovereignty, organisations can manage regulatory compliance, avoid data privacy violations, and build trust with customers. Let’s explore how.

What is data sovereignty?

Data sovereignty is the concept that information, and the protection and management of that information, belongs to the nation or individual in which it originates.

It is believed that data belonging to a French citizen, for example, should not be subject to US laws just because it is stored or processed by an American company. The data should, instead, remain in France, subject to French and EU laws.

This concept regulates how data is governed and secured based on where it was collected, not where the collector is located. It aims to protect individuals’ privacy rights and give them control over their personal data.

Why data sovereignty is important

Data sovereignty provides several key benefits. First, it protects an individual’s personal data from unauthorised access or use based on jurisdiction.

Secondly, it assures companies that customer data will remain secured under relevant national laws. Third, it allows businesses to be confident in using cloud storage and digital services that involve cross-border data transfers.

Finally, it ensures companies’ proprietary data remains protected if they change service providers.

data sovereignty
© shutterstock/TippaPatt

Without data sovereignty, the ramifications can be severe. Organisations can risk legal liability, reputational damage, and loss of customer trust if unable to properly secure data. More importantly, individuals can lose control over their personal information.

Data sovereignty is often conflated with related data protection concepts. Data residency refers to storing data within specific jurisdictions for regulatory compliance or business purposes. Data localisation requires that data stay within the country where it was collected, such as per GDPR rules.

Then, there is indigenous data sovereignty, which involves native groups controlling data privacy rights in their nations. While related, these concepts have distinct meanings around governing and securing data based on its origin, so they shouldn’t be confused.

Landmark cases establishing data sovereignty

Several landmark legal cases have shaped the modern understanding of data sovereignty. These include the PRISM and the PATRIOT Act, which concerned the NSA PRISM programme collecting data on foreign nationals, per the PATRIOT Act. This prompted concerns about US overreach into other jurisdictions.

Then there was Microsoft vs the United States, where the tech giant refused to provide customer data stored in Ireland to US authorities. The case debated whether the US could compel data disclosure across jurisdictions. It led to the CLOUD Act, which imposed limits on cross-border data requests.

Whilst there have been many more, these cases alone highlight the need for clear rules governing cross-border data management and enhanced protections for data sovereignty.

GDPR data residency requirements to be aware of

Since 2018, the EU’s General Data Protection Regulation (GDPR) has imposed strict data sovereignty requirements. Under GDPR, EU residents’ personal data must be stored and processed within the EU. It forces companies to obtain consent to collect data, implement security controls, and report breaches promptly.

GDPR also gives EU residents rights to access, modify, and delete their data. By keeping data within the EU, GDPR aims to uphold these rights and privacy standards. Noncompliance can trigger major fines upwards of 4% of global revenue, so they are not to be sniffed at.

Adhering to GDPR’s data sovereignty mandates requires both organisational commitment and the right technology tools for securing sensitive data. Make sure you are probably protected.

Approaching data sovereignty with cloud providers

Cloud services can be a grey area. However, when selecting cloud services, organisations should assess a provider’s data sovereignty capabilities. It is important to look at server locations and only use providers with in-country servers meeting localisation needs.

It is also imperative to only use suppliers that understand applicable privacy laws and provider practices for each jurisdiction. Make sure consumer rights are included, too. If need be, clarify practices for providing access, deletion, and other consumer rights.

Finally, ensure any provider you select offers robust access controls, auditing, reporting, retention, and security.

Managing risks across use cases

Whilst it is sometimes ignored, data sovereignty is a crucial issue that organisations must address to manage regulatory compliance, privacy risks, security threats, and customer trust today. As cross-border data flows accelerate, understanding sovereignty rights and regulations for protecting data based on jurisdiction is imperative.

The good news is that by leveraging solutions that provide data governance, user control, localised storage, and compliance reporting, companies can better navigate requirements like GDPR. Make the change today. A proactive strategy for data sovereignty ultimately reduces risk and helps build durable trust with customers and partners.

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