Data Sovereignty vs. Data Residency: 3 Myths Uncovered

Data sovereignty and data residency are often confusing for businesses managing data across borders, especially with the rise in cloud infrastructure, multi-cloud, and hybrid.

This issue is exacerbated when the term is used interchangeably. While they both relate to data - data sovereignty and data residency are two different things.

Here's what they are in a nutshell:

• Data sovereignty refers to the legal ownership of data.
• Data residency refers to where the data is physically located.
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These terms are often used interchangeably, but there are important distinctions between the two.

Data sovereignty is a legal concept and is governed by national laws. Data residency, however, is a physical concept determined by where the data is stored.

It can get confusing, mainly because the physical location of data can also lead to data sovereignty claims by foreign governments. This often leads us down a slippery slope of ownership, privacy compliance, and potential breaches simply based on the origins of your data source, the residency of your company, and where you stored the data.
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What is Data Sovereignty?

Data sovereignty is the legal ownership of the data, despite its physical location. It's also about protecting sensitive data from potential privacy breaches.

While data may feel intangible, it still needs to be stored somewhere. This somewhere is usually in the cloud.‍

So why is data sovereignty important?

Firstly, it ensures that data is subject to the laws and regulations of the country in which it is collected, which is important for data protection and privacy.

Data sovereignty also protects data from being accessed by other countries. This is vital for security and confidentiality. Data sovereignty also ensures that data is available for use by the country in which it was collected, which is essential for economic and social development.

Data sovereignty is a complex issue, and several stakeholders are involved. These include governments, businesses, and individuals. Each of these stakeholders has different interests and needs. As a result, data sovereignty is an evolving concept, and there is no one-size-fits-all solution.
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What is Data Residency?

Data residency refers to the physical location of where data is stored. It is an important consideration for organizations that must comply with data privacy regulations, such as the General Data Protection Regulation (GDPR).

Organizations may store data in multiple locations, including on-premise, in the cloud, or hybrid environment. Each option has different implications for data privacy and security. On-premise data storage gives an organization the most control over its data. The organization is responsible for ensuring that the data is stored securely and is accessible only to authorized personnel. However, this option can be costly and may require more IT resources to manage.

Cloud-based data storage offers more flexibility and scalability than on-premises storage. Organizations can choose from various cloud-based storage solutions, such as public cloud, private cloud, or hybrid cloud. Cloud storage can be more cost-effective than on-premises storage, but it may be less secure, as the organization does not have complete control over where the data is stored or how it is managed.

Data residency is essential for any organization that must comply with data privacy regulations. The data storage solution you choose will depend on your specific needs.
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What is Data Localization?

In a globalized world, data localization is the act of storing data on servers physically located within the country or region in which the data was generated. The purpose of data localization is to keep data within the legal jurisdiction of the country or region in which it was generated to comply with data protection laws.

Data localization has recently become controversial as more companies collect data from users worldwide. Some countries, such as the European Union, have passed laws requiring companies to store data within the EU to protect the privacy of EU citizens. Other countries, such as China, have passed laws requiring companies to store data within China to comply with Chinese law.

Critics of data localization argue that it creates a barrier to trade and innovation and is unnecessary in the internet age. They say that data can be stored securely in any location and that the benefits of global trade and innovation outweigh the benefits of data localization.

Supporters of data localization argue that it is necessary to protect citizens' privacy and that it helps ensure that companies comply with the laws of the countries in which they operate.