Data sovereignty: The hidden economic trade-offs

by | Jul 24, 2022 | Technology

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Data sovereignty — the principle that individual countries can regulate the storage of data within their borders — has taken off as a significant political cause. The European Union, United States, India and numerous other jurisdictions are working toward [subscription required] comprehensive legal frameworks that strictly govern how data is collected, stored and distributed across borders. 

Much of this debate has been viewed through a political and philosophical lens, framed as a battle of individual privacy versus technological innovation, or a power struggle between big tech and national governments. 

While these are the major elements of the debate around data sovereignty, they conceal another part of the debate that we don’t see discussed much: the economic trade-offs that come from these laws. Underneath the high-minded proclamations about protecting the privacy of citizens’ data lie some hard-nosed nationalistic economic considerations. Policymakers and industry players need to understand the true costs and benefits of data sovereignty laws, both political and economic. 

The pros: More jobs and investment

In their implementation, data sovereignty laws will require users to explicitly consent to their data being transferred to a different jurisdiction. For large organizations and enterprises, this means that it could be illegal to move their customer data outside of the country in which it’s collected. Thus, data sovereignty laws may compel organizations to store data locally even though it may cost more to do so. Storing many pockets of data in different countries may not only be more expensive, but it could significantly complicate data analysis and normal business processes. 

Essentially, organi …

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