What is digital sovereignty?
In essence, digital sovereignty is the degree of control a country, organisation or individual exercises over its own digital destiny: the ability to make independent decisions about data, software and digital infrastructure without being subject to the laws and commercial interests of external, often non-European, entities.
Specifically, it raises questions such as:
- Where is my data stored — in a data centre within the EU or in the US?
- Which laws apply — is my data protected by the European GDPR, or can a foreign government demand access under laws such as the US CLOUD Act?
- Who manages the software and infrastructure — should we rely on a handful of non-European tech giants to run critical business processes?
- Do we have the knowledge and the means to build and maintain our own infrastructure and technology?
Ultimately, digital sovereignty combines two things: technological independence and legal protection.
Why has digital sovereignty become so important?
Digital sovereignty has moved up the agenda because of a combination of critical events and growing public awareness.
Legal contradictions between EU and US law
US surveillance laws, notably the CLOUD Act and FISA Section 702, allow the US government to compel American companies to hand over data, even when that data is stored in Europe. This directly conflicts with the privacy protections set out in the EU’s General Data Protection Regulation (GDPR).
The tension became impossible to ignore in 2020, when US authorities sought personal data linked to Austrian privacy activist Max Schrems — a case that exposed the contradiction at the heart of transatlantic data transfers.
Overnight, every European organisation relying on US cloud services such as Microsoft 365, Google Workspace or AWS faced a genuine dilemma: they could no longer guarantee that customer or employee data was safe from foreign government access. This forced a fundamental question to the surface — where is our data, and who actually controls it?
Geopolitical tensions and economic instability
In recent years, the world has entered a period of heightened instability. Intensifying US–China rivalry, the war in Ukraine, and growing friction between Europe, Russia, the US, Israel and Gaza have all shown how technology can be weaponised. Examples include:
- The US ban on Huawei and export restrictions on advanced semiconductors.
- Concerns that Russia or China could cut off access to critical software or infrastructure.
- Taiwan’s central role in producing advanced semiconductors, now seen as a strategic vulnerability.
- Deep mistrust of companies based in countries with opposing political systems or values.
Governments and businesses have concluded that overdependence on a single country or region for key technologies is a strategic liability. Strategic autonomy is no longer a luxury — it is becoming a necessity.
The data explosion
Data has become one of the world’s most valuable economic resources, and the business models of the largest tech giants rely on collecting and analysing it at scale.
For Europe, this has been something of a wake-up call: despite generating enormous volumes of valuable data, much of the economic benefit still flows to non-European technology giants that control the underlying infrastructure. This has sparked calls to build a sovereign European data economy and stronger data governance, one that creates jobs, drives innovation and strengthens economic independence within the EU.
Rising cyber threats and the NIS2 Directive
Cybercrime has grown more sophisticated, and state-sponsored hacking is now a persistent threat. In response, the EU introduced the NIS2 Directive to raise cybersecurity standards and strengthen resilience across European organisations and their supply chains.
Why digital sovereignty matters: benefits and risks
Digital sovereignty offers real benefits, but it is not without risk. Policymakers, businesses and citizens all need to weigh both sides carefully.
Arguments for digital sovereignty
- Cybersecurity: this is the strongest argument. When data is stored and processed within the EU by European companies, it falls under the GDPR (General Data Protection Regulation), one of the strictest privacy regimes in the world. This protects citizens and businesses against unauthorised access, misuse and foreign espionage.
- Greater autonomy: heavy reliance on non-European technologies — from chips and cloud infrastructure to operating systems — creates strategic vulnerabilities. A trade boycott, export ban or sudden withdrawal of software licences due to geopolitical tensions could cripple critical sectors such as healthcare, energy and government.
- Economic strength: building a robust European digital ecosystem fosters innovation, creates jobs, and ensures that the economic value of European data benefits European economies.
- Legal certainty: European companies partnering with other EU-based entities can operate within a stable, well-understood legal framework, free from the unpredictability of foreign laws that can change overnight.
Risks and pitfalls to consider
- Protectionism and limited choice: overly protectionist policies risk excluding world-class innovations developed outside Europe. Organisations must retain the freedom to choose the best-fit technologies, regardless of origin.
- The “too little, too late” problem: Europe currently lags in key areas such as cloud computing and semiconductor manufacturing. Achieving full digital independence in the short term may be unrealistic without significant investment and international collaboration.
Frequently asked questions
What is digital sovereignty?
Digital sovereignty is the degree of control a country, organisation or individual has over its own data, software and digital infrastructure, independent of the laws and commercial interests of external, often non-European, entities.
Why does digital sovereignty matter for European businesses?
It matters because reliance on non-European cloud and software providers can expose EU organisations to foreign laws such as the US CLOUD Act, creating legal uncertainty under the GDPR and operational dependency on a small number of external suppliers.
How does the NIS2 Directive relate to digital sovereignty?
The NIS2 Directive raises cybersecurity and resilience requirements for European organisations and their supply chains, reinforcing the broader push toward stronger, more independent digital infrastructure in the EU.
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