Finding the Balance: Navigating Borderless Data and Data Sovereignty

Data Sovereignty: Balancing Business Advancement and Compliance

Since the advent of the digital age, businesses have relied on the free-flow of data to fuel their operations. However, the rise of privacy regulations, often disguised as data privacy laws, has stemmed the flow of data and created challenges for organizations seeking to balance business needs with compliance requirements. With data sovereignty laws becoming increasingly prevalent, businesses must navigate complex legal, corporate, geopolitical, and regulatory boundaries while delivering customer service, meeting deadlines, and communicating across global supply chains.

Compliance Challenges

Businesses have long recognized the need for limits when it comes to data sharing. Legal separations exist to keep data distinct between subsidiaries or restrict sharing between partners to specific types of data. However, what is rapidly changing are new data sovereignty laws that impose geographic boundaries on data processing and storage. Companies now face the task of complying with the laws of each country where they operate, which poses significant challenges in acquiring and protecting personal data.

Data localization, a requirement to keep personal data within a country’s borders, not only disrupts global cloud strategies but also forces organizations to duplicate technology, people, or resources to meet sovereignty requirements. Failure to adequately protect personal data can lead to hefty fines, as demonstrated by the recent $1.3 billion penalty imposed on Meta for failing to protect EU citizens’ data. Expensive third-party data processors may provide compliance solutions but increase security risks due to data sharing with external parties. Legacy technologies like dynamic data masking and access control lists are also ill-equipped to handle today’s compliance requirements.

The Cost of Doing Business Across Borders

Operating under data sovereignty laws comes with significant costs for organizations. The duplication of resources across regions or countries to comply with regulations is a major expense. Additionally, using costly third-party data processors presents both compliance and security risks. Community and national leaders may argue that these costs are the price of doing business in a globalized world, but for many organizations, they are burdensome and hinder growth.

Solutions for Reintegrating Borderless Data

To enable borderless data and data sovereignty to coexist, businesses must find compliant ways to enable cross-border data sharing. Tokenization offers a potential solution by allowing companies to secure data while granting access to different users and entities, all while adhering to local regulations. A recent ruling by the General Court of the European Union highlights the importance of this issue, stating that pseudonymized data transmitted to a recipient without means of reidentifying the data subject may not be considered personal data.

To achieve efficient global compliance, organizations need centralized data policy, logging, auditing, and monitoring systems that can scale to meet data sovereignty requirements. Automated systems that provide centralized protection, audit, and compliance for personally identifiable information (PII) can reduce compliance costs and create new opportunities for businesses. By federating the implementation of data security and privacy, organizations can lower expenses and ensure compliance.

Policy and Commerce Can Co-Exist

Data sovereignty laws are dynamic, evolving alongside technology and digital trends. Organizations must continually monitor and adjust to changing laws rather than adopting a one-time compliance approach. By remaining compliant while enabling borderless data flows, companies gain a competitive advantage, allowing them to make informed decisions about customers and products in existing markets and expand into new regions.

Ultimately, compliance with privacy and security regulations enables organizations to protect customer data, build trust, enhance their reputation, and foster customer loyalty. Loyalty translates into revenue, ensuring long-term success for businesses.

Keywords: Data governance, data privacy, data sovereignty, cross-border data transfer, data localization, data protection, international data regulations, data compliance, data security, data management