Which sectors need data sovereignty the most?

Data sovereignty is increasingly important in our digitally connected world, where organizations want to maintain control over their sensitive information. With stricter legislation and increasing cyber threats, companies are looking for ways to keep their data within national borders. Consequently, the demand for technology solutions that guarantee data sovereignty is growing exponentially.

However, not all industries have the same urgency when it comes to data location and control. Some industries operate under strict compliance requirements, while others have more flexibility in their cloud strategy. Understanding these differences helps organizations make the right choices for their digital infrastructure.

What is data sovereignty and why is it important?

Data sovereignty means that organizations have complete control over where their data is stored, who has access to it and what laws apply. This concept goes beyond data location to include legal, technical and operational aspects of data management.

The main components of data sovereignty are:

• Geographic control over data storage and processing
• Legal certainty about which laws apply
• Technical safeguards against unauthorized access
• Operational independence from foreign suppliers

For Dutch organizations, this becomes especially relevant with the growing dependence on U.S. tech giants. Recent developments, such as the possible sale of Solvinity to U.S.-based Kyndryl, demonstrate the vulnerability of critical digital infrastructure. The Open Cloud Alliance, in which seven Dutch IT companies are working together, illustrates the need for local alternatives to cloud services.

What laws and regulations necessitate data sovereignty?

The General Data Protection Regulation (AVG) provides the basis for data sovereignty requirements in the Netherlands and Europe. This legislation restricts the transfer of personal data to countries outside the EU unless adequate protection measures are in place.

Crucial regulations enforcing data sovereignty:

• AVG, Articles 44-49, on international data transfers
• The U.S. CLOUD Act, which may require U.S. companies to provide data
• The Schrems II ruling, which invalidated the EU-US Privacy Shield
• The Dutch Network and Information Systems Security Act (Wbni).

The removal of the Privacy Shield in 2020 forced thousands of organizations to rethink their data transfers. Companies had to implement additional safeguards or keep their data within Europe to remain compliant. This legal tipping point significantly strengthened awareness around digital sovereignty.

Why do government sectors have the highest data sovereignty claims?

Government sectors have the most stringent data sovereignty requirements because they manage sensitive citizen data and are subject to national security laws. Government data often may not be stored outside national borders at all due to strategic and security considerations.

Risks specific to the public sector:

• Foreign intelligence agencies can gain access through local laws
• Critical infrastructure may be disrupted during international conflicts
• Civil rights may be violated by uncontrolled data access
• National sovereignty jeopardized by dependence on foreign suppliers

Dutch municipalities using applications for permit applications, passport applications and tax processing therefore have strict data location requirements. The possible acquisition of Solvinity, which manages DigiD, shows how sensitive this subject is. Government IT contracts are often so large that they automatically end up with international players, causing knowledge and control to disappear outside the Netherlands.

How critical is data sovereignty for the healthcare and financial sectors?

Healthcare and financial institutions have very high data sovereignty requirements because of the extreme sensitivity of patient and customer data. These industries operate under strict compliance regimes that often have specific data location and access control requirements.

Critical considerations for these sectors:

• Medical records fall under special categories of personal data in the AVG
• Financial data is subject to banking supervision laws
• Cyber attacks on these sectors directly impact human lives and the economy
• International regulations may conflict with Dutch privacy laws

Healthcare institutions using cloud solutions must be able to demonstrate that patient data remains within EU borders and cannot be accessed by foreign authorities. Financial institutions have similar requirements, with De Nederlandsche Bank (DNB) maintaining strict guidelines for outsourcing to cloud providers. The combination of reputational risk and regulatory compliance makes data sovereignty for these sectors not optional, but essential.

Which sectors can have more flexibility with data location?

Sectors without direct processing of personal data or critical infrastructure can show more flexibility in their cloud strategy. This mainly concerns companies in manufacturing, logistics and certain parts of the retail sector that primarily process operational data.

Factors that allow more flexibility:

• Limited processing of personal data of customers or employees
• No direct impact on national security or critical infrastructure
• International business operations requiring cross-border data flows
• Cost advantages of global cloud platforms outweigh sovereignty risks

Yet even these industries must be cautious about fully international cloud strategies. Manufacturing data may contain competitively sensitive information, and supply-chain data may have strategic value. Moreover, future regulatory developments may extend data sovereignty requirements to sectors that are currently relatively free.

How Pegamento helps with data sovereignty

We understand that data sovereignty is a critical factor for modern organizations seeking to maintain their digital independence. Our collaboration with partners such as Uniserver from the Open Cloud Alliance enables us to deliver ISO 27001-certified solutions that fully comply with Dutch laws and regulations.

Our approach to data sovereignty includes:

• Dutch data location with legal safeguards against foreign access
• Hybrid cloud strategies combining on-premises and sovereign cloud
• Compliance support for AVG, Wbni and industry-specific regulations
• AI-driven intelligence running locally without sending data to foreign servers

By offering everything under one roof, we eliminate the complexity of multiple vendors and ensure consistent data governance. Our custom solutions with standard building blocks mean no costly customization, but the assurance that your data remains under Dutch control. Contact us to find out how we can help your organization with data sovereignty.