As businesses become ever more data-dependent, protecting that data becomes more and more crucial. At the same time, many aspects of cyber security are often complicated concepts that can be hard to understand; however, one area where businesses must pay attention is data sovereignty.
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Data sovereignty is a term used to describe the legal, physical and practical jurisdiction by which your business’s data is stored and processed – something that may not seem like it directly impacts security but does have very real implications for how secure your business’s information systems are. In this article, we will take an in-depth look at data sovereignty and why it should be taken seriously when considering the safety of your company’s digital assets.
What is Data Sovereignty, and Why Should Businesses Take It Seriously?
Before diving into why data sovereignty is important, it’s important to understand what it means. According to the European Union’s General Data Protection Regulation (GDPR), “data sovereignty” refers to “the right of a nation-state or region to determine who has access to its citizens’ personal information and how that information can be used or shared.” In other words, data sovereignty seeks to ensure that an individual’s private information is not misused or shared without their permission.
Data sovereignty laws vary greatly from country to country, as do cloud service providers’ agreements concerning privacy policies and user rights. Therefore, organizations operating across multiple countries or regions must understand each country’s regulations to comply with all applicable laws.
Taking data sovereignty seriously shows respect for Clients and helps protect businesses from potential legal issues with mishandling Client data. Without proper safeguards in place, companies risk facing hefty fines or lawsuits should any of their Clients’ private information be compromised due to negligence or failure to comply with privacy regulations.
On top of this, companies must abide by country-specific privacy laws when transferring personal data across international borders; otherwise, they face additional consequences, such as reputational damage or interruption of services in countries where these laws are enforced.
Attention to data sovereignty provides numerous benefits for businesses looking to safeguard Client information while avoiding potential liability concerns stemming from legal violations associated with mishandling personal data.
As more individuals become aware of their rights regarding private information ownership and protection online, it becomes even more important for businesses to take steps toward ensuring they comply with local regulations governing data privacy and security practices — something that will no doubt become increasingly crucial as cyber threats continue to evolve.
Notable Data Sovereignty Laws
United States
Regarding data sovereignty in the United States, there is a vast array of federal laws to be mindful of. But that’s not all – businesses must also comply with individual state mandates! Especially California: although one out of 50 states, its economic clout makes this region key for any company looking at establishing their digital footprint across America, contributing nearly 20% towards total US Gross Domestic Product ($3.2 trillion). If it were its nation, California’s economy would rank in the top five worldwide – a testament to its thriving tech sector. This makes conversations about data sovereignty within the state especially important and timely.
Despite expectations of a unified federal data privacy law, the United States needs more than one. To make matters more complicated, certain states even have laws that forbid local storage – as seen in recent NAFTA changes. Thankfully, organizations can still be held accountable for any violations via regulation by the Federal Trade Commission on behalf of national citizens.
California Consumer Privacy Act (CCPA)
The California Consumer Privacy Act of 2018 (CCPA) is a monumental step forward in giving individuals more control over their data. By granting the right to request deletion, opt out of the sale and receive reports on usage – amongst other rights – Californians now have greater autonomy regarding how businesses use their data. The CCPA sets an example for future legislation protecting consumer privacy across the US!
Canada
Canada has adopted the Personal Information Protection and Electronic Documents Act (PIPEDA) to protect better personal and sensitive data, which puts strict localization rules in place. All companies collecting this type of information must seek consent from their customers before they may collect or use it.
PIPEDA places strict limitations on how companies can use individuals’ data, ensuring that it is only used for the purpose consent was initially given. Any attempt to transfer this sensitive information outside of Canada must meet a certain level of privacy protection in the receiving country.
Furthermore, individuals have two inviolable rights – one being the right to ask how corporations use that data at any given time. With provincial initiatives aiming further to strengthen its existing laws on sovereignty over digital assets, Canada looks set for major advancements.
The European Union
Data sovereignty continues to be a topic of hot debate in the European Union as countries strive to promote greater data protection within their borders. In response, many are advocating for stronger cloud-based infrastructure that can better protect E.U member state’s data from potential external threats and ensure compliance with new legislations being rolled out by the bloc itself.
However, national regulations remain an integral part of this process due to their alignment with wider E.U law – making them crucial when securing all citizens’ digital rights in Europe today.
The General Data Protection Regulation (GDPR)
The General Data Protection Regulation (GDPR) is a revolutionary expression of data sovereignty within the cloud era, protecting the privacy and security of all E.U. residents both domestically and abroad – regardless if it’s an organization for profit or non-profit operating inside or outside Europe’s borders.
This regulation also serves as a form of ‘data localization,’ forbidding any applicable information to be transferred from E.U.’s jurisdiction unless proper measures provide similar levels of protection elsewhere across the globe!
The GDPR is arguably the most comprehensive data sovereignty law currently in place globally, with policies covering the right to be forgotten, the right to request any information a company holds about them and make corrections if necessary, or knowing when their data has been exposed in an incident. Organizations must also act swiftly under GDPR; they have 72 hours after detecting a possible breach.
The Implications of Businesses Failing Data Sovereignty
Below we will document some of the most notable cases and the financial consequences of businesses failing data sovereignty, ranging from hefty fines to catastrophic reputational damage.
While the companies listed are big names, attracting big fines, regulators often fine small organizations for failing to comply.
Amazon: Fined for GDPR violations – $887 Million
On July 30, 2021, the Luxembourg National Commission for Data Protection (CNPD) presented Amazon with an astounding €746 million ($887 million) GDPR fine due to their alleged use of customer data for targeted advertising.
Equifax: Fined for US data violations – $575 Million
In 2017, one of the largest data breaches ever occurred when Equifax revealed that nearly 150 million people had compromised their personal and financial information due to a lack of security patches.
Equifax failed to notify the public for weeks after discovering the breach. Recent investigations have found serious failings on behalf of Equifax with hefty fines leading them to agree to pay $575 Million – potentially reaching up to an unprecedented $700 million for mismanaging such sensitive data- all under penalty from Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB) & 50 states/territories across America who together declared this event unacceptable negligence.
Instagram: Fined for GDPR violations – $403 Million
In 2022, the Irish Data Protection Commissioner took action against Instagram’s failure to protect children’s privacy by GDPR. It was discovered that minors’ data, such as phone numbers and emails, were made public when some users upgraded their profiles to access analytics tools like profile visits.
T-Mobile: Fined for US data violations – $350 Million
After a shocking data breach in early 2021 affected an estimated 77 million people, mobile communications giant T-Mobile took responsibility and announced plans for settlement terms. According to their SEC filing, the company agreed to pay $350 million as part of compensation and class member claims with an additional commitment of 150 million dollars towards increased security measures in 2022/2023, providing necessary protection against any future cybercriminal threats.
Business Data Sovereignty & Utilizing Third-Party Services
Businesses must also consider the security provided by their third-party services and partners. While your organization’s cyber security posture may be strong, sharing data with third-party cloud services or cyber security providers that require data access may be a weak link in your data protection chain.
Organizations should leverage third-party services compliant with the GDPR, CCPA, and other relevant regulations. This includes services that provide encryption, authentication, and data obfuscation capabilities or services that do not require sensitive data to ensure data sovereignty is maintained at every level of the data lifecycle.
We partnered with Adam Networks in 2018 based on their amazing data security capabilities through their patented Zero Trust connectivity technology. Adam Networks is one of the only DNS-based threat protection that works without sending all the traffic and internet requests through a 3rd party servers, instead opting to process information locally.
Data Sovereignty – This Decades Next Big Topic
Data sovereignty and cyber security have become increasingly important as organizations are expected to comply with global data privacy regulations. Companies face serious consequences if they fail to meet the standards set by these regulations, from fines to catastrophic reputational damage. As such, businesses must be aware of their security posture and third-party review services for compliance and implement strategies that protect their customers’ sensitive information.
