Sovereign Cloud and AI: Where do I want my data stored?

April 23 2024, by Cathair Kerr | Category: Government
Sovereign Cloud and AI: Where do I want my data stored? | Macquarie Government

In 2006, Clive Humbly coined the term, “Data is the new oil.” Today, data and the significance of where and how it is stored, processed, and managed cannot be overstated. As an Australian, my preference would always be for data to be retained within the nation’s boundaries, ensuring it falls under the jurisdiction of Australian laws and regulations, such as the Australian Privacy Act 1988. When data is managed outside of Australia, it often faces less rigorous legal and regulatory frameworks. This article delves into the sovereign cloud concept within the realm of artificial intelligence (AI) and examines the potential risks associated with the storage or management of data beyond Australian borders.

Sovereign Cloud: An Overview.

Sovereign cloud refers to cloud computing environments designed to ensure that data is stored, processed, and managed within a specific geographical and jurisdictional boundary. This model is increasingly important in a globalised digital economy, where data often traverses international borders. For countries like Australia, sovereign cloud services are tailored to comply with Commonwealth regulations and standards, particularly in terms of data sovereignty, privacy, and security. An illustrative example of this is Macquarie Government’s secure cloud solutions, which operate entirely within Macquarie data centres in Sydney and Canberra. These facilities are managed by security-cleared Australian citizens, ensuring that the data remains under Australian jurisdiction and is not exposed to foreign legal and regulatory controls.

AI and Sovereign Cloud: A Synergistic Relationship.

Recently, Canada unveiled a $2.4 billion initiative to bolster Sovereign AI, aimed at enhancing the development of AI infrastructure that is both owned by majority owned and controlled Canadian companies and is also situated within Canada. The concept of Sovereign AI is intrinsically linked to the availability of sovereign data centres such as Macquarie Data Centres and Cloud Services that Macquarie Government provides. By merging AI technologies with sovereign cloud frameworks, there is a substantial increase in the capacity for sophisticated data analytics, machine learning, and decision-making processes, all within the jurisdictional boundaries of Australian regulators. This integration ensures that AI solutions can utilise extensive datasets in compliance with data protection regulations, thereby driving innovation in a manner that is both secure and adherent to legal standards.

Risks of Cross-Border Data Management.

One of the primary risks of storing or managing Australian data overseas is non-compliance with Australian laws and regulations, such as the Privacy Act 1988, which includes the Australian Privacy Principles (APPs). Data which is handled outside of Australia is likely to be subject to foreign laws and practices, potentially conflicting with domestic legal requirements and leading to complex legal entanglements.

Data Sovereignty and Security.

Data sovereignty concerns arise when data is stored or managed outside Australia, as it may become subject to foreign legal orders, such as subpoenas or government surveillance programs. This can compromise the confidentiality and integrity of sensitive data, including personal information, intellectual property, and national security data. Furthermore, cross-border data management often introduces additional cyber security risks, including varying levels of standards and practices, which may not align with Australia’s stringent requirements.

Operational and Strategic Risks.

Reliance on foreign-based cloud and AI services can lead to operational risks, such as latency issues, service outages, or data loss, which can significantly impact business continuity and service delivery. Strategically, there is a risk of over-dependence on external entities for critical data infrastructure and AI capabilities, potentially undermining Australia’s technological sovereignty and long-term strategic interests.

Mitigating the Risks.

Australia can mitigate these risks by strengthening legal frameworks to ensure that data stored or processed abroad is protected to the same extent as within the country. This includes negotiating agreements and treaties that enforce data protection laws across borders and holding foreign service providers accountable to Australian standards.

Enhancing Cyber Security Measures.

Implementing robust cybersecurity measures and ensuring compliance with national security standards are crucial for protecting data managed overseas. This includes regular security audits, adherence to international cybersecurity standards, and the development of secure data transfer mechanisms.

Promoting Sovereign Cloud Solutions.

Encouraging the development and adoption of Australian-based sovereign secure cloud solutions can reduce reliance on foreign entities and enhance control over national data assets. This approach supports the local technology industry and ensures that data is managed in accordance with Australian laws and best practices.


The emergence of sovereign cloud and AI technologies offers significant benefits for data management and analytics. However, for Australia, the risks associated with cross-border data management are non-trivial and require a comprehensive strategy to mitigate. It is imperative for us as Australians to prioritise and advocate for the use of local sovereign solutions over foreign storage and management of data. By strengthening government cyber security policy including legal and regulatory frameworks, enhancing cyber security measures, and promoting sovereign cloud solutions, Australia can safeguard its data assets while leveraging the benefits of these technological advancements. This balanced approach will enable Australia to maintain its strategic autonomy in the digital age and ensure the secure and compliant management of its national data resources.