Sovereign Cloud – a new technology perspective

⛅ Reclaiming Data Sovereignty

In nature, clouds are shaped by forces far beyond our control. They gather, shift and disappear according to the whims of weather patterns we can only predict but not influence. The Public Cloud mirrors unpredictability in many ways. It has become a global, seemingly infinite network that connects continents and enables the flow of data across borders in order to avoid the direct influence of organizations. Just as we cannot control the winds that drive the weather, businesses using the Public Cloud relinquish direct control over their most valuable assets – their data. In an era where data security has become a strategic priority for many organizations, data can flow uncontrolled across borders and jurisdictions making them subject to foreign regulations and become vulnerable to geopolitical tensions. Organizations trusting in the Public Cloud trust a system that is global but unreliable.

The Sovereign Cloud concept ensures independence and security by keeping data within one jurisdiction, minimizing cross-border transfers. This reduces external threats and provides stronger data protection for organizations. This strong need for security has not only drawn the attention of big technology companies like Google & T-Systems (T-Systems Sovereign Cloud) and SAP (Delos Cloud) but has also become a priority for government authorities. The European Union for example launched Gaia-X, a project aimed at developing a European centric cloud infrastructure.

Due to geopolitical insecurities, permanently increasing regulatory requirements, rising cybercrime and rising dependencies on the worldwide most renown global cloud providers (Hyperscalers) an innovative technology like Sovereign Cloud will become indispensable for many organizations in order to avoid dependencies on Public Cloud influence.

🌧️ The dilemma of the Public Cloud and the potential of the Sovereign Cloud

Becoming sovereign from the dependencies on the Public Cloud requires considerable technical and financial measures. Its undeniable advantages like scalability, global availability and geo-redundancy have led many organizations to migrate substantial parts of their IT infrastructure to the Public Cloud. There are not only advantages but also weaknesses that often only become visible over long-time usage or in day-to-day operations. These weaknesses point out that a Public Cloud is not the ideal solution in every case.

Global networks and extensive interconnections of the Public Cloud providers are difficult to align with the strict data protection regulations of several EU countries or specific industries. Organizations in highly regulated sectors, like critical infrastructure, are confronted with compliance challenges and data locality problems when using the Public Cloud. Global IT infrastructure of large Public Cloud providers complicates compliance with local laws like General Data Protection Regulation (GDPR), posing regulatory risks and penalties. As an alternative the Sovereign Cloud should ensure compliance with data protection laws. 

A frequently overlooked disadvantage is that Hyperscalers often require proprietary cloud architecture and accessible APIs that keep customers tied to their specific cloud products. Changing providers can become technically complex and financially expensive. A well-designed Sovereign Cloud should offer its customers the flexibility to easily switch providers at any time.

Another major disadvantage is that data have to travel long distances due to the globally distributed data centers which cause delays because of network latency. For real-time applications such as those in healthcare or finance these latency issues can become a noticeable disadvantage in day-to-day business. Optimizing the network architecture to reduce latency is hardly possible for a customer of a Hyperscaler. The Sovereign Cloud should be able to reduce latency to a minimum.

As organizations recognize the challenges of the Public Cloud the Sovereign Cloud has been developed and has been specifically designed to meet stringent regulatory requirements and data sovereignty needs of the customers.

☁️ Core principles of Sovereign Cloud

The disadvantages of the Public Cloud reveal the need for an alternative. The Sovereign Cloud offers many new approaches to solve these problems for certain types of organizations.

What is the Sovereign Cloud and how does it stand apart from conventional cloud models? A Sovereign Cloud describes a cloud environment specifically designed to keep data and applications within certain geographical and legal boundaries. Through technical and organizational measures, it ensures that data are stored and processed in a specific region, thus complying with national or regional data protection laws. A Sovereign Cloud enables organizations and authorities to maintain control over their data and to protect themselves against potential access by foreign authorities.

A key feature of a Sovereign Cloud is having data centers distributed across various sites while remaining entirely within the same country. This local storage and processing of data minimize the latency issues previously criticized in Public Clouds, which is especially critical for real-time applications.

Another important element is the implementation of data residency and data sovereignty. As stated before, all data remain within the designated country and access is regulated by strict policies and role-based access controls. Only authorized users within this country have access to the data, which is also subject to consistent encryption standards in all data states (see End-to-End encryption). This effectively addresses compliance challenges and data locality issues that arise when using the Public Cloud.

Sovereign clouds often rely on open-source technologies that solve the problems of vendor lock-in challenges associated with Public Clouds. This approach reduces dependence on such proprietary architectures and APIs, facilitating the ability to switch providers without significant technical hurdles or high costs. The origin and trustworthiness of the software components used are vitally important because open-source-based solutions offer high transparency and can be independently audited.

In today’s global IT environment, where regulatory compliance and rapid data access are critical, Sovereign Clouds provide organizations with the required control, security, and performance. Achieving these advantages relies on solid technical architectures and advanced security measures that ensure data sovereignty and integrity.

⚙️ Technical details of the Sovereign Cloud and its encryption methods

The core principles required for implementing a Sovereign Cloud impose significant demands on its technical architecture. While the technical features may not differ drastically from those of standard hyperscalers, they are crucial in a Sovereign Cloud environment to ensure these security requirements. Unlike a public cloud, where providers typically retain some control over encryption processes and key management, the Sovereign Cloud prioritizes full data sovereignty. Three technical aspects stand out:

• End-to-End Encryption (E2EE)
• Confidential Computing
• Bring Your Own Keys (BYOK)

The first two points primarily focus on the state of data. In a Sovereign Cloud, data sovereignty must be guaranteed in every state of the data lifecycle. Therefore, it is essential to distinguish between the three data states: 

Figure 1: Different types of data states (Illustration: Simon Brüggemeier)

💾 End-to-End Encryption (E2EE)

End-to-end encryption ensures that data are comprehensively encrypted throughout their distribution. This approach targets the states of data at rest and data in motion. Data are encrypted the moment they leave the sender and remain encrypted until they reach the intended recipient. Common encryption algorithms like AES or RSA are often used. Since only the owner's key can decrypt the data, control remains entirely with the data owner. In the context of a Sovereign Cloud, end-to-end encryption is vital to ensure that data sovereignty remains with the data owner.

💻 Confidential Computing

A significant challenge in fully encrypting data arises with data in use. For a CPU to process data, it must first decrypt it, making it temporarily vulnerable at that time. Trusted Execution Environments (TEEs) address this vulnerability by preventing data interception during processing. This allows data to be handled in plaintext only within the secure CPU enclave, after which it is re-encrypted. By eliminating vulnerabilities during data processing, Confidential Computing is essential for protecting sensitive data in a Sovereign Cloud.

🔑 Bring Your Own Key (BYOK)

To maintain organizational control over data, companies can opt to supply and manage their own encryption keys, a concept known as Bring Your Own Key (BYOK). This strategy prevents cloud providers or third parties from accessing encrypted data. The cloud provider stores and manages encrypted data without plaintext access. In contrast, traditional cloud environments without BYOK have the cloud provider generate and manage encryption keys, meaning they could decrypt the data at any time. With BYOK, Sovereign Cloud users guarantee that data sovereignty and control remain strictly within the organization.

🔗 Integrating the three concepts

The following illustration depicts how encryption keys, generated and managed under the organization's control, are used to protect data in various states: unencrypted, in motion, at rest and in use. By employing BYOK and Confidential Computing, organizations ensure the secure storage and processing of data in the cloud. Meanwhile, E2EE is used so that the sovereignty over the encryption keys remains within the organization.

Figure 2: Data flow between organization and sovereign cloud (Illustration: Simon Brüggemeier)

1: Encryption keys under the control of the organization
2: Encryption and decryption using encryption keys
3: Storing the encryption keys in BYOK, while maintaining organizational control
4: Encrypting data communication via E2EE using encryption keys from
5: Encrypting stored data through E2EE using encryption keys, provided by BYOK
6: Decrypting data for processing in the CPU and subsequent re-encryption via Confidential Computing       using encryption keys, provided by BYOK 

The synergy of E2EE, BYOK, and Confidential Computing demonstrates how they interconnect to provide permanent security. By implementing these measures, organizations ensure that they possess the exclusive ability to decrypt and access their data at all times.

📃 Advantages and Disadvantages

While the Sovereign Cloud mitigates weaknesses of traditional cloud models its implementation includes specific challenges. A balanced evaluation of its advantages and disadvantages is vital for decision making.

👍Advantages of the Sovereign Cloud

1.    Data sovereignty and compliance

Sovereign Cloud simplifies GDPR compliance by retaining data within national borders, improving stakeholder trust.

2.    Enhanced security

Using advanced encryption and confidential computing, Sovereign Cloud offers powerful defenses against unauthorized access and cyber threats. This is reinforced by E2EE to protect any kind of data.

3.    Lower latency for real-time applications

With data centers located within national borders, the Sovereign Cloud offers organizations faster and more reliable access to data. Rapid response times and a reduced latency are ensured by processing and storing data closer to the end-users, making it an ideal solution for real-time applications.

4.    Reduced vendor dependency

By using open-source components, a well-designed Sovereign Cloud allows organizations to retain flexibility and avoid vendor lock-in.

👎Disadvantages of the Sovereign Cloud

1.    Higher Costs

The specialized infrastructure which is required for a Sovereign Cloud includes more specialized hardware like TEEs and advanced security measures which raise the overall costs. Compared to traditional cloud offerings this could be a significant financial barrier, especially for smaller organizations or those with limited IT budgets. 

2.    Restricted global presence

The limitation to certain geographical areas represents a major challenge for internationally operating organizations in terms of provision and availability of data.

3.    Limited scalability and innovation

Unlike Hyperscalers which operate globally and with wide networks the Sovereign Cloud infrastructure is physically limited to a few national data centers. This can have a negative impact on fast growing companies. Due to high security requirements and a smaller size of the cloud infrastructure, new technologies and services cannot necessarily be rolled out in the Sovereign Cloud at the same time as by standard cloud providers.

4.    Complexity of administration

A Sovereign Cloud requires a complex understanding of security control measures. Additionally, administrative overhead increases because the responsibility for key management is outsourced to the customer.

Figure 3: Comparison of Advantages and Disadvantages of a Sovereign Cloud (Illustration: Lukas Lollo)

🌞 Results und future perspectives

The Sovereign Cloud expresses a paradigm shift in data management within traditional cloud environments and the reasons for regaining control over sensitive data is important. By deliberately choosing national storage and regulatory boundaries it sends a message to global cloud providers and their approach to data management:

“Sovereign cloud is a key driver for digitization […] [and] offers a way to combine European values and laws with cloud innovation.” – Stefan Zosel (Capgemini Government Cloud Transformation Leader)

The Sovereign Cloud not only reinforces independence from Hyperscalers but also offers notable security advantages by technologies like end-to-end encryption, confidential computing and the “Bring your own Key” principle which are vital for regulated sectors. 

This article underlines the potential advantages of the Sovereign Cloud but also expresses its complexities and limitations such as increased costs and extra administrative workload which currently is only manageable for bigger organizations or those with considerable IT budgets. The previous comprehensive comparison of the advantages and disadvantages offers a decision-making guide and a basis for intensive discussions about the Sovereign Cloud and its future.

Rising data privacy demands, geopolitical tensions and the threat of cybercrime all point to the necessity of data sovereignty which the Sovereign Cloud can support. It offers organizations the choice either to continue relying on Hyperscalers or move towards a Sovereign Cloud model. The call for Sovereign Cloud gets louder for organizations especially within the EU it becomes a central aspect of IT infrastructure and requires careful consideration for every strategic IT planning.