Are you confident your European data is truly protected from foreign surveillance? Microsoft’s recent admission under oath has raised important questions about data sovereignty, but the full picture is more nuanced than initial headlines suggest.

The Uncomfortable Truth – And Microsoft’s Response

Microsoft has publicly acknowledged that it cannot guarantee data sovereignty for customers in France and, by extension, the wider European Union. This admission came during legal proceedings where Microsoft France’s General Counsel, Anton Carniaux, confirmed the company’s inability to resist US government data requests under the US CLOUD Act.

The CLOUD Act (Clarifying Lawful Overseas Use of Data Act), enacted in 2018, allows US authorities to access data from US-based technology companies regardless of where that data is physically stored. This means your sensitive European data, even when housed in EU data centers, remains potentially accessible to US government surveillance under certain legal circumstances.

However, Microsoft has not been idle in addressing these concerns. The company completed its landmark EU Data Boundary initiative in February 2025, ensuring that customer data for major commercial services is stored and processed within the European Union. Additionally, Microsoft announced its Microsoft Cloud for Sovereignty in June 2025, providing what the company describes as “the most comprehensive set of sovereignty solutions in the industry.”

What This Means for Your Business

If your organization relies on Microsoft’s cloud services – Azure, Office 365, or any other Microsoft cloud platform – you face a complex landscape of both challenges and protections. While the CLOUD Act creates potential exposure to data access requests, this doesn’t automatically create GDPR violations.

Critical questions you should be asking:

• Can you guarantee GDPR compliance when using US-based cloud providers? (Many organizations successfully do through proper contractual safeguards)
• How will you handle data subject requests when you cannot control data access?
• What are your legal obligations if foreign authorities access your customers’ personal data?
• Have you evaluated Microsoft’s EU Data Boundary and sovereignty solutions for your specific needs?

The Broader Industry Context

Microsoft’s admission isn’t an isolated incident – it reflects a systemic reality affecting all major US cloud providers. Amazon Web Services (AWS) and Google Cloud face identical CLOUD Act obligations. AWS, for instance, states in their compliance documentation that they “contractually commit to comply with applicable data protection laws” and “commit to challenge any overbroad or inappropriate request from a government.”

This legal framework has been public knowledge since the CLOUD Act’s passage in 2018, and major cloud providers have been transparent about their legal obligations for years. The recent attention highlights ongoing tensions around digital sovereignty, but the underlying legal reality is not new.

The timing is particularly significant as European regulators intensify their focus on digital sovereignty. Recent rulings have already challenged tracking-based advertising and highlighted the complexities of cross-border data transfers.

Balancing Sovereignty and Practicality

While data sovereignty concerns are legitimate, organizations must weigh these against practical realities. European alternatives to US cloud giants often lack the scale, innovation capacity, and global reach that many organizations require. This can create operational and competitive disadvantages that may outweigh sovereignty concerns for many businesses.

The key is understanding your specific risk profile and implementing appropriate safeguards rather than making blanket decisions based on headlines.

Your Next Steps

This situation demands thoughtful action from European organizations:

For IT Leaders: Conduct a comprehensive audit of your cloud dependencies and assess your exposure to US data access laws. Evaluate Microsoft’s EU Data Boundary and sovereignty solutions alongside alternatives. Consider hybrid or multi-cloud strategies that minimize reliance on single providers while maintaining operational effectiveness.

For Compliance Teams: Review your data processing agreements and ensure you can demonstrate adequate safeguards for personal data. The existence of the CLOUD Act doesn’t automatically invalidate GDPR compliance when proper contractual and technical measures are in place.

For Business Leaders: Understand that the cheapest cloud option may not be the most compliant, but also recognize that sovereignty solutions exist. Factor in potential regulatory fines, reputational damage, and operational requirements when making technology decisions.

As the debate over digital sovereignty continues to evolve, organizations must navigate between legitimate privacy concerns and practical business needs. The question isn’t simply whether to abandon US cloud providers, but how to implement the right combination of technical, contractual, and operational safeguards to protect your data while maintaining competitive advantage.

The path forward requires informed decision-making based on your specific circumstances, risk tolerance, and the evolving landscape of both technology solutions and regulatory requirements.

EU Court Rules Tracking-Based Advertising Illegal: Major Blow to Google, Microsoft, Amazon

Your Work Emails Are Personal Data: The GDPR Ruling That Changes Everything