How does data sovereignty impact multinational businesses?

Data sovereignty significantly impacts multinational businesses by requiring them to comply with diverse national laws governing data handling. Each country has its own regulations concerning data collection, storage, and processing, and businesses operating across multiple jurisdictions must navigate these complex legal landscapes to remain compliant. This can involve adhering to data protection laws, like the General Data Protection Regulation (GDPR) in Europe, or local privacy laws in other jurisdictions. As a result, companies must implement policies and practices that account for these legal requirements, which may include data localization — keeping data within the country's borders where it is collected.

Understanding data sovereignty is crucial for multinational companies because non-compliance can lead to substantial penalties, legal complications, and damage to reputation. Therefore, rather than simplifying data sharing or eliminating the need for data encryption, data sovereignty necessitates a more careful and strategic approach to data management and compliance across different regions.