Sovereign Data Infrastructure: What It Is and Why It’s Critical for Canada

Data is no more just the new oil. It is a strategic asset that underpins critical infrastructure and public services. Whoever controls the data controls the future. As countries around the world increasingly move towards digital sovereignty, Canada finds itself at a crossroads. Our heavy reliance on foreign cloud services and external technology presents serious vulnerabilities. The need to discuss sovereign data infrastructure in Canada is critically important today.

Sovereign data infrastructure refers to the comprehensive system of data centers, cloud services, networks, and frameworks that allow a country to maintain control over all its data. This ensures that critical data stays within a country’s borders, and is subject to domestic laws and regulations. Sovereign data infrastructure is a core pillar of digital sovereignty.

This concept is not about digital isolationism, but focuses on strategic autonomy — the ability to engage with global partners while maintaining independence in decisions affecting national interests. Sovereign data infrastructure ensures that a nation can store, process, and protect its data according to its own laws and values, rather than being subject to foreign jurisdictions.

Estonia is a great example in this context. After experiencing devastating cyberattacks in 2007, the country rebuilt its digital infrastructure with sovereignty at its core. Estonia established a data embassy in Luxembourg that serves as a digital continuation of the Estonian state, ensuring governmental continuity regardless of physical threats at home.

Global Status: Where Key Countries Stand

The global race for data sovereignty is well underway, with various countries adopting different approaches:

U.S.

The U.S. maintains sovereignty through regulatory frameworks and the global dominance of its cloud providers. The CLOUD Act gives U.S. authorities extraterritorial reach over data, while defense programs like FedRAMP and JWCC ensure government data sovereignty. This model allows the U.S. to maintain significant global influence over data governance without adopting a formal sovereign data infrastructure policy.

European Union

The EU leads with initiatives like GAIA-X, GDPR, and the upcoming EUCS certification. France passed the SREN Bill, requiring sovereign cloud use for sensitive data, and Germany operates the Bundescloud and developing partnerships with providers like SAP. Many member states have country-specific laws restricting data transfers beyond EU borders, reinforcing Europe’s commitment to digital sovereignty, data protection, and reduced dependence on foreign providers.

U.K.

The U.K. is also prioritizing data sovereignty and security and has designated datacenters and cloud services as critical national infrastructure. While the government emphasizes the importance of keeping sensitive data within national borders, concerns remain about the reliance on major U.S.-based cloud providers.

China

China operates the most comprehensive sovereign data ecosystem in the world. Its “Great Firewall” strictly controls cross-border data flows, and strict data localization laws mandate that personal and critical business data remain within its borders. Domestic tech giants like Alibaba, Tencent, and Huawei manage cloud services, and China’s internet infrastructure is isolated from foreign influence.

Russia

Russia enforces strict data localization laws and has created a Sovereign Internet (Runet) that allows the government to cut itself off from the global web if necessary. Russian cloud services and domestic hardware are designed to limit dependence on foreign technology.

India

India is building a sovereign data infrastructure to ensure data localization. This effort includes the development of compliant data centers and cloud infrastructure, reducing dependence on foreign providers and ensuring critical data remains under Indian jurisdiction.

Japan

While Japan does not mandate strict data localization, it has strengthened its data protection laws through the Act on the Protection of Personal Information (APPI), imposing regulations on cross-border data transfers and ensuring transparency in how data is handled internationally. Japan is also promoting trusted cloud services through initiatives like the Trusted Cloud Framework.

Southeast Asia

Singapore, Malaysia, Thailand and Indonesia, among others, are partnering with enterprises to develop cloud sovereignty.

Canada: Vulnerable in Shifting Geopolitical Tides

Despite having a highly educated workforce and a robust tech sector, Canada lags behind its global peers in developing sovereign data infrastructure. Critical government and business functions are built upon foreign software, and vast amounts of Canadian personal, business, and government data reside on foreign clouds.

This creates significant vulnerabilities in an increasingly fragmented and multipolar digital landscape. While cloud outages have demonstrated how reliance on foreign providers can impact essential services, Canada’s traditional alignment with the US is becoming increasingly complicated, especially with ongoing diplomatic tensions and tariffs war.

At the heart of these concerns is the US CLOUD Act, which grants American authorities the power to access data held by U.S. companies, regardless of where that data is physically stored. This raises serious questions about Canadian data sovereignty and privacy. As trade disputes deepen and diplomatic relations deteriorate, the potential for misaligned interests and unilateral actions by the U.S. further undermines Canada’s ability to safeguard its critical data assets.

Even before the current geopolitical tensions, we have been witnessing the emergence of distinct digital sovereignty blocs — groups of countries aligning their approaches to data governance, cybersecurity, and digital trade based on shared interests and geopolitical alliances.

The once-unified vision of a global internet is rapidly fragmenting into separate spheres of influence. Russia’s internet disconnection tests and China’s tightly controlled digital ecosystem represent the most extreme examples.

But even among traditionally aligned Western nations, there is growing divergence in digital regulation and governance frameworks. The European Union’s stance on privacy, antitrust enforcement, and content moderation is totally differs from the U.S. approach, and is creating complexities for businesses. These issues have essentially amplified the need for EU to assert greater control over their data and digital infrastructure.

The economic implications of this digital landscape are equally significant. The digital economy represents the fastest-growing sector globally, yet Canada captures only a fraction of its potential value. Billions of dollars spent by Canadian businesses and consumers on foreign digital services represent a significant economic leakage — resources that could otherwise be directed toward nurturing domestic innovation, job creation, and the development of homegrown technologies.

This dependence also threatens to limit Canada’s ability to chart an independent course in critical emerging technologies, such as artificial intelligence and quantum computing.

The Path Forward

Establishing Canadian data sovereignty will require a comprehensive, coordinated approach involving both public and private sectors. The federal government must lead by developing a national data strategy that includes targeted investments, clear regulatory frameworks, and enforceable policies. This should encompass data localization requirements for sensitive information, procurement preferences that prioritize Canadian digital services, and the creation of a sovereign cloud infrastructure to support government operations and critical sectors.

Some of this work is already underway. For instance, TELUS, in collaboration with NVIDIA, is launching a Sovereign AI Factory in Quebec, which will provide Canadian businesses and researchers with secure access to advanced AI technologies, while ensuring that sensitive data remains within Canada’s borders.

Additionally, the Canadian government has introduced initiatives like the Canadian Sovereign AI Compute Strategy and the AI Sovereign Compute Infrastructure Program. These programs focus on building secure, high-performance computing systems to support research, innovation, and economic growth, while safeguarding Canadian data and intellectual property.

In the geospatial field, the Canada Centre for Mapping and Earth Observation (CCMEO), in collaboration with the Canadian Council on Geomatics (CCOG), has launched a series of virtual round tables focused on the future of Canada’s spatial data infrastructure. These discussions are bringing together participants from across the geospatial community, including industry leaders, academic researchers, non-governmental organizations, Indigenous governments and representatives, and municipal and local governments.

However, these efforts, while significant, address only specific areas of Canada’s broader data landscape. Building a truly sovereign data infrastructure will require a whole-of-government approach – one that brings together national policies, regulations, and investments to secure all forms of data critical to Canada’s future. Just as governments have traditionally taken the lead in building and maintaining essential physical infrastructure – such as roads, pipelines, and power grids – they must now take responsibility for developing and safeguarding the nation’s digital infrastructure.

At the same time, international collaboration is essential. Canada should actively seek alliances with like-minded countries that are pursuing balanced, transparent approaches to data governance. Participation in multilateral forums and bilateral agreements with Europe and other partners can provide the scale and shared standards necessary to support Canadian digital autonomy without isolation.

This effort will not be easy. It demands heavy lifting by government at every level, supported by close collaboration with the private sector and academia. But without decisive, coordinated action, Canada risks falling further behind in a world where digital sovereignty is increasingly tied to national security and economic prosperity.