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Navigating European data sovereignty: What is the key to compliant use of corporate communication platforms?

27 / 02 / 2024

Article by: Thomas Castermans

As Europe continues to prioritise data sovereignty, it’s on European businesses to strengthen their data governance and security policies amid geopolitical technological developments.

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Communication and collaboration tools can be considered the engines of today’s corporate world. It’s what keeps us informed and effective, no matter how dispersed the workforce. With the growing popularity of platforms like Microsoft Teams, Slack and WhatsApp for communication with colleagues, clients and partners, digital sovereignty has become a primary source of complex, dynamic and expanding compliance obligations for enterprises. This is particularly true when it comes to Europe — a global pioneer of data protection and sovereignty legislation.

As European leadership continues to introduce new regulations on the data front, there are growing concerns about the role that foreign technology providers play in safeguarding EU citizens' data and EU regulators’ ability to enforce data laws. The policies being developed to address the issue are aimed at enforcing restrictions on data transfer, decentralising data storage and reducing global tech giants’ grasp on power. Amidst this escalating regulatory complexity, businesses are looking for ways to ensure compliance without disrupting productivity.

Concerns around the use of business communication tools

The European business communication sector, much like cloud services, is largely dominated by US technology companies like Microsoft, Slack Technologies and Meta. There are two principal considerations here.

The possibility of unauthorised data access

Because these companies often store their data in data centres all over the map, it can be a real headache to figure out where exactly one’s data is located and enforce adequate access controls. Data stored in vendor-managed SaaS applications is even more opaque and difficult to track.

Besides, major hyperscale providers registered in the United States fall under the jurisdiction of US law. This introduces more data protection and privacy challenges, particularly in light of the 2018 US CLOUD Act. This legislation grants specific rights to US law enforcement, allowing them access to US companies’ and their clients’ data even if it is stored in a different country. This increases the risk of potential unauthorised access.

Breach of the EU data residency and cross-border transfer regulations

EU data residency requirements outlined in the General Data Protection Regulation (GDPR) mandate that organisations store and handle the personal data of EU residents within the confines of the European Union. The primary objective of the data residency requirement is to safeguard the privacy rights of EU residents by averting the transfer of the data they share, including on enterprise communication platforms, to countries with lower privacy standards. 

The most recent data shows that 94.87% of businesses are aware of the need to secure transfers of personal data outside the EEA. The European Commission has also expressed concerns, stating that global tech companies must ensure data collection, processing and cross-border transfer in compliance with EU values and legislative framework. Tech giants have done relatively little in response. 

The data handling practices of Microsoft Teams, for instance, present compliance issues for European businesses. While the platform currently offers data residency options in several countries including France, Germany, Italy, Poland, and others, these options apply exclusively to new tenants. A new tenant is defined as one that either hasn't had any users sign in to Teams or its admin user has never accessed the Teams admin centre.

For existing tenants, data residency arrangements differ based on their location. Tenants located in France, Germany, Liechtenstein, Norway, the UAE, the UK, South Africa, and Switzerland, will have their data stored in the EMEA region.

Therefore, European enterprises employing US-owned communication tools must proactively take control to ensure adherence to the dynamic regulatory environment, averting any unauthorised transfer, exposure or misuse of their data.

How can companies protect their data and stay compliant?

With increasing threats to information security and privacy, and with Big Tech companies remaining beholden to US laws, the time is now for companies to rethink the way they handle data storage, processing and transfer. Data localisation and ownership of encryption keys play a crucial role in empowering European businesses to effectively navigate the challenging data sovereignty landscape. It not only allows enterprises utilising tools like Microsoft Teams to align with evolving regulatory frameworks but also helps them safeguard client and employee data.

Valarian is dedicated to empowering businesses with full ownership and oversight over their data. We believe that security and compliance tools should be simple, seamless and invisible to the end user. Our solutions reduce unnecessary and unwanted friction for employees by allowing them to continue using the tools they’re most efficient and familiar with while providing compliance officers with peace of mind. With the ability to localise data and implement granular data governance policies and access controls, Valarian’s software fortifies corporate communications against unauthorised disclosure, regulatory violations and privacy breaches.

Future projections

Looking ahead, the future of data sovereignty is likely to be shaped by advancements in technology, geopolitical developments, and the ongoing dialogue between regulators and businesses. The emphasis on data residency is here to stay, with countries in Europe and beyond introducing stricter measures to protect their digital infrastructure.

Businesses that proactively adapt to these changes, investing in secure technologies and fostering collaborative relationships with regulators, are likely to thrive in the evolving data sovereignty landscape. While challenges persist, opportunities for innovation and growth emerge for those who navigate this complex terrain with strategic foresight.