Data sovereignty is a hot topic at the moment. With the geopolitical tensions companies are facing currently, it begs the question of where is it safe to keep your data? Rupert Bedell, Managing Director at Fasthosts, discusses how having UK-based infrastructure enables businesses to stay compliant, protected and in control of their data, rather than hosting sensitive business and customer information overseas
In the UK, the small business community is a driving force behind economic growth, innovation and local employment. In fact, as of 2024, small businesses were responsible for creating 300,000 new jobs. With customer expectations and online competition at an all-time high, the underlying structure that supports these businesses has never been more critical.
Within this underlying structure, every change, improvement or even daily operation significantly impacts a small business’s most indispensable asset: data. This extends from reliable hosting, robust security and effective analytics to essential technology upgrades and expert support. While ensuring website speed and security is crucial for maintaining customer trust, the secure storage of this data must be the paramount priority.
With growing concerns around data sovereignty and the risks of hosting sensitive business and customer information overseas, having UK-based infrastructure enables businesses to stay compliant, protected and in control of their data. For forward-thinking UK SMEs, data sovereignty is no longer just a compliance checkbox – it’s a competitive advantage in an increasingly unstable digital world.
The geopolitical climate and the impact on data decisions
Today’s geopolitical climate is causing businesses to reconsider where they store their data. The growing uncertainty currently in the US, shaped by the rapid geopolitical realignment and influx of tariffs, has put the spotlight on supply chain decisions, with data hosting now taking centre stage. This rising uncertainty and distrust has led many European companies to question the safety, security and cost efficiency of hosting data on US soil.
Since the US Cloud Act’s introduction in 2018, significant concerns have been raised in Europe. Whilst the protection of data is a global imperative, this clashes with the UK and EU’s GDPR rules, which stress the importance of consent and legal process. While GDPR emphasises the protection of data and the requirement of consent for its use, the US Cloud Act is opposite in its approach, granting US authorities access to data regardless of consent and where it’s hosted.
Considering the current volatility of the market and the data privacy risk posed by the US Cloud Act, the implications of continuing to use US hyperscalers has led many European businesses to question their reliance on heavyweights, like AWS, Google and Microsoft. Switching to EU providers is viewed not only as the most feasible option, but also the most attractive and secure one.
The rise of EU data sovereignty initiatives
There is a clear shift in the mindset towards prioritising data sovereignty, with industry leaders calling for greater control over European data; witnessed in a recent letter demanding the creation of a EuroStack of technology. This co-ordinated push is already taking shape, with many new initiatives being introduced.
For example, European Cloud leaders Aruba, IONOS and Dynamo have introduced Sovereign European Cloud API (SECA), creating a truly sovereign infrastructure that maintains the highest security standards while ensuring full compliance with European regulations.
European businesses are responding to these initiatives, with a rise in online queries about EU data hosting options also on the rise. The total number of visitors to sites such as european-alternatives.eu, which explores European alternatives for digital services and products, rose by more than 640,000 since December 2024. With this influx of interest for EU infrastructure, many larger European organisations have been moving to position themselves as the leading EU Cloud alternative.
With growing momentum behind European sovereignty, spurred on by the need to reduce foreign overreliance and enhance control over digital assets, now is the time for UK businesses to adopt change too. Taking these sovereignty initiatives on board, UK SMEs stand to gain several benefits by selecting a UK-based hosting provider that emphasises control, compliance and transparency.
The benefits of hosting data locally
For UK SMEs, the benefits of data sovereignty aren’t just limited to regulatory compliance with the Data Protection Act and GDPR. Instead, a move to local soil can be a significant benefit to the company’s strategy. By enabling UK companies to drive innovation and ensure better security and reliability, sovereignty provides a competitive advantage and customer trust is fostered by having full control over critical data.
This control turns what was once a compliance issue into a competitive edge, not only improving customer trust but also helping with the efficiency and ease of adopting the latest technologies as and when they become available. Also, local hosting typically delivers faster loading times and better user experiences for UK customers. Reduced latency also improves customer satisfaction and search engine rankings – both crucial for small business success.
Finally, the risks associated with sudden policy changes affecting foreign cloud providers are eliminated through hosting locally. The uncertainty previously circling compliance, policy and business continuity is eradicated, as both the hosting provider and business will be operating under the same rules and regulations.
Preparing for a sovereign digital future
The shift toward data sovereignty isn’t a fleeting trend – it’s a fundamental, strategic realignment for businesses building their technology roadmaps. UK SMEs must recognise this critical juncture and act now to ensure their data policies are not only compliant but also competitively positioned for tomorrow’s market and evolving regulations.
To achieve this, SMEs should actively seek out a locally hosted provider that champions transparency, robust security and compliance, all while offering the essential scalability for their growing business needs. Establishing a strong, locally hosted digital foundation can yield significant advantages: it reduces costs, improves operational efficiency and crucially, future-proofs an organisation’s digital presence. These benefits collectively empower SMEs to compete more effectively against larger rivals and, most importantly, solidify continued customer trust.
Ultimately, data sovereignty transcends simple regulatory adherence. By keeping data local, SMEs gain invaluable control, cultivate deeper trust with their customers and equip themselves with the necessary tools for sustainable growth in a dynamic digital landscape.
