Data Sovereignty: the hidden business risk of online-only dependence

The Curious Codex

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100% Human Generated
2026-01-15 Published, 2026-01-15 Updated
2131 Words, 11  Minute Read

The Author
GEN Blog

Richard (Senior Partner) LinkedIn

Richard has been with the firm since 1992 and was one of the founding partners

 

A simple thought experiment

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Imagine you arrive tomorrow and your primary technology provider denies access. Not because you did anything wrong, but because an automated system flags you, a policy changes, or a dispute escalates.

Could you still trade? Can you still take orders, answer customers, access contracts, ship goods, invoice, collect payment, and recover your data, without waiting in a support queue?

That is the practical heart of data sovereignty. It is not ideology. It is continuity.

This is not an argument against modern platforms. It is a reminder that outsourcing operations also outsources control. The risk is manageable, but only if it is acknowledged and designed for.

What data sovereignty means (and what it does not)

Data sovereignty means you retain meaningful control over your organisation's information: where it lives, who can access it, how it can be used, and how you can move it if circumstances change.

It is often confused with two related ideas:

  • Data residency: the physical or geographic location where data is stored (for example, a UK or EU data centre).
  • Operational sovereignty: whether you can keep operating if a vendor is unavailable, unaffordable, or unwilling.

You can have EU-hosted data and still have low sovereignty if your access is mediated by a single vendor's identity system, licensing, and terms. The location of a database does not guarantee control.

In practice, sovereignty is about control under stress: when something goes wrong, who decides what happens next, your business or a third party?

How companies become dependent, often by stealth

Vendor dependence rarely arrives as a board decision that says "let's make ourselves reliant on one provider". It grows quietly, usually through convenience.

  • Ecosystems are designed to be convenient: one login, one admin portal, one bill, one set of defaults. Convenience is valuable, until it becomes a single point of failure.
  • Identity becomes the master key: when email, documents, device login, CRM, finance, and meetings all hinge on one identity provider, losing access to that identity can freeze the business.
  • Integrations create gravity: once everything is connected, leaving becomes expensive, slow, and risky. Exports are incomplete, data models do not match, and staff retraining becomes a hidden cost.
  • Defaults become policy: over time, "the way the tool works" becomes "the way the company works". That is how technology choices become operational constraints.

This is why sovereignty is a business risk topic: the dependency is not always visible until something breaks.

It also explains why large overseas providers (often US-headquartered) can have so much leverage globally. When a market becomes structurally dependent on a single vendor or a small handful of vendors, you do not need a formal monopoly for the effect to feel similar. Exit costs become the control mechanism, and pricing and policy changes become something you absorb rather than choose.

Everything online means access can be revoked, and breaches scale

Moving systems online can reduce some risks (for example, you no longer maintain hardware), but it can increase others. Two stand out for business leaders: loss of access and loss of confidentiality.

1) Loss of access: the service can disappear for you

Online services are governed by terms, policies, automated enforcement, and external pressure. In many models there is no warranty that access must be restored within a particular timeframe.

Put bluntly: if a critical service is online only, it can be taken away without notice, and often without the kind of warranty business owners assume applies to essential infrastructure.

The "what if" scenario matters because it does not require malice. It can be triggered by:

  • automated fraud or abuse detection that gets it wrong
  • payment disputes or compliance checks
  • policy changes that reclassify acceptable use
  • geopolitical escalation where businesses become collateral in larger disputes

The uncomfortable "what if" is also political. If a regulator escalates threats, or if relationships between governments and large overseas providers deteriorate, access restrictions can become an instrument of leverage. You do not need to predict this to manage it. You just need a plan that assumes it could happen.

For UK businesses, this is not a far-fetched category of risk. Public disputes, for example around online safety regulation and enforcement, can become heated quickly. Whether or not a regulator such as Ofcom can enforce a threat is not the point. The point is that escalation can change vendor behaviour, change platform policy, or trigger defensive automation, and your business can get caught in the blast radius.

The business question is simple: if access is denied tomorrow, what continues to work?

2) Loss of confidentiality: breaches are routine, and email exposure can be business ending

Data breaches are not rare edge cases. In some ecosystems they are reported daily, sometimes hourly, across the economy. Most organisations only understand the true impact after it happens.

When your email and documents are exposed, you do not just lose files. You lose trust:

  • Reputation damage: customers and suppliers assume you cannot protect their information.
  • Operational disruption: incident response, legal review, customer comms, forced password resets, downtime.
  • Commercial harm: competitors gain insight into pricing, pipeline, negotiations, and strategy.
  • Fraud enablement: attackers read threads, learn workflows, and impersonate staff convincingly.

A particularly underappreciated risk is espionage by inbox: access to mailboxes and shared drives becomes a window into contracts, product plans, staff issues, and financial position. Even if nothing is ransomed, the damage is real.

It is also worth being explicit about motives. Criminals do not compromise accounts for entertainment: they do it to make money. That usually means payment redirection (changing bank details on invoices), taking over finance workflows, blackmail, or packaging your internal data for resale, sometimes to competitors.

The uncomfortable truth is: if your data is on someone else's computer, you are trusting their engineering, their staffing, their processes, their third parties, and their incident response. Some providers do this well. Others have poor track records. Either way, the risk is yours.

Payments: a chokepoint risk hiding in plain sight

Many businesses treat card payments as a utility: always available, always neutral. In practice, dominant payment rails create concentration risk.

If you are effectively excluded from mainstream card processing (via dominant card networks such as Visa and Mastercard), you can be "alive" as a company yet unable to trade normally: fewer conversions, failed subscriptions, delayed cashflow, and supplier friction.

That is the risk: if a payment provider decides you are no longer acceptable, whether fairly or unfairly, commerce can stop. Resilience means having a plan for alternative payment paths, not assuming the default rail will always be available.

This is one reason public institutions explore alternatives (for example, proposals for a future EU digital currency are often discussed in resilience terms). The strategic theme is not technology. It is optional pathways for commerce.

Communications: when your ability to talk to customers becomes a subscription

A quiet shift has happened in sales and support: "pick up the phone" has been replaced by "book a call". Meetings, messaging, and voice are increasingly routed through hosted collaboration platforms.

The immediate cost is friction. "Book a meeting" sounds organised, but it often turns simple interactions into a scheduling exercise. In many businesses, direct calling is faster, clearer, and more resilient, especially when a customer is waiting and the clock is running.

That can be convenient, until it becomes fragile. If your primary platform (Teams, Zoom, Webex or similar) is unavailable for 24 hours, sales slows. If it is unavailable for a week, customer experience and cashflow can be hit. A dependency that looks like "productivity software" becomes a continuity risk.

A useful way to think about this is: have you built a business culture that can still make and receive calls when the collaboration layer is unavailable? Or have you accidentally made "the app" the only way work happens?

The operational test is straightforward:

  • 24 hours down: can staff still call customers and suppliers, share essential information, and keep support running?
  • 7 days down: can you still onboard, sell, deliver, and invoice without waiting for the platform?

Practical mitigations are often low drama:

  • keep owned numbers (portability matters)
  • maintain a PSTN or mobile fallback for key roles
  • ensure customer-facing lines are not trapped inside one app
  • have a second meeting bridge option and a written comms outage playbook

Surveillance, overreach, and the backdoor problem

Governments have legitimate reasons to pursue lawful access: serious crime, terrorism, and national security. The policy debate is complex.

The engineering reality is simpler: once an exceptional access mechanism exists, it becomes an attack surface. It can be exploited by criminals, hostile states, insiders, or misconfiguration. History contains many examples of tools built for "the right people" being repurposed by the wrong ones.

For businesses, the risk is not abstract. Exceptional access increases the chance that confidential communications (customer data, legal strategy, mergers, negotiations) can be exposed.

Why federated messaging changes the risk profile (Matrix as a model)

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Centralised messaging platforms can be easy to adopt, but they create a single control point: one provider, one policy layer, one identity system. That is efficient, until it is not.

Federation is a different model. In a Matrix style approach, organisations can run their own server (or choose a trusted host) while still communicating with others. The key shift is: you can keep your identity, your history, and your policies while remaining interoperable.

This contrasts with many other common messaging apps, where the provider and their policies remain a single control point. Federation does not eliminate risk, but it changes the dependency profile.

If you are assessing secure messaging for your business, look for:

  • Portability: can you export history and users in a usable format?
  • Federation or interoperability: can you communicate beyond one vendor's walled garden?
  • Self-host option: can you run it privately if needed?
  • Identity control: can you use your own domain and manage your own keys and policies?

A practical framework: assess, reduce dependency, test continuity

Data

Sovereignty is not a single project. It is a posture. A simple framework keeps it business-led.

1) Assess: where are you fragile?

  • Map critical functions: sales, customer support, invoicing, payments, procurement, compliance, internal comms.
  • Identify single points of failure: one identity provider, one comms platform, one payment rail, one cloud admin account.
  • Define tolerances: how long can each function be unavailable, 4 hours, 24 hours, 7 days?

2) Reduce dependency: create options

  • Own your domain and numbers: portability is sovereignty.
  • Separate identity from apps where possible: avoid a single master key for everything.
  • Back up with purpose: not just files, configs, contact lists, call flows, identity recovery, and admin access.
  • Plan exits early: know the export paths, the costs, the timing, and the operational steps.
  • Avoid irreversible coupling: treat convenient integrations as a risk decision, not a free upgrade.

3) Test continuity: prove you can still trade

  • Run tabletop exercises: provider denies access, communications down, payment processor freeze.
  • Practise recovery: can you restore comms, reroute numbers, access backups, and reach customers quickly?
  • Keep a parallel path for the few things that must never stop: inbound calls, support email, payments, and invoicing.

Why Windows 11 and the Linux desktop trend matters (for business, not ideology)

One visible sign of sovereignty concerns is the pushback against forced platform changes. The Windows 11 cycle has created pressure: hardware requirements, upgrade timelines, and the bundling of features some organisations do not want.

This is where Linux is strategically interesting: it is genuinely free in the sense that no single vendor can take it away, force an upgrade, or require new hardware simply because a support policy changed. You can keep perfectly good machines in service, standardise on a stable environment, and avoid surprise platform direction changes (including being pushed into AI assistants such as Copilot if you do not want them).

For business leaders, the point is not that everyone should switch tomorrow. The point is option value: the ability to choose, to delay forced migrations, and to keep core tools working on your terms.

Three actions to take this quarter

  1. Write your denial of access plan (one page): what stops, what continues, and who does what in the first 4 hours.
  2. Identify two chokepoints (identity and communications are common) and design a viable fallback.
  3. Run a continuity test: simulate a 24-hour outage of your primary collaboration platform and measure the business impact.

Executive summary

Data sovereignty is the business ability to retain control of information and remain operational if a vendor becomes unavailable, unaffordable, or unwilling. Ecosystems and online-only tooling can create stealth dependencies where identity, communications, documents, and payments become single points of failure. Breaches and inbox exposure are not theoretical. They are routine and can be reputation destroying. The mitigation is not to reject modern platforms, but to reduce fragility: own portable identifiers (domains and numbers), build export and recovery paths, and prove through testing that the business can still trade when a critical provider is down.


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--- This content is not legal or financial advice & Solely the opinions of the author ---