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THE C YBER PRO JE CT Sovereignty and Data Localization Emily Wu The Cyber Project Belfer Center for Science and International Affairs Harvard Kennedy School 79 JFK Street Cambridge, MA 02138 /Cyber Statements and views expressed in this report are solely those of the author and do not imply endorsement by Harvard University, Harvard Kennedy School, or the Belfer Center for Science and International Affairs. Design and layout by Andrew Facini Copyright 2021, President and Fellows of Harvard College Printed in the United States of America REP REP OR T JU LY 20 21 THE C YBER PRO JE CT Sovereignty and Data Localization Emily Wu Table of Contents Executive Summary 1 Introduction 3 Data sovereignty and its importance in the emerging technology landscape 5 Spotlight: Cloud computing 6 Spotlight: 5G telecommunications 7 Spotlight: Artificial Intelligence 8 Data localization is used to assert data sovereignty 9 Types of Data Localization Policies 11 Local-only storing, transmission, and processing 11 Local copy required 12 Narrower, conditional restrictions 13 Reasons for Data Localization Policies 14 Technical concerns 14 Value concerns 17 How should policy makers respond? 19 Conclusion 22 Bibliography 23 Adobe Stock Executive Summary Data localization policies impose obligations on businesses to store and process data locally, rather than in servers located overseas. The adoption of data localization laws has been increasing, driven by the fear that a nation’s sovereignty will be threatened by their inability to exert full control over data stored outside their borders. This is particularly relevant to the US given its dominance in many areas of the digital ecosystem including artificial intelligence and cloud computing. Unfortunately, data localization policies are causing more harm than good. They are ineffective at improving security, do little to simplify the regulatory landscape, and are causing econ