Secure server location in Germany? Data sovereignty in the cloud: Why a server location in Germany is not enough! – Image: Xpert.Digital
Why server location offers no guarantee for data security
The illusion of “Germany as a secure server location”
The belief that data on servers in Germany is automatically protected from foreign access is a dangerous misconception. This analysis sheds light on why physical location alone does not guarantee data security and what measures are necessary for true data sovereignty.
Many companies in Germany mistakenly assume that storing their data on servers within Germany offers sufficient protection against unauthorized access. However, this assumption overlooks a crucial factor: the nationality of the cloud provider and the associated legal obligations are far more important than the physical location of the data processing.
The CLOUD Act (Clarifying Lawful Overseas Use of Data Act) is a US law that came into effect in 2018 and requires US IT companies, including their international subsidiaries, to hand over stored data to US authorities upon request – regardless of where that data is physically stored. Specifically, this means that if a company uses AWS, Google Cloud, Microsoft Azure, or other US-based services, the data is potentially subject to US access, even if it resides on servers in Frankfurt, Berlin, or Munich.
The implications of this law are often underestimated: “The Cloud Act compels US cloud providers such as Google Cloud, Microsoft Azure, Amazon Web Services, and Dropbox to make the data stored in the cloud accessible to US authorities upon request.” The consequence is clear: “It effectively overrides the GDPR regulations.”
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The fundamental conflict between US law and European data protection
The conflict between the CLOUD Act and the European General Data Protection Regulation (GDPR) presents companies with an irresolvable dilemma. US providers with server locations in the EU are obligated to grant US authorities access to their servers, even though the GDPR explicitly prohibits them from doing so. This legal discrepancy creates a constant tension in which compliance with both legal frameworks is practically impossible.
The issue goes beyond mere data protection and touches upon the fundamental question of data sovereignty. Due to the potential access possibilities of US authorities, "companies de facto lose control over their data and thus over their intellectual property," which is particularly critical for trade and business secrets.
The legal development: From Schrems II to the EU-US Data Privacy Framework
The legal situation has evolved through several court rulings and new agreements. The European Court of Justice's "Schrems II" ruling of July 2020 declared the "EU-US Privacy Shield" invalid because US surveillance practices were incompatible with European data protection standards. This ruling significantly hampered data transfers to the US.
In response, the European Commission adopted the new EU-US Data Privacy Framework (DPF) in July 2023. This framework is intended to address the concerns raised by the Schrems II ruling: “The new framework is designed to address these concerns through safeguards that restrict access to EU data by US intelligence agencies and by establishing a review court that can order the deletion of EU citizens’ data if it has been collected in breach of the safeguards.”
Nevertheless, this framework remains controversial. It is only valid until June 27, 2025, and the European Commission recently proposed extending the adequacy decisions for the United Kingdom for a further six months. The stability of this legal basis is therefore by no means guaranteed.
The actual risks for German companies
The use of US cloud services poses specific risks for German companies:
- Data breaches: The CLOUD Act allows US authorities to access sensitive data without the knowledge of the actual data owner, which violates the GDPR.
- Legal dilemma: Companies face a challenge – either they violate the GDPR by complying with the CLOUD Act, or they refuse to transfer data to US authorities and thus violate US law. In both cases, they face fines.
- Loss of control over intellectual property: Particularly critical is the potential access to trade secrets, strategic plans and research results.
- Lack of transparency: US authorities can access data without informing the company in question.
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True data sovereignty: Alternatives to US cloud providers
To achieve true data sovereignty, companies must consider alternative strategies:
1. European cloud providers as a secure alternative
An effective solution is to switch to cloud providers based in the EU that are not subject to the CLOUD Act. Examples include:
- IONOS Cloud: As a European provider, IONOS is subject exclusively to the strict data protection laws of the EU and guarantees full control over the data. Because the data is stored in Germany, it is protected against access from abroad. IONOS operates in compliance with the GDPR and meets the highest security and compliance standards, including ISO 27001, BSI IT Baseline Protection, and C5 certification.
- Hetzner: Offers GDPR-compliant hosting services and does not transfer customer data to third countries. Even its cloud services in the USA and Singapore are GDPR-compliant, as customer data remains with Hetzner Online GmbH and is not transferred to subsidiaries.
The advantages of European providers are obvious: “As a European provider, IONOS is subject exclusively to the strict data protection laws of the EU and thus guarantees full control over your data.”
2. Successful migration examples
The feasibility of such migrations is demonstrated by the example of Open Data Denmark, which moved from Google Cloud Platform (GCP) to Hetzner's data centers in Germany. This migration was motivated by growing concerns regarding trust, data protection, and data sovereignty with respect to GCP. The move brought three key advantages:
- Cost efficiency: Reduction of operating costs by over 30%
- Data sovereignty: Hosting in Germany ensured full compliance with EU regulations, in particular the GDPR
- Performance: Better hardware and network infrastructure
Practical steps to achieving true data sovereignty
To achieve true data sovereignty, companies should consider the following steps:
- Identify cloud providers: Check whether your current cloud provider is a US company or subject to US legislation.
- Conduct a risk assessment: Evaluate which data is particularly sensitive and what risks it might be exposed to with US providers.
- Evaluate alternative providers: Consider European cloud providers such as IONOS or Hetzner as alternatives that guarantee full GDPR compliance.
- Develop a migration strategy: Plan the phased migration of critical data and applications to European providers.
- Implement data protection measures: Implement additional security measures such as encryption and strict access controls.
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Sovereignty instead of dependence
Simply storing data on servers in Germany is not enough to guarantee true data sovereignty. The legal structure and origin of the cloud provider are crucial for the effective protection of sensitive company data.
Given the ongoing legal uncertainties and the fundamental conflict between US law and European data protection law, migrating to European cloud providers is the safest way for many companies to gain genuine control over their data. While this decision may involve effort, it offers the most reliable foundation for data protection and digital sovereignty in the long run.
Instead of waiting for further legal developments or the next "Schrems" ruling, companies should act proactively and regain control over their digital infrastructure. Only in this way can true data sovereignty be achieved – beyond mere "paper security" through supposedly secure server locations.
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