Analysis from Omdia’s new Digital Sovereignty: AI & cloud policies and regulatory frameworks report reveals a shift in how countries approach technological independence.
“The earliest debates on digital sovereignty focused on data residency and localization, however, policy discussions are now moving beyond this to encompass more comprehensive control over the entire AI and cloud ecosystem and technology stack”, explained Sarah McBride, Principal Analyst, Regulation, at Omdia. “This includes compute infrastructure, training datasets, and model governance.”
However, policymakers are increasingly recognizing that AI and cloud sovereignty cannot involve achieving complete technological self-sufficiency due to the supply chain being inherently global but is rather about achieving strategic agency and informed decision-making, she said.
Omdia’s report highlights that though sovereignty is appearing on many governments’ agendas, clear guidance on AI and cloud sovereignty requirements is largely absent.
“Despite some recent regulatory efforts, the need remains for clearer definitions, certification mechanisms, and operational boundaries,” said McBride. “The EU represents the clearest example of a regulatory-driven AI and cloud sovereignty model. Its regulatory model is defined by controlled openness, enabling participation in global AI ecosystems while maintaining strict oversight and would make sovereign AI an auditable legal requirement for the first time.”
The proposed Cloud and AI Development Act (CADA), announced in June 2026, focuses specifically on ensuring that the EU has the capacity, infrastructure, and governance mechanisms required to maintain technological autonomy.
Government funding and subsidies drive sovereign cloud and AI development
“Governments are predominantly supporting sovereign cloud and AI development through public funding,” explained McBride.
The UK, for example, has announced £500 million ($671.4 million) of investment in a new Sovereign AI Unit and the AI Opportunities Action Plan has attracted more than £14 billion ($19 billion) in investment for major infrastructure projects, including sovereign AI data centers and AI hubs. Saudi Arabia’s HUMAIN sovereign AI venture is backed by $100bn in mostly government funding, and Singapore has announced over S$1 billion ($784 million) in funding for AI development, with S$500 million ($392 million) dedicated to securing high-performance compute in the country, in line with its sovereignty agenda.
AI and cloud sovereignty faces a complex set of challenges that extend beyond technological limitations and high development costs, according to Omdia. Despite ambitions for digital self-reliance, ongoing dependence on foreign hardware, software, AI and cloud platforms remains a critical vulnerability. Cultural gaps, limited public trust, and fragmented policymaking add to the challenges.
Digital sovereignty is no longer an exclusively European or North American debate: more countries are beginning to take their own stance.
“Ultimately, the sovereignty trend is not merely a regulatory challenge or compliance burden but a catalyst for market restructuring and revenue diversification for telecom operators, enabling them to expand their roles into compute, cloud and digital infrastructure,” concluded McBride.
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