AWS Security Blog

Introducing a new AWS whitepaper: Does data localization cause more problems than it solves?

Amazon Web Services (AWS) recently released a new whitepaper, Does data localization cause more problems than it solves?, as part of the AWS Innovating Securely briefing series. The whitepaper draws on research from Emily Wu’s paper Sovereignty and Data Localization, published by Harvard University’s Belfer Center, and describes how countries can realize similar data localization objectives through AWS services without incurring the unintended effects highlighted by Wu.

Wu’s research analyzes the intent of data localization policies, and compares that to the reality of the policies’ effects, concluding that data localization policies are often counterproductive to their intended goals of data security, economic competitiveness, and protecting national values.

The new whitepaper explains how you can use the security capabilities of AWS to take advantage of up-to-date technology and help meet your data localization requirements while maintaining full control over the physical location of where your data is stored.

AWS offers robust privacy and security services and features that let you implement your own controls. AWS uses lessons learned around the globe and applies them at the local level for improved cybersecurity against security events. As an AWS customer, after you pick a geographic location to store your data, the cloud infrastructure provides you greater resiliency and availability than you can achieve by using on-prem infrastructure. When you choose an AWS Region, you maintain full control to determine the physical location of where your data is stored. AWS also provides you with resources through the AWS compliance program, to help you understand the robust controls in place at AWS to maintain security and compliance in the cloud.

An important finding of Wu’s research is that localization constraints can deter innovation and hurt local economies because they limit which services are available, or increase costs because there are a smaller number of service providers to choose from. Wu concludes that data localization can “raise the barriers [to entrepreneurs] for market entry, which suppresses entrepreneurial activity and reduces the ability for an economy to compete globally.” Data localization policies are especially challenging for companies that trade across national borders. International trade used to be the remit of only big corporations. Current data-driven efficiencies in shipping and logistics mean that international trade is open to companies of all sizes. There has been particular growth for small and medium enterprises involved in services trade (of which cross-border data flows are a key element). In a 2016 worldwide survey conducted by McKinsey, 86 percent of tech-based startups had at least one cross-border activity. The same report showed that cross-border data flows added some US$2.8 trillion to world GDP in 2014.

However, the availability of cloud services supports secure and efficient cross-border data flows, which in turn can contribute to national economic competitiveness. Deloitte Consulting’s report, The cloud imperative: Asia Pacific’s unmissable opportunity, estimates that by 2024, the cloud will contribute $260 billion to GDP across eight regional markets, with more benefit possible in the future. The World Trade Organization’s World Trade Report 2018 estimates that digital technologies, which includes advanced cloud services, will account for a 34 percent increase in global trade by 2030.

Wu also cites a link between national data governance policies and a government’s concerns that movement of data outside national borders can diminish their control. However, the technology, storage capacity, and compute power provided by hyperscale cloud service providers like AWS, can empower local entrepreneurs.

AWS continually updates practices to meet the evolving needs and expectations of both customers and regulators. This allows AWS customers to use effective tools for processing data, which can help them meet stringent local standards to protect national values and citizens’ rights.

Wu’s research concludes that “data localization is proving ineffective” for meeting intended national goals, and offers practical alternatives for policymakers to consider. Wu has several recommendations, such as continuing to invest in cybersecurity, supporting industry-led initiatives to develop shared standards and protocols, and promoting international cooperation around privacy and innovation. Despite the continued existence of data localization policies, countries can currently realize similar objectives through cloud services. AWS implements rigorous contractual, technical, and organizational measures to protect the confidentiality, integrity, and availability of customer data, regardless of which AWS Region you select to store their data. As an AWS customer, this means you can take advantage of the economic benefits and the support for innovation provided by cloud computing, while improving your ability to meet your core security and compliance requirements.

For more information, see the whitepaper Does data localization cause more problems than it solves?, or contact AWS.

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Jana Kay

Since 2018, Jana Kay has been a cloud security strategist with the AWS Security Growth Strategies team. She develops innovative ways to help AWS customers achieve their objectives, such as security table top exercises and other strategic initiatives. Previously, she was a cyber, counter-terrorism, and Middle East expert for 16 years in the Pentagon’s Office of the Secretary of Defense.

Arturo Cabanas

Arturo Cabanas

Arturo joined Amazon in 2017 and is AWS Security Assurance Principal for the Public Sector in Latin America, Canada, and the Caribbean. In this role, Arturo creates programs that help governments move their workloads and regulated data to the cloud by meeting their specific security, data privacy regulation, and compliance requirements.