Microsoft recently announced a new wave of capabilities for its Sovereign Cloud offering across its public and private cloud environments to meet stringent global, particularly European, regulatory demands for data residency, control, and resilience.
This announcement aligns with the major hyperscalers’ efforts to address rising governmental and enterprise concerns about data control. Microsoft isn’t alone, as Google has updated its sovereign cloud services, including a Cloud Airgapped solution. At the same time, AWS sought to address customer concerns by announcing the establishment of an EU-based cloud unit.
As Svetlana Geiger, an Industry expert and Trusted Advisor for customers and partners at Microsoft, commented on LinkedIn:
Across Europe and globally, organisations face rising regulatory demands, resilience expectations, and rapid tech innovation. Governments and enterprises need the cloud’s power without losing control of their data.
The announcement includes the commitment to the EU Data Boundary, which ensures that data processed by AI services for EU customers remains within the European Union. According to the company, this means that all customer data, whether at rest or in transit, will be stored and processed exclusively in the EU, unless customers explicitly direct otherwise.
Building on this commitment, Microsoft is expanding its long-term investment in in-country data processing for Microsoft 365 Copilot interactions, growing to 15 countries by the end of 2026. This includes offering processing within Australia, India, Japan, and the United Kingdom by the end of 2025, with eleven additional countries to follow in 2026.
For customers implementing controls in the public cloud, Microsoft introduced a refreshed version of its Sovereign Landing Zone (SLZ), which is built on the Azure Landing Zone (ALZ) foundation. Moreover, the SLZ provides a prescriptive architecture that accelerates compliance. In addition, it includes an updated Management Group hierarchy, Azure Policy definitions, and guidance on deployment placement for controls such as Azure Key Vault Managed HSM.
Furthermore, for organizations requiring the highest degree of isolation and control, the Sovereign Private Cloud capabilities received significant enhancements centered on Azure Local, a hybrid cloud solution that allows businesses to run virtualized workloads on-premises while integrating with Azure services (including Azure Stack HCI).
The maximum scale of Azure Local is increasing dramatically from single clusters of up to 16 physical servers to support hundreds of servers, enabling customers with large-scale or growing sovereign workloads to run larger, more complex workloads while meeting security and sovereignty requirements.
To support performance-intensive, highly regulated workloads, Microsoft is also introducing a new Azure Local offering featuring the latest NVIDIA RTX Pro 6000 Blackwell Server Edition GPU, which is purpose-built for high-performance AI, enabling organizations to run over 1,000 models, such as GPT OSS, DeepSeek-V3, Mistral NeMo, and Llama 4 Maverick, directly within their sovereign private cloud environment.
Additionally, a benefit for operational flexibility is the introduction of Storage Area Network (SAN) support on Azure Local. This allows customers to securely connect their existing on-premises storage solutions to Azure Local, leveraging prior investments while benefiting from cloud-native services and ensuring data residency.
Addressing the most stringent compliance needs, Microsoft announced the general availability of Microsoft 365 Local starting in December, bringing core productivity workloads (Exchange, SharePoint, and Skype for Business Server) to Azure Local in a connected mode. Yet details are missing as a respondent on a Reddit thread comments:
As far as I know, they haven’t released any concrete technical details, but to me, the announcement sounded like “hey, do you remember Windows Small Business Server? We’ll do the same with maybe a M365 skin on top.” Hopefully they’ll tell more at Ignite 2025…
Looking ahead, the roadmap includes Data Guardian, an upcoming capability for the Sovereign Public Cloud that will route all remote access by Microsoft engineers to EU-based operators who can monitor and halt activities, enhancing transparency and control.
Finally, Microsoft is supporting its ecosystem with the official launch of the Digital Sovereignty specialization within the Microsoft AI Cloud Partner Program.
