The European Union’s approach to data sovereignty represents a comprehensive strategy balancing individual privacy rights with geopolitical and economic objectives. Centered on the General Data Protection Regulation (GDPR) since 2018, the EU has established stringent controls over data residency, cross-border transfers, and corporate accountability. Recent initiatives like the 2025 EuroStack framework and updated digital trade clauses underscore the bloc’s ambition to reduce foreign technological dependence while maintaining high data protection standards. However, regulatory fragmentation, enforcement consistency, and reconciling sovereignty with global data flows persist.
Legal basis in the GDPR
The GDPR anchors EU data sovereignty by asserting jurisdiction over all personal data related to EU residents, regardless of where it is processed. This extraterritorial scope compels global organizations to comply with requirements such as explicit consent, purpose limitation, and the “right to be forgotten.” Critically, Article 3 mandates that non-EU entities handling EU data appoint a representative within the bloc, ensuring accountability to European supervisory authorities.
Data localization rules under GDPR, while not explicitly requiring physical storage within the EU, create de facto sovereignty by prohibiting transfers to countries lacking “adequate” data protection frameworks. The invalidation of the EU-US Privacy Shield in the 2020 Schrems II ruling exemplifies this principle, as the Court of Justice of the European Union (CJEU) deemed US surveillance laws incompatible with EU rights.
EU policymakers frame data sovereignty as essential for reducing dependencforeign cloud providers and Big Tech firms. The 2025 EuroStack report advocates for a “European stack” of interoperable digital infrastructure, mirroring the strategic importance of the euro and single market. This initiative seeks to counterbalance the dominance of US and Chinese platforms by fostering homegrown alternatives in areas like cloud computing, AI governance, and quantum encryption.
Adopted in December 2022, the Path to the Digital Decade programme sets 2030 targets including:
- 100% online access to key public services
- 75% of EU enterprises using cloud/AI services
- A tenfold increase in EU-produced semiconductors
Complementing this, the 2023 Declaration on Digital Rights and Principles enshrines GDPR standards as fundamental rights, applying them uniformly across member states. Recent Council conclusions from October 2023 emphasize “digital empowerment” through enhanced cybersecurity capabilities and sovereign data spaces for sectors like healthcare.
Cross-border data flow management
The EU’s approach to cross-border data flows in trade agreements is exemplified by its use of “horizontal clauses,” which seek to balance economic openness with strict data protection standards. These clauses generally prohibit data localization requirements imposed by partner countries, ensuring that businesses can transfer data freely across borders without being forced to store it locally. However, the EU simultaneously preserves its regulatory autonomy by maintaining the high standards of the General Data Protection Regulation (GDPR). This is achieved through mechanisms such as Standard Contractual Clauses (SCCs), which provide legal safeguards for data transfers to third countries that may not offer equivalent levels of protection.
Despite this structured approach, geopolitical and legal tensions frequently emerge. For instance, former EU member states like the UK, after Brexit, have sought to establish their data governance frameworks, asserting sovereignty over domestic regulations. This divergence creates compliance complexities for multinational corporations that must navigate differing—and sometimes conflicting—data protection regimes. The challenge is further compounded when trading partners, including the US and other global economies, introduce their own rules that may not align with the EU’s stringent privacy protections, leading to ongoing negotiations and legal uncertainty in cross-border data management.
Despite GDPR harmonization, supplementary national laws like Germany’s BDSG and France’s Loi Informatique et Libertés create compliance complexities. A 2024 study found that 43% of multinationals face conflicting mandates when operating across multiple EU states.
Economic impacts on SMEs
Costs for GDPR compliance average €1.3 million annually for mid-sized firms, with data localization expenses accounting for 60% of budgets. Critics argue this disadvantages European startups against well-resourced foreign competitors.
Normative power projection
The GDPR has inspired similar laws in many countries including South Korea and Brazil, creating a de facto “Brussels Effect” in global data governance. However, the 2025 EuroStack shifts from regulatory influence to technological assertiveness, challenging US and Chinese tech hegemony.
The EU’s data sovereignty framework represents an unprecedented experiment in reconciling digital rights with strategic autonomy. While GDPR established global benchmarks, emerging initiatives like EuroStack reveal ambitions for technological self-sufficiency that may redefine Europe’s role in the digital economy. Success hinges on balancing regulatory rigor with innovation incentives, ensuring sovereignty measures enhance rather than isolate EU competitiveness. As cyber-physical infrastructures converge, the bloc’s ability to maintain unified standards across 27 member states will determine whether digital sovereignty becomes a catalyst for integration or a source of fragmentation.