Data localisation: The pros and cons

Puck, 28 September 2022

In the previous blog “Data Localisation: Infrastructure at Home” we looked at what data localisation means, and why more and more countries are adopting it.   

We also mentioned some of the difficult issues that have arisen when discussing the subject of data localisation. In this blog, we will list the most important pros and cons for you. 

Advantages and disadvantages  

The phenomenon of data localisation is not yet very widespread in the Netherlands – or even in the EU. There are no countries in the EU that have drawn up laws on data localisation; in terms of data, there is still free trade within the European Union. This is because in the EU there are stricter rules on data protection. There is less mistrust between them.   

This is not true for all countries. In other parts of the world, the rules concerning data security and privacy laws are different and perhaps more unclear. Therefore, it is impossible to say whether data localisation in its entirety is “good” or “bad”. For every advantage there is a disadvantage and vice-versa.   

For this reason, we have made an overview of the most important advantages and the corresponding disadvantages of data localisation as a global phenomenon. 

Advantages  Disadvantages  
Better availability:  
Once the data of our own citizens and companies is stored domestically, the data is also more readily available. This can make it easier for the government and intelligence services to access the data and detect criminal activities more quickly. Provided they have a good reason for doing so.  
Not all countries have such strict rules regarding privacy-sensitive information. There is unrest in some countries because the government does not inspire enough confidence in the proper handling of the privacy-sensitive data of citizens and companies. If these countries were to require companies to store data in their own country, this could cause more unrest.  
Physical availability:  
Localising data also means that the data becomes more physically accessible: after all, the servers are located in one”s own country. This is advantageous for companies, for example, because the datacenters – where the data is stored – are more physically accessible and therefore easier to maintain. There is better visibility on the physical security of the data.  
Building datacenters is not cost-free. Proper maintenance and monitoring of sensitive data can cost a lot of money. Money that some countries do not have. In addition, constructing datacentres requires a good internet connection, which is not equally available in all countries. These countries therefore benefit from being able to store their data elsewhere.  
By keeping data local, every company from that particular country has access to the same resources and a consistency is formed in terms of service that can be offered. This means that consumers do not have to worry about consistency in security of their data on different platforms.  
Establishing strict rules on keeping data local could have a negative effect on the openness of communication abroad. An openness that is especially important within the EU. It could therefore impede free trade and cause a blockage of information. 
If all data from one country, is stored in the same country, there is better supervision of data security. After all, all companies have to comply with the same requirements drawn up by that country in terms of digital and physical security.  
Technological developments:   
A company from a country where technological developments are not yet advanced can benefit from storing data externally. In this way, a company can choose where and how it stores and secures its data. This can be done by taking advantage of a better technology offering from another country. If laws are introduced to only store data locally, this will no longer be an option.   

All in all, the question of whether data localisation is good or bad is not so black and white. It can be beneficial for a prosperous country. But for a country with a technological backlog, it can only cause problems. For the time being, instituting strict rules and laws to keep data local does not seem like a good idea. However, localising your data without strict regulations can have advantages.  

Want to read more about Data localisation in the EU and the best infrastructure choice for your Dutch company? Read our blog “Data localisation in the EU: keeping your data local“. 

Puck Lamée

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