The Rise of Sovereign Clouds in the APAC Region

In July 2024, the Australian government made a significant move by investing AUD $2 billion (US $1.3 billion) in a strategic partnership with AWS to create a “Top Secret Cloud” for the government. This sovereign cloud initiative will provide a secure environment for Australia’s defence and national intelligence agencies to host their most sensitive information, enhance data sharing and analysis, and leverage emerging technologies like AI and ML.

This development reflects the growing trend of sovereign cloud adoption in the APAC region, especially in the public sector. According to Capgemini, around 48% of agencies in APAC are planning to incorporate cloud sovereignty into their strategies within the next year to address cybersecurity concerns and comply with data protection regulations.

Sovereign clouds are rapidly growing in the APAC region

The demand for sovereign cloud solutions in APAC is expanding at a rapid pace. IDC’s research indicates that 17% of government agencies in APAC are already using sovereign cloud services, with another 30% planning to adopt this technology by 2025.

In Australia, Capgemini’s study shows that 73% of organizations believe they will adopt cloud sovereignty to ensure compliance with government regulations. Moreover, 64% of Australian organizations are actively exploring sovereign cloud as part of their strategy.

What are the reasons for the sovereign cloud boom?

The surge in sovereign cloud solutions in APAC can be attributed to various factors:

• Geopolitical tensions: Rise in geopolitical uncertainties and foreign surveillance concerns.
• Infrastructure control: Desire for more autonomy over infrastructure and data security.
• Cybersecurity concerns: Growing threat landscape necessitates better data protection measures.
• Data protection regulations: Increasing number of nations enacting data protection laws.
• Economic benefits: Investments in sovereign clouds boost local digital economies.
• Low-latency processing: Need for localized data handling for efficient operations.

Hyperscaler cloud providers are investing in sovereign clouds

Leading cloud providers like AWS, Google Cloud, and Microsoft Azure are developing sovereign cloud services in the APAC region. IDC categorizes these offerings into dedicated sovereign cloud solutions and those designed with built-in sovereign controls from the outset.

According to IDC, organisations are seeking more options and features in the sovereign cloud market, a demand that vendors in the region are expected to address in the coming years as they establish their presence in this space.

Is the future of the cloud sovereign?

The future of cloud computing in APAC seems to be intertwined with sovereign cloud solutions. With the growing complexities of data regulations, sovereign clouds are set to play a crucial role in ensuring data sovereignty and compliance. Hyperscale cloud providers will likely lead the development of these solutions, working closely with local governments and tech ecosystems to meet the region’s evolving needs.