Cloud sovereignty has quickly shifted from industry buzzword to boardroom priority. For highly regulated organizations, financial services, healthcare, government, and critical infrastructure, the central dilemma is clear: how do you leverage the speed and scale of the public cloud while maintaining control, compliance, and trust?
With new regulations such as NIS2 and DORA, combined with mounting geopolitical concerns, the question has never been more pressing: is Microsoft Azure “sovereign enough” for European organizations?
In this first part of our blog series From Concern to Control: An EU-Sovereign Azure Path, we unpack what “sovereignty” really means in practice. We’ll explore the EU Data Boundary, encryption and governance controls, and the gap between theory and provable compliance. In part two, we’ll zoom in on concrete mitigations and design patterns.
In February 2025, Microsoft completed the EU Data Boundary, committing to keep customer and personal data for Azure, Microsoft 365, Dynamics 365, and Power Platform within the EU/EFTA. Even support data and incident handling are now primarily processed EU-first.
That’s a major milestone, but not the end of the story. Certain exceptions remain, for example in global security operations and non-regional services, where data may still leave EU borders. And for compliance and audit teams, those exceptions represent uncertainty and risk.
With Microsoft for Sovereignty and the Sovereign Landing Zone (SLZ), organizations can lean on ready-to-use policy baselines that:
Still, the responsibility doesn’t shift away from the enterprise. Sovereignty isn’t “set it and forget it.” It requires consistent execution, deep architecture knowledge, and governance discipline.
Encryption remains the cornerstone of cloud compliance in Europe. Through Customer-Managed Keys (CMK) and Double Key Encryption (DKE), Microsoft cannot access plaintext data without explicit customer involvement.
When paired with Confidential Computing, where data remains encrypted even during processing, organizations can establish a zero-access model. This model not only limits operator exposure but also mitigates extraterritorial risks like the U.S. CLOUD Act.
Microsoft publishes detailed catalogs outlining:
Some examples:
For compliance teams, this level of transparency is critical. It allows enterprises to design geofenced architectures, avoid non-compliant services, and maintain audit-ready dataflow documentation.
Here’s the reality: Microsoft Azure now provides a strong foundation for cloud sovereignty in Europe. But without the right design patterns, governance controls, and documentation, the gap between “good enough” and provably compliant remains wide.
For regulated enterprises, bridging that gap means:
The takeaway is simple: Azure now delivers EU-ringfenced operations with enforceable, documentable controls. Where exceptions remain, organizations can design around them, keeping encryption keys within the EU, enforcing zero-access models, and ensuring no third country (including Microsoft itself) can access plaintext data.
For European enterprises, sovereignty doesn’t have to be a blocker. Done right, it becomes a design property, an enabler for both compliance and innovation.