Cloud services and global IT platforms have become indispensable for nearly every company today. At the same time, uncertainty is growing about how far-reaching laws such as the US CLOUD Act can interfere with the data sovereignty of European and international companies. While public discussions often focus on technical questions such as server locations, the real risks lie much deeper especially in legal and organizational areas.
This article examines how the CLOUD Act specifically affects national and international companies, why organizations may find themselves caught in a legal dilemma, and which measures are now necessary to sustainably reduce compliance and business risks a topic that has increasingly been discussed in recent months, including in analyses by Heise and Tagesschau.
1. The CLOUD Act does not only affect US companies but any company with a US connection
The CLOUD Act obliges US providers to disclose data upon order regardless of the country in which the data is stored. Several legal analyses have confirmed that this extraterritorial effect is real, including the Stiftung Datenschutz, which points out that US companies like Microsoft “cannot rule out” access by US authorities even when data is stored in European data centers.
This means that even the following are sufficient:
- a US parent company,
- a corporate structure with relevant US presence,
- or the use of services that are contractually or technically connected with US companies,
to fall under the scope of the CLOUD Act.
Heise emphasizes that many European companies have long underestimated the impact mainly because the physical server location within the EU is not a reliable protection against US access.
2. National companies: Risks from dependence on US technology
Even companies without international locations face risks when they use US-based or US-controlled services.
2.1 Conflicts with GDPR and industry specific regulations
Because the GDPR requires an “essentially equivalent level of protection,” forced data access by US authorities may lead to compliance violations. Tagesschau points out in contributions on digital sovereignty that the EU has repeatedly tried to mitigate such conflicts, but without a complete solution so far.
For nationally operating companies, this means:
- They may be caught between two legal systems if they rely on US technologies.
2.2 Risks in customer relationships and procurement processes
Public-sector clients and critical infrastructure operators increasingly demand transparency regarding access risks. This has been highlighted in several industry reports, including discussions on digital independence in the EU (Tagesschau).
Companies that cannot meet these requirements risk:
- exclusion from tender processes,
- loss of trust,
- or regulatory inquiries.
2.3 Hidden risks from standard applications
Many companies underestimate that even everyday tools e.g., CRM systems, ticket systems, video conferencing solutions may be affected by the CLOUD Act. Heise describes this “invisible dependency” as one of the biggest operational risks for European companies.
3. International companies: Multidimensional risk due to multiple legal frameworks
For internationally operating organizations, additional complexities arise.
3.1 Jurisdiction conflicts
International companies can easily end up in situations where:
- EU law demands the protection of data,
- while US law demands access to the same data.
According to analyses by the Stiftung Datenschutz, such conflicts often cannot be resolved simply through contracts or standard contractual clauses.
3.2 Complexity of global data flows
Global companies often have:
- international subsidiaries,
- interconnected production systems,
- worldwide customer journeys,
- cross-location IT infrastructures.
Even a single US-based cloud service can influence the compliance risks of an entire corporation.
3.3 Reputational and market consequences
From an economic journalism perspective (e.g., Tagesschau, business sections), data access by US authorities can lead to significant reputational damage especially for financial institutions, healthcare providers, or public sector contractors.
4. Why technical measures alone are not sufficient
Several major providers promote concepts such as “EU Data Boundary” or sovereign subcontractors. Yet according to Spiegel (report on Microsoft 2023), the company explicitly stated to European committees that even with outsourced data centers, complete protection from US access cannot be guaranteed.
Data-protection experts including the Stiftung Datenschutz emphasize that while technical architecture measures such as encryption are important, they cannot fully prevent legal access capabilities.
5. What companies must do now Governance over technology
Although technical architecture decisions remain important, it is becoming increasingly clear that dealing with the CLOUD Act is primarily a governance and risk management task.
5.1 Risk classification of all used services
Companies must transparently document:
- Which providers fall under US jurisdiction
- Which data categories are processed
- Which regulatory requirements apply
Heise recommends systematic Transfer Impact Assessments for this purpose.
5.2 Establish a data governance framework
A professional governance model includes:
- clear roles (CIO, CISO, Data Protection, Legal)
- clear guidelines for selecting cloud providers
- transparency regarding data flows
- monitoring and audits
5.3 Contract and supply chain assurance
Companies should ensure that providers:
- report authority access requests,
- disclose the scope of such requests,
- support technical and organizational safeguards,
- provide exit scenarios.
These points are often missing in standard contracts a risk also emphasized by public sources such as Tagesschau in the context of digital independence.
5.4 Evaluate strategic alternatives
Organizations with high regulatory requirements should consider:
- EU-based cloud providers,
- sovereign cloud concepts,
- hybrid data zones,
- stronger separation of critical and non-critical workloads.
The European debate on digital sovereignty shows that many companies are already preparing such strategies (Tagesschau, Heise, EU Commission reports).
Conclusion: The CLOUD Act is a business risk not just an IT issue
The CLOUD Act is not a technical detail but a strategic risk factor for every company. Whether national or international what matters is not where data is stored, but which legal system the provider belongs to.
For companies, this means:
A modern cloud strategy must be not only high performing, but also legally secure, governance-oriented, and geopolitically aware.
MeJuvante.ai supports organizations in making precisely these decisions with a systematic approach to risk analysis, governance design, and sovereign data architecture.