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AI and LLM Data Privacy and Data Sovereignty: Navigating the Challenges

AI and LLM Data Privacy and Data Sovereignty

From a business perspective, we now live in a world where artificial intelligence (AI) and large language models (LLMs) are reshaping how data is processed, insights are drawn, services are provided, and how these services are consumed. In short, the emergence of LLMs and the reinvigoration of AI generally have ignited change in the business landscape more rapidly than ever. This environment increases opportunity but also the volatility, uncertainty, complexity, and ambiguity of the enterprise business playing field. 

As we have all witnessed, AI and LLMs have significantly impacted our interactions with technology over the last few years. From chatbots to expert systems to content generation, LLMs (and Machine Learning tools, more generally) have become increasingly integrated into our daily and business lives. 

At the same time as this technology rapidly evolves, governments and public sector organizations are increasingly updating, creating, and rolling out legislative and compliance frameworks dealing specifically with data privacy, data ownership, and regulations regarding both the responsibility and the liability for the collection, usage, storage, and tracking of corporate and personal data.

As we embrace these technological advancements, crucial questions about data sovereignty and privacy are emerging, and forward-thinking enterprises that wish to leverage their market positions and strengths while also hedging against threats or weaknesses face a critical challenge: “How to harness the power of AI, LLMs, and Machine Learning while maintaining stringent data sovereignty and data controls.” 

AI & LLM - A Brief Perspective on the State of Data and the Current Data Dilemma

As enterprises rush to integrate AI and LLMs into their operations, many turn to popular solutions like OpenAI's ChatGPT or Hugging Face models. However, the associated AI and LLM services often come with significant data sovereignty concerns that pose risks for businesses with strict regulatory requirements or those with sensitive data.

For example, the two major players in the AI space mentioned above have been critically scrutinized for their data policies and practices.

OpenAI, the increasingly well-known company behind ChatGPT and other tools, has raised eyebrows with its data handling policies

According to their terms of use, user data may be transferred and stored across multiple jurisdictions, potentially exposing it - and anyone who pushes data into their platform - to varying levels of data protection laws. Moreover and perhaps more worrying, OpenAI reserves the right to share data with third parties, including service providers and government agencies, without necessarily obtaining explicit user consent or providing detailed disclosure of these practices.

Hugging Face, another prominent AI platform, faces similar challenges.

Their privacy policy indicates that personal information may be transferred globally, impacting data protection and control strategies and practices due to differing laws across jurisdictions. The company also shares user information with affiliates and third-party service providers, though they claim to ensure confidentiality. However, the specifics of these arrangements and the jurisdictions involved seem to lack transparency.

Both of these platforms have provisions for data transfer in the event of a merger, acquisition, or sale of company assets, which raises even more significant concerns about long-term data sovereignty, as new entities may not adhere to the same privacy standards or may be subject to different data protection laws which are either more stringent or more lax.

For enterprises, these policies and practices create significant regulatory, compliance, reporting, security, and commercial risks - especially those operating in regulated industries or handling sensitive data.

Enterprise AI & LLM: The Imperative for Data Sovereignty

At, we have always emphasized the critical importance of data sovereignty—especially for organizations with stringent data protection requirements—even before we worked to extend our platform and service offering to cover LLMs, Machine Learning, and AI hosting.

It is a very different situation if your data is stored in Switzerland, Germany, or the U.S. Consumers and enterprises want to ensure that their data is only used for approved purposes.

Michael Schmid

Michel Schmid, Head of Technology and Co-founder,

This observation highlights’s experience operating with the vast differences in data laws across countries and notes the potential implications for enterprise data security and compliance. In short, for enterprises, a deep and operationally clear level of control is not just desirable - it's more often actually a legal, commercial, or regulatory requirement.

Enterprise AI & LLM: The Imperative for Data Sovereignty

Investing in a Data Sovereign LLM, Machine Learning, and AI Hosting Platform

At, we actively work with our enterprise customers, who increasingly recognize the need to invest in the AI revolution and undertake it responsibly, data-sovereignly, and regulatory-aligned. 

Starting this journey with a strategic approach from the outset offers several key advantages:

  • Compliance Assurance: By hosting AI models and data within controlled environments, enterprises can ensure compliance with region-specific regulations like GDPR, HIPAA, or industry-specific requirements.
  • Data Control: Organizations maintain full control over their data, including how it's used, stored, and processed, mitigating risks associated with third-party data handling.
  • Customization and Risk Mitigation: Enterprises can tailor AI models to their specific needs and data sets, potentially improving accuracy, performance, and relevance. Additionally, controlling the underlying data and systems provides opportunities to hedge against LLM-based systems known to hallucinate answers or suggest “creative” solutions that are not in the business’s best interest.
  • Long-term Stability: By owning the infrastructure and models, companies are insulated from sudden changes in third-party policies or potential service discontinuations.

Embracing Open Source in Enterprise AI & LLM

Open source LLMs and AI frameworks are emerging as powerful solutions for enterprises seeking the type of data privacy and sovereignty we have discussed. is investing in extensions to our open source Platform-as-a-Service (PaaS) to simplify the adoption, development, delivery, and operation of these open source tools.

Some reasons why organizations should consider an open source based platform and approach include:

  • Transparency: Open source code allows for thorough security audits and compliance checks, which is crucial for regulated industries.
  • Flexibility: Enterprises can modify and adapt open source models to fit their specific use cases and data protection requirements.
  • Community Support: A global community of developers continually improves these models, often addressing security issues faster than with proprietary solutions.
  • Cost-Effectiveness: While initial setup may require investment, open source solutions can offer long-term cost savings compared to subscription-based proprietary services.
  • Innovation Potential: By contributing to and benefiting from open source projects, enterprises can stay at the forefront of AI and LLM advancements.

Practical Steps for Enterprises Looking to Embrace an Open Source Data Sovereign AI Approach

  • Assess Your Data Sovereignty Needs: Understand your regulatory environment and internal data protection requirements.
  • Explore Open Source LLMs: Investigate the most recent models that offer enterprise-grade capabilities while allowing for on-premises hosting.
  • Build Expertise: Invest in training your team or partnering with experts who can manage and customize open source AI solutions.

In Conclusion

As LLMs, Machine Learning, and AI become more and more central to business operations and innovation strategies, enterprises with significant data privacy and sovereignty requirements (both now and into the near future) must chart a careful course regarding platform and tool selection. By investing in data sovereign AI tools and hosting platforms - and embracing open source approaches generally - forward-thinking organizations can harness the power of AI while maintaining a risk-adjusted technical footing with a focus on strict control of their data.

This approach not only ensures compliance and security but also positions enterprises at the forefront of this innovation environment. As the AI landscape evolves, those who take control of their AI infrastructure today will be best positioned to leverage these powerful technologies while safeguarding their most valuable asset: their data.

While the journey towards data sovereign AI may seem complex, enterprises serious about innovation and data protection can reach out to us to leverage our data sovereign platform and our team’s deep experience with hosting and meeting enterprise data sovereignty requirements.


Q: What are the risks of using popular AI and LLM services like ChatGPT or Hugging Face models for businesses?

A: These services may not guarantee data sovereignty. Your data could be stored in locations with weaker data protection laws and potentially shared with third parties without your explicit consent. This can create regulatory and security risks, especially for businesses in regulated industries or handling sensitive data.

Q: Why is data sovereignty so crucial for enterprises using AI and LLMs?

A: Data sovereignty allows businesses to maintain control over their data, ensuring compliance with regional regulations like GDPR or HIPAA. It also mitigates risks associated with third-party data handling and enables customization of AI models for better accuracy and risk reduction.

Contact us if you have any additional questions.