Microsoft CEO: AI sovereignty isn't where it runs, it's who controls it
- Reference: 1768995924
- News link: https://www.theregister.co.uk/2026/01/21/nadella_ai_sovereignty_wef/
- Source link:
In a [1]chat with BlackRock CEO Larry Fink at the Davos World Economic Forum, SatNad argued that corporate AI sovereignty hinges on control over models trained on proprietary knowledge, not the physcial infrastructure location.
Top companies ground Microsoft Copilot over data governance concerns [2]READ MORE
"If you're not able to embed the tacit knowledge of the firm in a set of weights in a model that you control, by definition you have no sovereignty. That means you're leaking enterprise value to some model somewhere."
He added: "In fact, the datacenter, where it runs, is the least important thing."
"In the AI era, the topic that's least talked about, but I feel will be most talked about in this calendar year, will be the sovereignty of a firm," Nadella continued.
[3]
The reframing follows Microsoft's struggles with traditional data sovereignty. The software and cloud biz's [4]EU data boundary – intended to assuage European customers' concerns over dependency on a US-owned entity – [5]cannot guarantee protection against US government access demands.
[6]OpenAI will try to guess your age before ChatGPT gets spicy
[7]Anthropic CEO: Selling H200s to China is like giving nukes to North Korea
[8]Amazon CEO Andy Jassy goes wobbly on AI bubble possibility
[9]AI researchers map models to banish 'demon' persona
So it is better to advance the conversation to sovereignty in the AI era, where – according to Nadella – datacenter location is the least of an enterprise's worries. He said encryption would address sovereignty concerns with only the speed of light constraining datacenters placements.
That assumes sovereignty in the AI era is somehow different from digital sovereignty. A [10]paper published yesterday by the World Economic Forum described AI sovereignty as "the ability of economies to shape, deploy, and govern AI ecosystems in accordance with their own values, whilst ensuring strategic and operational control, flexibility, and, ultimately, resilience through a combination of localized investment and trusted international collaboration."
[11]
Nadella, however, moved beyond national needs and onto the sovereignty of a corporation, regardless of where it is sited. "There is comparative advantage in countries. There is comparative advantage in firms," he said.
"That needs to be preserved, even in the AI era. That's what'll give you real sovereignty."
[12]
Elsewhere in his discussion with Fink, Nadella delved into AI market dynamics and tackled the B word. He said a bubble would exist "if all we are talking about are the tech firms," noting the technology "depends on demand all over the world."
Weeks ago, the exec claimed it was time for the next stage of AI acceptance following the " [13]initial phase of discovery ." Microsoft has bet big on AI, via multibillion-dollar investments in OpenAI, squeezing generative AI into every part of its portfolio, and spending hundreds of billions on heavy-duty datacenter infrastructure. It has skin in this game. ®
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[1] https://www.youtube.com/live/NLsoEJ7WpZY
[2] https://www.theregister.com/2024/08/21/microsoft_ai_copilots/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aXEGOajWe42KKeGUy_92kQAAAY4&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.theregister.com/2025/03/03/microsoft_unveils_a_finalized_eu/
[5] https://www.theregister.com/2025/07/25/microsoft_admits_it_cannot_guarantee/
[6] https://www.theregister.com/2026/01/21/openai_bets_on_age_prediction/
[7] https://www.theregister.com/2026/01/20/anthropic_nvidia_china/
[8] https://www.theregister.com/2026/01/20/amazon_ceo_andy_jassy_ai_bubble/
[9] https://www.theregister.com/2026/01/20/ai_demon_vs_assistant/
[10] https://www.weforum.org/publications/rethinking-ai-sovereignty/
[11] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aXEGOajWe42KKeGUy_92kQAAAY4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[12] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_software/aiml&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aXEGOajWe42KKeGUy_92kQAAAY4&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[13] https://www.theregister.com/2026/01/02/microsoft_ceo_satya_nadella_calls/
[14] https://whitepapers.theregister.com/
I believe the US Supreme will disagree. After lawyers have enriched themselves by several hundred million.
How are those investments in Trump working out for you Nadella?
The mad orange king who you gave millions to, just to curry favour, is now single-handedly destroying trust between the US and Europe. European governments and businesses are finally waking up to the truth that the USA cannot be trusted.
Europe will move away from using your poisoned, data stealing systems. You will lose billions. I hope it destroys Microsoft.
Re: How are those investments in Trump working out for you Nadella?
Unfortunately, if you're shelling out for propping up the US economy by NVIDIA 's magic beans then European cloud income and outgoings are probably more like a rounding error.
From reading the article's title, I was hoping that Nadella had finally said the ugly truth - that you cannot have sovereignty over data hosted by a US company, no matter where the data is located.
Alas, no, it's just the usual meaningless AI hype.
Oopsie
So all this sovereignty mumbo jumbo (distinct legal entity, only EU passport holders allowed to work etc) is confirmed to be cope strategy for EU politicians who found themselves in the middle of a shit creek and without a paddle.
Well done.
Word salad from a CEO.
Who controls the hardware AND the software matters.
Exactly, the government in the US has legal control of the software and physical access to Cloud storage facilities. Both aspects require the hardware to be domiciled within the owner government (UK and the EU) with clear cut-outs for when the US is exercising/flexing it’s extraterritorial muscle.
Datacenter location in unimportant, until...
...a criminal orange tyrant orders USA entities to shut down access to EU/UK/wherever.
At that point, location is everything.
Re: Datacenter location in unimportant, until...
Exactly. Nadella is pushing this argument because... well, he would, wouldn't he? MS stands to lose a lot if overseas customers don't want to use their US datacentres.
As you say, it's disingenuous nonsense to suggest that location has nothing to do with data "sovereignty", because whoever's in charge where it's located can simply turn off your server or block access to it.
And- on top of that- how does encryption make things secure? That data is going to have to be decrypted to perform computations on it, at which point it's exposed, and the server is going to have to hold the keys regardless. Or if you're using the US server purely for data storage and plan to do the processing elsewhere... even if that's possible, isn't it likely to be pointlessly inefficient?
Datacenter location is the least of an enterprise's worries
After:
"Is this thing ever going to work reliably?"
"Who do we sue when the LLMs go doolally?"
And the ever-popular
"We are spending HOW much now?! How can we get out of this without losing face to the investors? Oh god, oh god, oh god, we're screwed, aren't we? Did I just say that part out loud?"
ROT13
So it is better to advance the conversation to sovereignty in the AI era, where – according to Nadella – datacenter location is the least of an enterprise's worries. He said encryption would address sovereignty concerns with only the speed of light constraining datacenters placements.
So encryption that MS has a copy of the key for will allow access to industry standard enterprise software written MS' patented spaghetti programming with dependencies across data centres worldwide and if you tickle Copilot in the right place it will spill anyone's secrets.
We really do need to get our data back under our control as soon as we can.
"Ehi! I'm spending hundrend of billions in bulding datacenters in US...."
"... now you're saying me you don't want to use them because of Trump??? It's because of Trump I'm buidling them in US!"
You can't trust anybody who bowed to Trumputin at Mar-a-Lago....
Its Both.
Sorry SatNad. Its both.
UK and EU locations and UK and EU IP.
American Corporations cannot be trusted now they are subordinate to the Orange Maniac and his cultists.
Does this guy ever know when to just, close is mouth hole.
Another use case for AI...
I know it's not really plausible, but if nailing itself to AI kills Microsoft, AI will finally have improved the world almost as much as its fans keep promising it will.
Sounds like an argument
For not using MS "AI" then.