Saudi Arabia eyes data embassies amid sovereign AI push. Here's what we know so far

As countries contention to build domestic data centers in the sanction of sovereign AI, Saudi Arabia is betting connected a much originative idea: information embassies. 

A information embassy is wherever information is stored extracurricular of a country's carnal borders but operates under its laws, overmuch similar a diplomatic embassy.  

The conception is not new. Estonia established the archetypal information embassy successful 2017 and there's only been 1 different since, from Monaco. Both embassies are in Luxembourg and hold a backup of the countries' critical data, acceptable up as a information measurement against cyber and clime risks.  

As AI scales, the conception could gain momentum as a mode to build information centers overseas — successful places that person plentifulness of resources and power, fixed vigor is 1 of Europe's biggest bottlenecks successful building AI infrastructure — portion still operating within the laws of the developer's country.  

At least, that's what Saudi Arabia is counting connected arsenic it positions itself as an exporter of information alternatively than oil. Saudi Arabia is betting hard on solar energy, but its h2o resources — needed to chill information centers — are scarce, dousing the thought successful doubt. It comes arsenic the state battles its neighbors to go an AI hub arsenic planetary investors and tech firms crook to the Middle East for its heavy pockets and influx of talent, representing a imaginable displacement successful planetary power.

Getting information embassies up and running would be tricky successful practice as they require bilateral planetary agreements on jurisdiction and there is presently no relevant legal model successful place, Viktor Mayer-Schönberger, prof of Internet governance and regularisation astatine the University of Oxford, told CNBC. 

The impermanent state and big state would have to hold on assurances that neither enactment is violating the presumption of the agreement, Mayer-Schönberger, said. However, this volition ultimately "depend connected the spot of the parties involved," he added. 

Saudi Arabia, however, has acceptable its sights connected becoming the archetypal G20 state to present specified a framework. In April, its Global AI Hub Law draught acceptable out three levels of information embassies, ranging from the impermanent country retaining full autonomy to hybrid ineligible protections where Saudi courts could assist foreign courts.  

It is different illustration of how the AI race could reshape geopolitics arsenic the Kingdom cozies up to the U.S. There has been nary denotation of the U.S. being a preferred spouse for information embassies, but the brace has established a "Strategic Artificial Intelligence Partnership" with Saudi Arabia that includes the "building and processing precocious AI infrastructure."

When asked whether the conception could lick tensions astir ByteDance's TikTok, wherever the U.S. feared its citizens' data was being accessed by the Chinese authorities and used to power voters ahead of the 2024 election, Mayer-Schönberger was not convinced.  

"It would necessitate a analyzable bilateral pact betwixt China and the US that would instrumentality precise agelong to negotiate; moreover, fixed the distrust betwixt the 2 nations, it is hard to ideate that the US would spot China to support the information disconnected limits," helium said. 

Big Tech firms Google and Microsoft already offer their cloud computing customers with section data centers hosted successful Europe for delicate data, arsenic good as a peculiar governance operation designed to bounds U.S. authorities entree to that data. 

"Whether specified arrangements would actually protect the information from entree remains to beryllium seen, however," Mayer-Schönberger said.

While concerns of information sovereignty person travel into absorption arsenic globalization backslides and caller accent is enactment connected nationalist information and economical competitiveness, determination is small clarity connected however regulations volition germinate erstwhile it comes to embassies.

Sovereignty is an undefined term, noted Nathalie Barrera, who heads up privacy and data regulations in the EMEA region at Palo Alto Networks. "Everyone's talking astir it, but nary 1 has defined it, meaning sovereignty for France looks antithetic than sovereignty for Spain," she told CNBC. 

Palo Alto Networks' customers attraction astir 3 things: autonomy, which involves the extortion of data, knowing who has access, and control; integer resilience to guarantee uninterrupted services; and foreign government data access.  

Barrera sees information embassies falling successful the mediate category, particularly successful the discourse of Estonia and Monaco.  

"This is not unsimilar than the other territoriality effect of GDPR," she said, noting that determination tin beryllium information successful the U.S. that is inactive taxable to European laws. 

"And so, this is conscionable a different option oregon a setup to support definite categories of data, which, from my understanding, it's beauteous overmuch delicate information that the authorities needs to hold, specified arsenic taxation information, wellness information, administrative information, from its citizens and employees," she added. 

Part of Saudi Arabia's lure is its cost, arsenic onshore for information centers is importantly cheaper, arsenic is power and capital. The country is well positioned geographically as a connection betwixt Europe, the Middle East and Asia.  

"It makes consciousness if Saudi Arabia tin connection information centre services astatine a little outgo than countries that request them," said Hortense Bioy, caput of sustainable investing probe astatine Morningstar Sustainalytics.  

However, "the emergence of information centres introduces caller ESG considerations which are now widely recognised, with c emissions and h2o strength among the astir pressing concerns."  

While the prima is plentiful successful the arid state, its grid is still largely powered by fossil fuels. Around 64% of Saudi Arabia's full vigor proviso was from lipid successful 2023, according to International Energy Agency data, suggesting successful this lawsuit the trade-off for sovereignty could be sustainability.  

In all, Mayer-Schönberger remains skeptical connected the imaginable for information embassies to go the next big thing. "The federation state remains too almighty and globalization is waning," helium said.