Microsoft gives European customers a clearer view of who reaches their data
On 20 October Microsoft announced new measures for customers in Europe. A European partner will watch over Microsoft engineers when they access systems remotely.
What happened
On 20 October in Paris, Microsoft announced new measures that give European customers a clearer view of who reaches their systems. Chief executive Satya Nadella presented them on Microsoft’s Frontier Tour; Douglas Phillips, who runs Microsoft’s specialised clouds, set out the details on the company blog.
The main one is called Data Guardian. When a Microsoft engineer needs remote access to certain production systems, a European partner with staff based in Europe oversees it. Microsoft does not say who the partner is or exactly which systems are covered. The Production Touch Ledger records who got in and what they did, in a way that cannot be changed unnoticed. Both apply to customers in the EU and EFTA (such as Norway and Switzerland) and are being rolled out in stages, with no dates given.
Customers can now keep the root key of their encryption in hardware they run themselves, in their own office or with a third party, as Microsoft promised last year. More can also run on a customer’s own servers. Foundry Local, for running AI models on your own hardware, even without an internet connection, becomes generally available at Microsoft’s Ignite conference. Microsoft 365 Local, with Exchange and SharePoint on your own servers, is in preview for approved customers.
Germany’s Gesellschaft für Informatik, a computing society, is critical, Heise reports: these are mostly extra contractual and technical controls on the surface, while the software and the cloud stay in American hands. In its view, laws such as the US CLOUD Act remain a legal risk, even when data is processed encrypted in Europe. Gartner analyst Ashish Banerjee told Computerworld: ‘I would not call this complete control.’ In his view, companies should check whether Microsoft still handles their sign-in, updates and management.
These are mostly extra contractual and technical controls on the surface. The software and the cloud itself stay in American hands.
The criticism of the German Gesellschaft für Informatik, via Heise, in short
The background
Watching the door or locking it
In a cloud, the provider’s engineers sometimes need access to production systems, for instance to fix a fault. Microsoft already had rules for that, such as access that only lasts for a limited time. Data Guardian adds an extra pair of eyes, and the ledger a log that cannot be altered unnoticed.
Encryption works differently: whoever holds the key can read the data. With the new option, the root key sits in a secure key vault of your own, a hardware security module (HSM), for example from Futurex, Thales or Utimaco, the manufacturers Microsoft worked with last year. It does mean managing it yourself: lose the key and you can no longer reach your own data either.
What came before
Microsoft first announced Data Guardian in June 2025, when it was to be run by its own staff living in Europe, who would approve access and watch in real time. Now that role goes to an outside European partner.
A year of growing doubt came first. In May 2025 the chief prosecutor of the International Criminal Court in The Hague lost access to his Microsoft email after US sanctions. Microsoft denies it stopped its services to the court, but a spokesperson said it had been talking to the court since February about cutting off the prosecutor. In June 2025 Microsoft France could not guarantee under oath before the French Senate that French citizens’ data would never go to the US government without consent, although it said this had never happened. And the Dutch tax office planned to move to Microsoft 365, but this autumn opted for Microsoft software on its own servers.
The CLOUD Act and the market
Under the CLOUD Act of 2018, US law enforcement can demand data from American companies, even when it is stored abroad. Microsoft commits in its contracts to challenge unfounded requests, but according to Microsoft France’s legal director it must comply with a valid order.
Switching is not easy. Amazon, Google and Microsoft together hold around 70% of the European cloud market, and European providers’ share has shrunk over the past decade.
Our analysis
Watching is not locking out: the real gain is in holding your own key
Microsoft is answering the doubts step by step: first storing data in Europe, then its own European staff keeping watch, now an outside partner, and alongside that Microsoft software on your own servers. Each step gives you more control, and each one leaves more for you to do.
Oversight and a log tell you afterwards who got in and what they did. They do not stop a US order served on Microsoft. Your own key helps more: stored data encrypted with a key Microsoft does not hold is, in principle, unreadable to Microsoft. But a service that works with your data has to be able to read it while it works. Our expectation: with AI in the cloud, your own key helps less than it seems, because a model has to read your email or document to summarise it. For anyone who wants to process sensitive data with AI, what matters most is therefore where the model runs: on an AI server in your own office, that data never leaves the building.
You need not go that far for everything. For most data, a big cloud with these extra controls is fine. For the most sensitive, you decide where the key lives and where the model runs. And with Data Guardian, ask who the partner is and which systems it covers before you rely on it.
What stands out
- The partner has no name yet Microsoft does not say which European company keeps watch or exactly which systems fall under Data Guardian. There is no date either.
- Microsoft is heading for your office too That Microsoft now offers AI on your own hardware shows that where a model runs is becoming an ordinary choice. Open models such as Mistral, Gemma and gpt-oss already run without the internet on an AI server in the office.
- The same route as the Dutch tax office Microsoft software on your own servers, the route the Dutch tax office chose, is called Microsoft 365 Local in Microsoft’s sovereign line-up. More than a year after it was announced, it is still a preview for approved customers.
- Sanctions and export rules apply too Analyst Pareekh Jain points out that Microsoft is bound by US laws, sanctions and export restrictions. The International Criminal Court case showed what that can mean.
What it means for you
If you use Microsoft’s cloud, you get a clearer view of who can reach your data, but the supplier is still American.
- More oversight, not less access Microsoft engineers can still reach systems. What is new is that a European partner watches and that it is recorded.
- American law still applies Critics point out that laws such as the US CLOUD Act still carry legal risks, even when your data is processed encrypted in Europe.
- Your key can now live outside Microsoft You can keep the root key on your own hardware, in your office or with a third party. That gives you more control, but you have to manage it yourself.
Where we come in · Advisory
We weigh up with you which AI suits which data
Which AI tool may handle which data? In a Discovery or Roadmap we work that out with you, independent of any supplier. Sometimes a big cloud is fine; sometimes an AI server in your own office fits better. We supply those too: an Apple Mac Studio, cut off from the internet, running open models such as Mistral, Gemma and gpt-oss.
Do you know which of your data sits in an American cloud?
Tell us what you are unsure about. We’ll think it through with you independently and always reply within one working day.
