The Digital Sovereignty Dilemma

Microsoft's Role in New Zealand's Tech

Balancing Sovereignty and Global

Defining Digital Sovereignty

The Cost of Sovereignty and Global Benefits

AI and Cybersecurity Challenges

The Future of AI in New Zealand

Navigating Cloud Security and Data Protection

New Zealand's Digital Sovereignty Position

Advice for Business Leaders

Key Takeaways on Digital Sovereignty

New Zealand runs on American technology. But what happens when the country behind those platforms starts looking like a less dependable partner?

That question hangs over the latest episode of The Business of Tech, as Microsoft faces growing pressure to give governments and businesses more control over the systems they rely on.

My guests are Lewis Mills, Microsoft New Zealand’s Corporate Affairs Director and Special Counsel for National Security, and Blake Herzinger, Microsoft Asia’s Defence and National Security Government Affairs Lead. 

Both recently participated in the Aspen Institute’s national security forum in Queenstown, where cybersecurity and public-private cooperation featured prominently.

The sovereignty debate is no longer just about where data sits. It’s about who can access it, which laws apply, and whether essential services can keep running when a supplier, network or international relationship comes under strain.

Microsoft is adapting. Its Sovereign Private Cloud offering, built on Azure Local, brings selected cloud capabilities onto customer-controlled infrastructure. Disconnected deployments can operate without a connection to Microsoft’s public cloud, moving the management layer inside the customer’s own environment.

Control, security and resilience

That offers more control. It doesn’t necessarily mean less dependence on Microsoft.

That distinction is drawing more attention as organisations weigh the benefits of global platforms against concerns about foreign jurisdiction, supplier concentration and geopolitical disruption.

Mills defines digital sovereignty around control, security and resilience. But those priorities can compete. Keeping infrastructure close may strengthen direct oversight, while using geographically dispersed cloud services can help organisations recover when disaster strikes locally. In an earthquake-prone nation, having offshore options could represent a digital lifeline.

Herzinger likens the choices to the sliders on a DJ’s mixing desk: turning one setting up can force compromises elsewhere.

Rebuilding everything locally carries a formidable price tag. 

“If you want to spend, you know, two per cent of GDP, you could build a completely domestic AI technology stack, but very few governments are going to be able to achieve that,” Herzinger told me.

It underlines the scale of the challenge.

In the episode, I press the pair on US government access to data, the risks of relying on hyperscalers, and what sovereign AI could realistically mean for a small economy. 

The answer isn’t simply to bring everything home or to double down on public cloud platforms.

It’s deciding which dependencies we can live with, which controls we need, and whether we have credible options when circumstances change.

Listen to this episode of The Business of Tech, streaming on iHeartRadio, Apple, Spotify or wherever you get your podcasts.

New Zealand runs on American technology. But what happens when the country behind those platforms starts looking like a less dependable partner?
That question hangs over the latest episode of The Business of Tech, as Microsoft faces growing pressure to give governments and businesses more control over the systems they rely on.
My guests are Lewis Mills, Microsoft New Zealand&rsquo;s Corporate Affairs Director and Special Counsel for National Security, and Blake Herzinger, Microsoft Asia&rsquo;s Defence and National Security Government Affairs Lead.&nbsp;
Both recently participated in the Aspen Institute&rsquo;s national security forum in Queenstown, where cybersecurity and public-private cooperation featured prominently.
The sovereignty debate is no longer just about where data sits. It&rsquo;s about who can access it, which laws apply, and whether essential services can keep running when a supplier, network or international relationship comes under strain.
Microsoft is adapting. Its <a href="https://blogs.microsoft.com/blog/2026/10/20/advancing-digital-sovereignty-with-greater-control-and-choice/">Sovereign Private Cloud offering</a>, built on Azure Local, brings selected cloud capabilities onto customer-controlled infrastructure. Disconnected deployments can operate without a connection to Microsoft&rsquo;s public cloud, moving the management layer inside the customer&rsquo;s own environment.
Control, security and resilience
That offers more control. It doesn&rsquo;t necessarily mean less dependence on Microsoft.
That distinction is drawing more attention as organisations weigh the benefits of global platforms against concerns about foreign jurisdiction, supplier concentration and geopolitical disruption.
Mills defines digital sovereignty around control, security and resilience. But those priorities can compete. Keeping infrastructure close may strengthen direct oversight, while using geographically dispersed cloud services can help organisations recover when disaster strikes locally. In an earthquake-prone nation, having offshore options could represent a digital lifeline.
Herzinger likens the choices to the sliders on a DJ&rsquo;s mixing desk: turning one setting up can force compromises elsewhere.
Rebuilding everything locally carries a formidable price tag.&nbsp;
&ldquo;If you want to spend, you know, two per cent of GDP, you could build a completely domestic AI technology stack, but very few governments are going to be able to achieve that,&rdquo; Herzinger told me.
It underlines the scale of the challenge.
In the episode, I press the pair on US government access to data, the risks of relying on hyperscalers, and what sovereign AI could realistically mean for a small economy.&nbsp;
The answer isn&rsquo;t simply to bring everything home or to double down on public cloud platforms.
It&rsquo;s deciding which dependencies we can live with, which controls we need, and whether we have credible options when circumstances change.
Listen to this episode of The Business of Tech, streaming on iHeartRadio, Apple, Spotify or wherever you get your podcasts.

The Business of Tech, hosted by leading tech journalist Peter Griffin. Every week they take a deep dive into emerging technology and news from the sector to help guide the important decisions all Business leaders make.

Issues such as cybersecurity, retaining trust after a cyberattack, business IT needs, purchasing SaaS tools and more.

New Episodes out every Thursday. Follow or subscribe to get it delivered straight to your favourite podcatcher.

@petergnz

@businessdesk_nz

Proudly sponsored by 2degrees Business!

 

The Business of Tech, hosted by leading tech journalist Peter Griffin. Every week they take a deep dive into emerging technology and news from the sector to help guide the important decisions all Business leaders make.
Issues such as cybersecurity, retaining trust after a cyberattack, business IT needs, purchasing SaaS tools and more.
New Episodes out every Thursday. Follow or subscribe to get it delivered straight to your favourite podcatcher.
@petergnz
@businessdesk_nz
Proudly sponsored by 2degrees Business!
&nbsp;

The Business of Tech

Digital sovereignty, Microsoft-style

https://api.omny.fm/orgs/7784f840-c291-422a-924b-ad9000bbad71/clips/5405f77f-7f11-42a2-bb05-b4f70188d919/transcript