AI Vocabulary · 02 AI Infrastructure
What is Data Residency?
Where your data is physically stored and processed. It is one part of data sovereignty.
Data residency answers a geographical question: in which country or region are the servers that store and process your data. Most cloud and AI providers let you choose a region. Data sovereignty goes further and asks whose law and whose control can reach the data.
Storage and processing can sit in different places. Microsoft's documentation for its AI platform states that stored data remains in the chosen geography, while in a global deployment prompts and answers may be processed wherever the model runs. A data zone deployment keeps processing within the US, the EU or Asia-Pacific.
Why it matters for you
Under the GDPR, personal data that leaves the EU needs a legal basis. A single deployment setting can move processing abroad even though storage stays in the EU.
Own it
Check storage and processing location separately for every AI service, record both in your data processing agreement and choose regional or data zone deployments for personal data.
Where it comes from
The deployment types are described in Microsoft's documentation Deployment types for Foundry Models (Microsoft Learn, read October 2026, vendor).
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