Developing countries battle Big Tech’s grip on global data

This article was originally published in Rest of World, which covers technology's impact outside the West.

A battle for data sovereignty is brewing from Africa to Asia.

Developing nations are challenging Big Tech's decades-long hold on global data by demanding that their citizens' information be stored locally. The move is driven by the realisation that countries have been giving away their most valuable resource for tech giants to build a trillion-dollar market capitalisation.

In April, Nigeria asked Google, Microsoft, and Amazon to set concrete deadlines for opening data centres in the country. Nigeria has been making this demand for about four years, but the companies have so far failed to fulfill their promises. Now, Nigeria has set up a working group with the companies to ensure that data is stored within its shores.

“We told them no more waivers – that we need a road map for when they are coming to Nigeria,” Kashifu Inuwa Abdullahi, director-general of Nigeria's technology regulator, the National Information Technology Development Agency, told Rest of World.

Other developing countries, including India, South Africa, and Vietnam, have also implemented similar rules demanding that companies store data locally. India's central bank requires payment companies to host financial data within the country, while Vietnam mandates that foreign telecommunications, e-commerce, and online payments providers establish local offices and keep user data within its shores for at least 24 months.

Amazon and Google declined to comment on the global challenges to their business model. In an email to Rest of World, Microsoft said it has deployed edge nodes in Nigeria to enhance local connectivity, reduce latency, and support data residency. “We are championing a collaborative, regionally integrated approach, working with governments to develop regional and pan-African frameworks that support secure cross-border data flows,” the email said.

Experts believe the pushback from governments underscores a broader awareness about the economics of data extraction. Countries that once welcomed foreign tech investment without conditions are now seeking concrete benefits for their nationals.

“More and more African countries, including the African Union, have come to the conclusion today that they feel like their data and the economic benefits that come from that data should flow back to the country,” Sharada Srinivasan, a Washington-based economist at the World Bank, told Rest of World. “The concern is that economic benefit only goes to big platforms that are often not located within that country.”

Most of the data gleaned from African internet users reportedly sits in data centres in Europe and the Middle East. Several African countries are now spending millions to build new data centres, using government money and international loans. The African Development Bank has become a major funder, seeing these projects as a means for digital independence, said Folashadé Soulé, a senior research associate at Oxford University's Blavatnik School of Government.

Among several ventures, Congo has received $77 million for Central Africa's first national data centre, and the African Development Bank has invested $52 million in a $60 million tech park in Cabo Verde. Africa50, a continental investment firm, has put $15 million into Egypt's Raya Data Center. The World Bank's International Finance Corporation has invested $100 million – its biggest investment yet in Africa – into Raxio Group, a data centre company with operations in at least six African countries, including Uganda, Angola, Côte d'Ivoire, and Ethiopia.

The working group started by Abdullahi in Nigeria aimed to expedite compliance and reach an agreement that the companies must either build their own facilities or help local Nigerian operators upgrade theirs and use those.

While the tech giants claimed local storage options weren't good enough, they failed to explain what improvements were needed, Abdullahi said. Nigeria officials saw this as a tactic designed to avoid expensive investments.

“They said co-locating with existing data centres would have been a great way to start, but the data centres didn't meet their requirements,” Abdullahi said. “So we told them to either invest in infrastructure to meet our sovereign needs, or we will shut them and use our local providers.”

While many African governments push for local data storage, this doesn't necessarily lead to better protection because foreign companies often remain the primary beneficiaries, creating a contradiction in digital sovereignty efforts.

“The prevalence of foreign technology firms in Africa, with their access to valuable user data, exposes African governments and citizens to data and national security vulnerabilities,” Soulé said.

Google, Amazon, and Microsoft have exploited weak laws in developing countries without giving anything back, University of South Africa professor Colin Thakuur told Rest of World. They took advantage of nations that didn't understand how valuable their citizens' information would become.

“Most of these international companies, which dominate data collection and housing globally, have exploited gaps in cyber laws to usurp data and sell it without consequence,” Thakuur said. “The push for data sovereignty, however, allows a country to reclaim and secure the intrinsic data related to its citizens and companies.”

Many developing countries have been too slow to update their laws as technology has advanced rapidly. Governments that failed to anticipate the internet boom are now scrambling to write new laws that can effectively govern the companies, Thakuur said.

“Nobody anticipated the success of the internet and social media and now AI,” he said. “Our challenge is that we, as a continent, are too slow to change our regulatory framework.”

South Africa is the only African country where Amazon, Microsoft, and Google have built their own data centres, adding to a market valued at $2.28 billion in 2023, according to market research firm Arizton Advisory & Intelligence. Owing to the “vast consumer market, the supportive regulatory environment for local data storage, and the dynamic technology sector,” the South African data centre market could attract investments of as much as $3.7 billion by 2029, the Chicago-based market researcher said in a report.

Microsoft recently promised to build a data centre in Kenya through a partnership with G42, the United Arab Emirates' leading AI and cloud computing company. Economic factors influence where tech companies choose to invest, Yousra Khayati, an investment director at Africa50, said.

“South Africa, for instance, has considerable infrastructure that meets requirements, especially in terms of fiber cable, which is the backbone of data storage,” Khayati told Rest of World. “Also, for most of these companies, South Africa represents their biggest market in terms of revenue and service demand.”

Nigeria and other African countries face obstacles in attracting major investment, as they have to prove they have stable laws, good infrastructure, and enough business to make expensive data centres profitable, said Bruce Ayonote, founder and CEO of Abuja-based cloud service provider Suburban Cloud.

“Nigeria's demand is still fragmented by uncertainty around enforcement, cross-border data transfer rules, and incentives for localisation,” Ayonote told Rest of World. “Without clear, stable regulations, global firms remain cautious.”

In recent years, high-grade data centres of companies like MainOne, Open Access Data Centres, Rack Centre, and Galaxy Backbone, as well as Chinese tech giant Huawei, have emerged in Nigerian cities, meeting international standards for reliability and security. These facilities now serve banks, telecommunications companies, and financial technology firms that need fast, local hosting services.

This month, MTN, Africa's biggest telecommunication company, launched what it described as West Africa's biggest data centre and a cloud service to rival Amazon, Google, and Microsoft. The project is worth $235 million.

Demand for local cloud services is growing due to the high cost of international providers and increasing awareness about data sovereignty.

“Nigeria is making steady progress toward achieving data sovereignty, but its current data centre capacity is not yet fully efficient or widespread enough to support it at scale,” Ayonote said.

Damilare Dosunmu is a reporter for Rest of World covering Africa's tech scene. He is based in Lagos, Nigeria.

This article was originally published in Rest of World, which covers technology's impact outside the West.

Source: Scroll
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