US orders diplomats to fight data sovereignty rules

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A State Department cable signed by Secretary of State Marco Rubio on February 18 instructs U.S. diplomats to lobby against foreign “data sovereignty” and “data localization” rules that would restrict how American firms store and process foreigners’ personal data, according to Reuters. The cable argues such laws would disrupt global data flows, raise costs and cybersecurity risks, and constrain AI and cloud services.

The directive lands as governments from Europe to Asia try to pull sensitive datasets—health records, financial data, location histories—back under domestic jurisdiction, often by requiring local storage, limiting cross‑border transfers, or tightening consent and audit rules. Washington’s message, as described by Reuters, is that these controls are not merely regulatory choices but obstacles to U.S.-based AI services that depend on large, mobile pools of training and inference data. That turns embassies into a distributed lobbying network for Silicon Valley: a country that wants stricter rules is told it is also choosing higher prices, weaker innovation and—by the cable’s framing—more censorship.

The argument is politically neat because it collapses several tradeoffs into one. Data localization can create new attack surfaces and raise compliance costs, but it can also reduce exposure to foreign subpoenas, intelligence collection and commercial re-use. For smaller states, the question is less philosophical than contractual: if most cloud capacity, foundational AI models and developer platforms are American, then the “free flow of data” mainly means exporting raw material and importing finished products. Domestic regulators carry the blame for privacy breaches and critical‑infrastructure risk; the rent from scale—model performance, platform lock‑in, and margin—accrues elsewhere.

The cable also reflects a familiar escalation pattern in cross‑border tech disputes. When disagreements can no longer be resolved through standards bodies, trade talks or court challenges, they move into foreign policy. Embassies can apply pressure that private firms cannot: linking market access, security cooperation and diplomatic goodwill to the fine print of data governance. The same toolset that once pushed telecom choices and IP rules is now being used to shape where data sits and who can train on it.

The cable does not create new law. It does, however, formalize an expectation that U.S. diplomats will treat other countries’ privacy and security rulemaking as a negotiable obstacle to American AI competitiveness.