Cloud Act, Patriot Act and foreign interference

TL;DR

• - The Patriot Act (2001) and especially the CLOUD Act (2018) give US authorities extraterritorial access to data hosted by American companies, regardless of where that data is physically stored.
• - This means that data hosted in Quebec on Microsoft, Google or Amazon servers can legally be accessed by the US government without even going through Canadian courts.
• - Quebec (via Law 25) now requires companies to assess risks before any data transfer outside the province and prohibits transfers if legal protections are not equivalent.
• - Quiet negotiations are underway between Ottawa and Washington to allow direct, reciprocal data access (a bilateral CLOUD Act agreement), which could weaken the protections offered by the Canadian Charter.
• - China, Russia and other countries also impose extraterritorial laws or collaboration obligations on companies, increasing the risk of interference through foreign technologies.
• - Even without foreign hosting, Canadian internet traffic often passes through the United States, exposing communications to NSA surveillance.
• - For Quebec businesses, it''s urgent to regain control of sensitive data by: hosting locally with providers under Canadian or Quebec jurisdiction; keeping the only copy of encryption keys (Bring Your Own Key); actively governing encryption (inventory, rotation, off-cloud storage); and demanding transparent contractual clauses on data location and access.
• - Hosting locally with providers under Canadian or Quebec jurisdiction;
• - Keeping the only copy of the encryption keys (Bring Your Own Key);
• - Actively governing encryption (inventory, rotation, off-cloud storage);
• - Demanding transparent contractual clauses on data location and access.
• - In Europe, France, Germany and other countries are developing sovereign clouds (GAIA-X, Cloud Bleu) and rejecting providers that do not comply with the GDPR.
• - Canada has been slow to respond, but grassroots and provincial initiatives (particularly in Quebec) show that a more sovereign path is possible.

Intro

Digital sovereignty—sometimes called data sovereignty—is defined as ''the principle whereby data is subject to the laws and regulations of the country where it is produced, processed or stored.'' It seeks to ensure that a state’s (or organization’s) sensitive information remains protected by its own legal framework. Yet for years, Canada (and Quebec in particular) has been massively dependent on foreign cloud infrastructures and services, especially American ones. This situation raises critical issues: when our data passes through or is hosted abroad, it becomes subject to examination by foreign governments under their national laws, threatening our privacy and collective digital security. In this article, we dive deep into two emblematic U.S. laws—the USA Patriot Act and the CLOUD Act—as well as other forms of foreign interference to understand their impacts on Quebec and Canadian digital sovereignty. We place special emphasis on the importance of strong encryption governance and judicious choice of hosting providers in order to keep exclusive control of our encryption keys and protect our sensitive data.

The Patriot Act: surveillance reaching beyond borders

Adopted in the wake of September 11, 2001, the USA Patriot Act greatly expanded the U.S. government’s surveillance powers. This federal law allows U.S. agencies (such as the FBI, NSA or CIA) to access a wide range of data held by companies in the United States—without the individuals’ consent or prior judicial authorization. More importantly, its provisions also apply to foreign subsidiaries of American companies: a U.S. company operating in Canada or elsewhere is obliged, if ordered, to provide access to its servers even if local laws would normally prohibit it. In other words, if a Canadian business entrusts the storage of its information to an American giant (Microsoft, Google, Amazon, etc.), that data could be turned over to U.S. authorities under the Patriot Act, potentially without the knowledge of those concerned.

This extraterritoriality has sparked major concerns around the world. As early as the 2000s, data protection experts advised against storing personal information in U.S. clouds, anticipating the conflict between the Patriot Act and other countries’ privacy laws. In Europe, for example, the use of American cloud services was deemed risky under the General Data Protection Regulation (GDPR)—a risk heightened after the Privacy Shield was invalidated in 2020, leaving no clear legal framework for transferring personal data to the U.S. In Canada, similar fears emerged about the Patriot Act’s compatibility with privacy protection standards. The province of Quebec has adopted a major reform (Law 25, formerly Bill 64) to modernize its personal data protection law, partly to counter this type of threat: as of September 2023, storing Quebecers’ personal information in data centers located in the U.S. is no longer permitted without a thorough risk assessment. In practice, Quebec’s new rules—modeled on the European approach—require organizations to determine whether the destination country offers protections comparable to those of Quebec before any external transfer. Without sufficient guarantees, storing sensitive data on U.S. soil could be considered non-compliant with Quebec companies’ obligations given the largely unilateral access powers granted by the Patriot Act.

The CLOUD Act: extraterritoriality of cloud data made explicit

While the Patriot Act triggered concerns about foreign access to data, a more recent law, the CLOUD Act (Clarifying Lawful Overseas Use of Data Act, 2018), formalized and extended the principle. The CLOUD Act explicitly gives the U.S. government the power to obtain digital data from any tech company under U.S. jurisdiction, regardless of where that data is stored. In other words, the physical location of servers no longer protects data from the reach of U.S. law: if the data is under the control of a company incorporated in the United States (or one of its subsidiaries), a U.S. warrant or order can compel the company to turn that information over to American authorities. As one expert summarized, ''a provision of the CLOUD Act requires any company incorporated in the United States ... to disclose to U.S. authorities the data it controls on request, regardless of where that data is stored.'' This means, for example, that an email saved on a server in Quebec is not safe: if it’s hosted by Microsoft, Google, Amazon or another U.S. provider, it could be legally accessible to U.S. investigators via the CLOUD Act without Canadian courts having any say.

The CLOUD Act was adopted in part to resolve legal battles over extracting data stored abroad. Before 2018, companies could refuse to provide content stored outside the United States by invoking territoriality (as Microsoft did when asked for emails hosted in Ireland). Now, the law states that ''access to data follows the company that holds it rather than the location of the information.'' In practice, the CLOUD Act bypasses traditional mutual legal assistance channels between countries: instead of going through a treaty and local courts (the often lengthy MLAT process), U.S. authorities can send requests directly to online service providers. This approach streamlines access for U.S. law enforcement, but it raises sovereignty issues for other nations, including Canada.

Controversial negotiations with Canada

Notably, since 2022 the Canadian government has been holding quiet negotiations with Washington to conclude a bilateral agreement under the CLOUD Act. If signed, this agreement would establish a data-sharing regime between the two countries: it would allow U.S. law enforcement to make direct data requests to communications or cloud companies in Canada (provided those companies have ties to the United States, for example by offering services there). In return, Canadian law enforcement would theoretically get reciprocal access to data held by U.S. providers. However, in the view of many legal experts, such a CLOUD Act agreement would be reciprocal in appearance only and mainly to Washington’s advantage: given the stark differences between the two countries regarding privacy protection, there’s a risk that Canadian constitutional guarantees would be subordinated to more permissive U.S. standards. In U.S. law—through the third-party doctrine—information entrusted to a third party (like a technology provider) is no longer considered private, allowing warrantless surveillance. In Canada, by contrast, the Supreme Court has rejected this view and maintains that a reasonable expectation of privacy persists even for personal data stored with a third party. Without proper safeguards, allowing U.S. authorities to tap into data hosted in Canada could circumvent our own warrant and proportionality requirements, undermining Canadian sovereignty over personal data protection.

More broadly, the CLOUD Act worries rights advocates because it can undermine data protection regimes around the world. No notification to the individuals concerned is required when information is shared under this law, and the orders are often executed in secret. Moreover, other countries may be tempted to adopt similar measures. There is concern about a domino effect: if the United States permits itself to cross legal borders, what would stop other states from seeking direct access to the data of their citizens stored abroad? In response, a few bilateral executive agreements have been signed (with the United Kingdom, for example) to frame such requests on both sides, but they remain the exception rather than the rule. For now, Canada has not finalized such an agreement with the United States, and many voices are calling to slow down or even stop this proposed deal, given the rights and freedoms at stake.

Foreign interference and digital sovereignty: beyond U.S. laws

The United States is not the only country whose practices test Canada’s digital sovereignty. Foreign interference can take various forms in the digital realm, be it extraterritorial laws, economic espionage or control of critical infrastructure. Here are some notable examples:

• - Intelligence laws in other countries: China, for example, adopted a National Intelligence Law in 2017 that requires ''all organizations and citizens'' to cooperate with state intelligence and security services on request. This means no Chinese entity—technology company, subsidiary, or individual—can refuse to provide information or assistance to Chinese authorities invoking national security. In a globalized context, this obligation raises fears that Chinese-made equipment or software could serve as a Trojan horse. For example, the use of Chinese tech providers in our networks (Huawei for 5G, apps like TikTok, cloud services, etc.) has been restricted in Canada and other democracies precisely because of the risk that data or communications could be accessible to Beijing under this legal framework. In short, routing sensitive information through systems subject to authoritarian regimes carries a high risk of political interference and espionage.
• - Internet traffic transiting abroad: Even without using a foreign provider, our data can unintentionally leave the country while in transit. Canada’s internet infrastructure is historically highly integrated with that of the United States, so much so that over a quarter of purely domestic internet traffic in Canada takes a ''boomerang'' route through routers located in the U.S. In practical terms, an email sent between Montreal and Quebec City or a visit to a Canadian government website may actually pass through communication nodes on U.S. soil before returning to Canada. This invisible detour exposes the traffic to the NSA’s mass surveillance under programs authorized by the Patriot Act and other U.S. laws. Thus, Canadian data that was supposed to stay internal can be intercepted in this cross-border loop, escaping our legal protections (since as soon as it transits through the U.S., it becomes legally accessible to U.S. authorities). This phenomenon weakens not only confidentiality but also the resilience of Canada’s network: in the event of geopolitical tensions, a unilateral action by the U.S. government affecting those exchange points could theoretically disrupt our national communications.
• - Dependence on foreign giants: Canada has been slow to develop robust local alternatives for cloud services and digital infrastructure. As a result, a very large portion of our data is hosted by American companies. In 2023, about 48% of Canadian businesses used cloud solutions dominated by Amazon Web Services, Microsoft Azure and Google Cloud. Even the Canadian government relies heavily on these foreign providers to store and process strategic information. This situation creates dependence: we are handing over our digital ''keys to the kingdom'' to entities over which our laws have little control. As one observer notes, ''virtually all Canadian data is managed by U.S. firms subject to the CLOUD Act,'' which undermines our national control over information. Moreover, this dependence can have economic and strategic consequences: we have seen Microsoft, Google or others, under pressure from U.S. sanctions or political imperatives, cut access to essential services for foreign entities, causing collateral damage outside the United States. One can imagine the disastrous impact a sudden interruption of U.S. cloud services would have on Canadian businesses or institutions—whether as a result of a trade conflict or a unilateral decision during a crisis. This is precisely why digital sovereignty is today considered, alongside energy or defense, a matter of national security in Canada.

Canadian legal framework: data protection and local hosting

In response to these foreign interference threats, Canada and Quebec have begun to strengthen their legal arsenal and promote better data governance practices:

• - Personal information protection laws: At the federal level, PIPEDA (Personal Information Protection and Electronic Documents Act) requires private organizations to adequately protect personal information about their clients, employees, etc. This law—and its equivalent for the public sector—does not currently contain an explicit clause prohibiting data transfers abroad, but every Canadian company must inform its clients if their data is hosted outside Canada and ensure that it remains protected even outside the country. A federal bill (C‑27) is under study to modernize these rules, possibly drawing on certain transparency and consent requirements from Quebec’s Law 25.
• - Provincial and sector-specific requirements: Some Canadian jurisdictions have adopted stricter measures. Quebec, as well as British Columbia and Nova Scotia, already require ministries and public bodies to store personal data on servers located in Canada (unless specially authorized). This requirement explicitly aims to prevent sensitive data (such as health, education or driver’s licence information) from falling under foreign laws like the Patriot Act. In addition, regulated sectors—finance, health, etc.—may include in their directives that digital service providers must comply with Canadian laws and ideally keep the data in the country. Quebec’s new Law 25 goes further for the private sector: it requires a privacy impact assessment before disclosing personal information outside Quebec, and allows transfers only if the data will enjoy protections equivalent to those offered here. Otherwise, ''taking back control of our data'' means not outsourcing processing to a foreign provider deemed risky. Although still in its early stages, this framework gives authorities (such as Quebec’s Commission d’accès à l’information) tools to sanction companies that endanger Quebecers’ data through risky international arrangements. The penalties for non-compliance can reach several million dollars, which encourages businesses to be cautious and to seek local or encrypted solutions for their cloud needs.
• - ''Sovereign cloud'' initiatives: Aware of the current dependency, a movement is emerging to develop Canadian alternatives. Companies and experts are calling for the construction of a truly sovereign Canadian cloud, operated by Canadian entities and governed solely by Canadian law. In practical terms, this involves creating data centers in Canada, encouraging national cloud service providers, and adopting open (open-source) technologies so we’re not captive to foreign proprietary solutions. In Quebec, voices from civil society are also calling for an end to massive outsourcing to American companies and the creation of Quebec public hosting centers for government data. The idea is to ensure public control over critical infrastructure so it can neither be sold nor subjected to the dictates of foreign interests. Of course, such a shift doesn’t happen overnight: it requires investment, expertise and political will. Nevertheless, calls are growing for Canada to treat digital sovereignty as a strategic priority—just like energy or food sovereignty—in order to preserve its freedom of action in the digital age.

Encryption governance: keep control of the keys, keep control of the data

Whatever your provider’s jurisdiction, encryption is one of the most effective protections for preserving the confidentiality of your data. However, for it to fully play its role against laws like the CLOUD Act or the Patriot Act, you must retain exclusive control of the keys. The devil is in the details: it isn’t enough for your data to be encrypted—you also need to make sure the provider doesn’t have access to the decryption key. Otherwise, if a foreign government orders them to hand over your information, the provider can simply supply the data in clear text, making the encryption pointless. As one expert explains: ''If the provider manages your encryption keys itself, it can be compelled to provide decrypted data to authorities.'' This is why companies concerned about sovereignty are increasingly opting for models where they keep the only copy of the encryption keys (Bring Your Own Key, external vaults, HSM modules, etc.).

Fortunately, most large cloud providers now offer client-side encryption or customer-managed keys. For example, AWS, Microsoft Azure and Google Cloud allow clients to use encryption keys under their own control, not accessible to the provider itself. In concrete terms, this might take the form of a master key stored in a secure on-site hardware module, or a third-party key management service that encrypts and decrypts on the fly without ever exposing the key to the cloud provider. If a foreign government request arises, the provider could hand over the files it stores—but they would be end-to-end encrypted and thus unusable without the key you hold.

It is important to put true internal encryption governance in place:

• - Inventory and classify your data to determine which require strong encryption and keeping the keys yourself (e.g., sensitive personal data, trade secrets, strategic information).
• - Establish key management policies: who is allowed to access decryption keys? Where are they stored (ideally in an HSM module or an isolated encrypted secret manager)? What is the key rotation and backup plan? These questions must be anticipated to avoid both losing legitimate access to data and unauthorized access.
• - Limit the trust placed in providers: even if a cloud service claims to be ''zero knowledge'' or unable to read your data, review the architecture. For example, a purely software-based local encryption option managed through the provider’s console could include backdoors. Favor solutions where the source code is auditable or where open standards are used, so you have technical assurance that only the key holder can unlock the data.
• - Train and raise awareness: encryption key security is only as strong as its weakest human link. It’s crucial to train system administrators and management teams to handle these keys safely (not leaving them in plain text on a server, avoiding sending them by email, etc.), and to make management aware that encryption is not just a technical issue but a corporate governance imperative in the current context.

In summary, well-governed encryption gives power back to organizations. It makes it possible to create a sovereignty enclave within a foreign cloud environment: your data may physically reside outside our borders, but it remains mathematically inaccessible to unauthorized parties. That said, remember its limits: if your keys themselves are hosted or managed abroad, or if a malicious insider has access to them, the protection is gone. Encryption governance must therefore be rigorous and holistic.

Choosing your provider with full knowledge

Beyond encryption, the choice of hosting provider is a strategic decision for any company concerned about protecting its data from foreign interference. Here are some important considerations and comparisons decision-makers should keep in mind:

• - Jurisdiction and ownership of the company: Find out the nationality of your cloud provider and the laws it is subject to. A data center located in Montreal, if operated by the Canadian subsidiary of an American multinational, does not offer the same degree of sovereignty as a data center run by an independent Canadian company. In the first case, your data hosted ''at home'' remains legally accessible under the U.S. CLOUD Act. In the second case, it could theoretically only be disclosed to a foreign government through Canadian legal channels (e.g., a mutual legal assistance treaty, with review by a Canadian judge). Microsoft’s example is telling: despite opening data centers in France, Microsoft France admitted in 2025 that it ''cannot guarantee'' that its European customers’ data will stay out of reach of the U.S. government—if Washington makes a proper request, Microsoft will be obliged to turn over the data. No local cloud region or marketing contract can neutralize this legal reality.
• - Certification levels and contracts: Make sure the chosen provider meets the security and data protection standards required by your industry (ISO 27001, government certifications, etc.), but also read between the lines of your contracts. Some so‑called ''sovereign'' cloud offers in Europe involve complex partnerships between a local actor and a foreign giant. Analyze who holds the system’s keys and what clauses apply in the event of a government request. Ideally, include clauses to resist excessive requests (some companies, such as Microsoft, claim contractually that they will challenge unjustified or overly broad demands). However, keep in mind that even these guarantees have their limits: if an injunction is legally valid in the United States, the provider will eventually comply.
• - Data location and redundancy: Choose a provider that allows you to precisely select where your data is stored (Canada, European Union, etc.) and stick to it. Beware of backup copies or automatic replication outside Canadian soil. For example, a company may think its data is confined to a center in Quebec, but if the provider replicates the data in real time to a site in the United States for redundancy, the benefit is lost. Demand transparency about the hosting architecture and disaster recovery mechanisms: these too must meet your sovereignty requirements.
• - Exit plan and diversification: Finally, have a contingency plan. If tomorrow the political situation changes (imagine a tightening in the U.S. making data requests more frequent or aggressive), your company must be able to repatriate or move its data to a safer environment without too much delay. To do this, avoid vendor lock‑in with a single provider. Opt for interoperable solutions that make migration easier if necessary. At the same time, monitor legislative developments: just as Europe had to react to U.S. laws by invalidating the Privacy Shield, Canada could in future adopt new rules—or benefit from new agreements—changing the landscape. Staying informed will allow you to adjust your hosting strategies proactively.

International comparisons and emerging trends

It is instructive to compare the Canadian approach to digital sovereignty with that of other regions:

• - Europe: Facing the same challenges with U.S. laws, the European Union has adopted a strict regulatory approach (GDPR, Schrems II decisions invalidating transfers to the U.S. without safeguards, etc.). Some member states have launched sovereign cloud projects (e.g., the GAIA‑X project or France’s Cloud Bleu partnering Orange and Microsoft under conditions) to regain control of their data. Nevertheless, as we’ve seen, as long as an American company is in the loop, doubts remain. Hence a trend in Europe toward favoring 100% European solutions for the most sensitive data, or using client-side encryption techniques like those recommended here. The case of Microsoft in France has confirmed to many European decision-makers that no U.S. provider can guarantee total immunity from the CLOUD Act—which has further fueled the debate on Europe’s strategic digital autonomy.
• - United States: Ironically, the United States is also concerned with digital sovereignty, but in the opposite sense—protecting against the interference of foreign powers in their networks. For example, U.S. authorities have banned Chinese telecom equipment from their critical infrastructure, citing espionage risks. They have also passed laws requiring certain federal data to be stored and processed on U.S. soil. This global trend toward data localization is not without criticism—some see it as a risk of internet fragmentation—but it reflects a reality: digital trust is increasingly built on geopolitical considerations. Almost every country is seeking to draw invisible borders around its data, based on its allies and adversaries.
• - Other jurisdictions: Countries like Russia, India and Brazil also require that their citizens’ data be stored locally, or greatly restrict the export of raw data. China, as mentioned, obliges all companies operating on its soil to keep data there and to provide access to the authorities as needed. These approaches are often motivated by a mix of political control and economic protectionism, but they all point to the idea that the physical location of data is becoming crucial again after a cloud computing era mistakenly presented as ''placeless.''

For Canada, these comparisons underline the importance of acting quickly so as not to depend solely on other people’s infrastructure. Increasingly, collaboration between like‑minded countries (allies) will be necessary to establish agreements that mutually respect each other’s sovereignty. For example, negotiating a balanced data access agreement with the United States could be possible if Canada demands guarantees of reciprocity and respect for the Canadian Charter of Rights. Otherwise, it would be better to invest in our own capabilities than to accept an asymmetrical access arrangement that weakens us.

Conclusion: Taking back control of our keys and our digital destiny

In an era when data is compared to the ''oil of the 21st century,'' digital sovereignty is no longer a luxury or a protectionist whim: it’s an essential component of national security, economic competitiveness and citizens’ privacy. The Patriot Act and the CLOUD Act illustrate how foreign laws can have a direct impact on our businesses and institutions by allowing a foreign government to override our legal boundaries to access our information. Other forms of interference—whether from adversarial powers or simply the result of our technical interdependence—require constant vigilance.

The good news is that there are concrete measures to mitigate these risks. As a business decision‑maker, you can already: carefully choose your providers (prefer local partners or those subject to trusted laws whenever possible), require contractual clauses and audits on the actual location of data, and above all implement robust encryption where you retain the keys. The latter practice, in particular, deserves emphasis: if you alone hold the key to your data, you ultimately hold its sovereignty. Of course this requires expertise and serious internal governance, but the benefits are worth it.

Finally, it is crucial to support and follow changes to the legal framework in Quebec and Canada. The Quebec initiative for digital sovereignty—''Taking back control of our data''—shows a possible path where the state, businesses and civil society join forces to build reliable, ethical and rights‑respecting infrastructure. Protecting our data is protecting our rights and our future prosperity. Like territorial sovereignty, digital sovereignty is an ongoing project that must be invested in and defended: by maintaining control of our encryption keys, diversifying our technology choices and reaffirming our values in the digital world, we can reduce foreign interference and ensure that control of our digital destiny remains in our hands.

Sources

- Cloud Act, Patriot Act and impacts on Canada (liguedesdroits.ca, theregister.com);

- Canadian and Quebec data protection laws (simpliciti.ca, seatable.com);

- Analyses by experts (Citizen Lab, OpenMedia, etc.) on digital sovereignty (citizenlab.ca, openmedia.org);

- Encryption and key governance advice (civo.com, aws.amazon.com). (See the cited references for more details.)