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They aren't the only ones:
Canada's Approach to Cloud Services in the Public Sector Proposed Ban on American Cloud Services
The Canadian government is considering a ban on American cloud services for public sector use. This move is part of a broader strategy to enhance data sovereignty and protect sensitive information from foreign access. The intention is to ensure that Canadian data remains under Canadian control, especially in light of concerns regarding the U.S. CLOUD Act, which allows U.S. authorities to access data stored by American companies, even if that data is located in Canada. Implications of the Ban
Current Status
As of now, discussions are ongoing, and the government is evaluating the legal, operational, and technical implications of such a ban. The definition of "sovereignty" in this context is still being refined, and the government is considering how to balance security with the need for effective cloud services.
The Canadian public institution I work at has been diving deeper and deeper into the Microsoft soup in the past few years. Getting out of there would take a considerable amount of work.
There was some word lately that Canada is going with a local "Cohear" or "Cohere" to create their sovereign cloud infrastructure. It'll be interesting to see it go ahead, seems to be part of what the government is looking to help finance. Here's hoping the government is smart enough to get a %age of the profits too and double dip on the economy boost.