Microsoft adds disconnected Azure, Microsoft 365 and AI model support to Sovereign Cloud, enabling secure, compliant operations even without connectivity.
As digital sovereignty shifts from policy debate to operational mandate, organizations are reassessing how they deploy critical infrastructure and artificial intelligence under tighter regulatory scrutiny and elevated geopolitical risk.
Microsoft on Tuesday expanded its Microsoft Sovereign Cloud portfolio, adding governance, productivity tools and support for large AI models that can run securely even in fully disconnected environments. The update reflects a growing demand from governments, regulated industries and national infrastructure operators for systems that function independently of continuous public cloud connectivity.
Microsoft’s approach to sovereignty centers on allowing enterprises and public-sector organizations to operate securely and autonomously while remaining aligned with global digital standards. The Microsoft Sovereign Cloud integrates productivity software, security controls and cloud workloads across public and private environments. Customers can determine the appropriate level of control for each workload without fragmenting architecture or increasing operational risk.
At the core of the expansion are three updates:
- Azure Local disconnected operations (now available): Organizations can run mission-critical infrastructure with Azure governance and policy controls entirely on-premises, without any cloud connectivity. Management, policy enforcement and workload execution remain within customer-operated environments, ensuring continuity in classified, sovereign or isolated settings.
- Microsoft 365 Local disconnected (now available): Core productivity services — Exchange Server, SharePoint Server and Skype for Business Server — can now operate fully within a customer’s sovereign boundary on Azure Local. The services are supported through at least 2035, allowing teams to communicate and collaborate even when offline.
- Foundry Local with support for large AI models: Customers can deploy multimodal, large-scale AI models within fully disconnected sovereign environments. Built on modern infrastructure, including GPUs from partners such as NVIDIA, Foundry Local enables advanced AI inferencing on local hardware, entirely within customer-controlled data boundaries.
Also Read: Building AI That Compounds, Not Just Ships
A Unified Sovereign Private Cloud
Microsoft describes the new architecture as a Sovereign Private Cloud, unifying Azure Local, Microsoft 365 Local and Foundry Local across both connected and disconnected deployments. In connected environments, a cloud-based control plane manages on-premises components. In fully disconnected environments, that control plane operates locally as an appliance virtual machine, directly managing infrastructure and workloads without reliance on external connectivity.
The result, Microsoft says, is a localized full-stack experience designed to remain resilient regardless of connectivity conditions. Governance, identity controls and operational policies remain consistent whether systems are online, intermittently connected or fully isolated.
Azure Local serves as the on-premises foundation for critical workloads, offering governance models consistent with Azure while eliminating dependence on continuous cloud access. Microsoft says the platform can scale from smaller deployments to data-intensive and AI-driven environments, allowing customers to expand over time while maintaining a unified operational model inside sovereign boundaries.
Operating in disconnected environments introduces constraints that differ from traditional cloud assumptions. External dependencies may be unacceptable, connectivity may be intentionally restricted and operational continuity becomes imperative rather than optional.
“The availability of Azure Local disconnected operations represents a breakthrough for organizations that need control over their data without sacrificing the power of the Microsoft Cloud,” said Gerard Hoffmann, chief executive of Proximus Luxembourg. “For Luxembourg, where digital sovereignty is not just a principle but a strategic necessity, this model offers the resilience, autonomy and trust our market expects.”
Productivity and AI Without Compromise
Microsoft 365 Local extends sovereignty beyond infrastructure to collaboration. By running Exchange Server, SharePoint Server and Skype for Business Server entirely within customer-controlled environments, organizations retain control over resiliency, compliance and access policies while preserving familiar productivity experiences.
Meanwhile, Foundry Local expands from supporting smaller AI workloads to enabling large-scale multimodal models on-premises. Microsoft will provide support for deployment, updates and operational health, even as inferencing demands grow. Customers, the company says, retain complete control over their data and hardware.
Also Read: AI Won’t Kill Call Centers—It Will Redefine Them
Choice Without Complexity
Microsoft positions the Sovereign Private Cloud as a response to customer demand for full disconnection capability without sacrificing operational simplicity. While some organizations require fully isolated environments, others operate across hybrid or intermittently connected models. The company says its updated stack allows customers to standardize governance and operational practices across all modes.
In an era when sovereignty increasingly defines digital strategy, the ability to run infrastructure, productivity and advanced AI entirely within national or organizational boundaries may prove less a niche requirement than a competitive necessity.
