Definition
Data residency is Data residency is a requirement or promise that your data is stored and processed in a specific country or region, which for AI includes where prompts are run, not only where files sit.
Data residency is about geography. It answers one question: in which country or region does my data physically live and get processed?
With ordinary software, residency mostly means where files are stored. With AI there is a second half: where your prompt is run. When you send a request to an AI provider, the text travels to a data center, a model reads it through inference, and the answer comes back. If that data center is in another country, your data crossed a border even if nothing was saved.
That is why AI providers now offer separate controls for each half. Some let you keep stored data in a chosen region. Some also offer in-region inference, meaning the GPUs that process your prompt sit in that region. A strict arrangement needs both.
Residency is necessary for many compliance needs but not sufficient. It says where data sits, not who can be compelled to hand it over. A foreign company running a local data center may still be subject to its home country's laws. That broader question of control is what sovereign AI tries to address.
Residency also differs from zero data retention. Residency is about location. Zero data retention is about whether the provider keeps your prompts and outputs at all. You can have either, both or neither.
It is also a separate matter from on-device AI, where the model runs on your own hardware and the data never leaves it.
The last question matters most in practice, because regional options are often limited to certain models or products.
Think of a bank vault. Residency tells you which city the vault is in. It does not tell you who holds the keys.
It is keeping your data stored and your prompts processed inside a chosen country or region, which requires both regional storage and in-region inference.
No. Residency is about where data is handled. Zero data retention is about whether the provider stores your prompts and outputs at all.
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