If a politically stable nation with a good international reputation were to guarantee government respect for data privacy for data centres housed on its soil and run by its companies, that nation could become the Swiss bankers of data.
Rolling your own "digital sovereignty" is not going to be cheap for most nations, and many other nations simply won't be trusted by anyone, least of all their own citizens.
It's a bit flabbergasting that U.S. tech companies didn't see this coming years ago and lobby hard for the U.S. to repeal anti-privacy legislation like the CLOUD act. Their lunch is sitting out in the open, completely unwatched, waiting to be eaten by somebody else and it's far too late to do anything about it.
The more astonishing thing is that people regularly talk about this in the context of hosting providers when by far the more significant threat is mobile platforms.
There are a zillion hosting companies, many of them outside the US. Now which mobile platform are you going to use that doesn't give one of two US companies root on your population's phones?
You could take your analogy further, and consider why the Swiss banking isn’t so opaque anymore. Hint: people who did really inhuman things used that system to store their profits, and the Swiss society, developed and stable as it is, decided that they don’t want to bear the moral cost of it anymore.
It is not as simple as banking - people tend to want low-latency and high-speed connection which necessitate the data center to be in close proximity. Which basically means that founding a country with strong data protection laws somewhere in Antarctic won't get you many clients in Europe.
> Rolling your own "digital sovereignty" is not going to be cheap for most nations
neither are Microsoft 365 subscriptions at governmental scales
No offence, but I do believe a few Dutch ppl could run email servers for cheaper