Microsoft strengthens sovereign cloud offering with local AI and productivity stack

MIcrosoft

• Microsoft adds offline features to Sovereign Cloud suite
• Azure Local now supports offline operations for high-security use
• Microsoft 365 Local and Foundry Local offer offline productivity and AI.

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As governments and regulated industries tighten digital sovereignty requirements, Microsoft is deepening its push into sovereign infrastructure with new offline-first capabilities across cloud, productivity and AI.

In a blog post by Douglas Phillips, President and Chief Technology Officer of Microsoft Specialized Clouds, the company outlined three major additions to its Sovereign Cloud portfolio: Azure Local disconnected operations, Microsoft 365 Local disconnected and expanded AI model support through Foundry Local.

Azure Local Runs Even Without Cloud Connectivity

With Azure Local disconnected operations, organisations can now run mission-critical infrastructure entirely within their own operational boundary, even with no connection to the public cloud. Governance, policy enforcement and workload management remain inside the customer’s environment, ensuring continuity for classified, isolated or high-security deployments.

The goal is to replicate familiar Azure experiences while removing dependency on continuous connectivity. This allows agencies and enterprises to scale from small deployments to large AI-driven workloads while keeping management consistent with broader Azure standards.

Microsoft 365 Local Extends Productivity Offline

Infrastructure alone is not enough in sovereign settings. Microsoft is also bringing core productivity tools into these isolated environments through Microsoft 365 Local disconnected.

Server workloads including Exchange Server, SharePoint Server and Skype for Business Server will be supported through at least 2035 and can now operate fully inside a customer’s sovereign private cloud on Azure Local. Teams can collaborate, share information and communicate securely, even when completely offline.

By aligning management with Azure governance models, Microsoft aims to ensure consistent policy enforcement across connected and disconnected environments.

Foundry Local Brings Large AI Models On-Premises

The third update focuses on AI. Foundry Local now supports larger multimodal models running directly inside sovereign private clouds. Built on modern infrastructure from partners such as NVIDIA, the system allows customers to deploy and run large AI models locally, complete with inferencing and APIs that never leave their controlled data boundaries.

As AI workloads grow more resource-intensive, Microsoft says it will provide deployment, update and operational support while allowing customers to retain full control over their hardware and data.