Short answerSelf-hosting gives you control over where data lives but you carry security and maintenance. Cloud platforms are faster to set up but you rely on their policies. For genuinely sensitive material, decide by policy and contract, not convenience.
| Self-hosted | Cloud platform | |
|---|---|---|
| Data location | You choose | Provider chooses (check policy) |
| Setup effort | High | Low |
| Security work | Yours | Shared |
| Model calls | Still go to your model provider unless you run a model yourself | Go to the provider you choose |
For one cloud option and what Microsoft says about data, see Azure OpenAI. Even a self-hosted app usually sends prompts and file passages to a model API, so read that provider's data terms too. Start with the privacy checklist; for a custom build see API rebuilds.
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