Decision Guide
Local LLM Hosting vs Public API
Choose local hosting when data sovereignty, regulatory compliance, or real-time latency are non-negotiable; choose a public API for low-sensitivity prototyping and bursty demand. For regulated industrial, defense, and healthcare workloads, self-hosted open-weights LLMs win on sovereignty, compliance, latency, and long-run cost.
| Dimension | Local / Air-Gapped | Public API |
|---|---|---|
| Data sovereignty | Weights and data stay 100% inside the client VPC | Prompts and uploads transit a third party; retention risk |
| Compliance (CMMC / ITAR / HIPAA) | CUI boundary contained; integrated from day one | Requires FedRAMP High / ITAR enclave overhead |
| Latency | Deterministic, offline-capable, sub-10ms edge loops | Network round-trip + queuing; jitter under load |
| Cost over time | One-time hardware capitalization; amortizes toward zero | Continuous per-call fees plus data egress charges |
| Vendor lock-in | Portable open-weights (Llama, Mistral, Qwen) | Coupled to a single provider's models and pricing |
| Best fit | Regulated, data-sensitive, latency-critical workloads | Low-sensitivity prototyping and bursty, variable demand |