Information technologies (IT) and the new (virtual) space of dominion that they create can alter the order of the powers of the democratic states. This article will discuss the idea that the digital state is becoming a Virtual state with less power of control over its territory, because the historic power of the state is being restricted by the rise of governance beyond the state. The process of globalization, as well as the larger use of digital technologies, challenges the Westphalian nation-state, changing the state’s boundaries so that new forces and new actors acquire even larger space of dominion. We will explain that the information society challenges, but does not eliminate, the effectiveness of the state. The Web, with its open spaces, extends the state’s boundaries, creating new spaces of virtual dominion and changing governments structures: Actually, digital technologies affect functions of direction, control and organization of governments, and democracy quality, opening new areas of dominion for governments. Even if some of the functions of the states, like those related to economics, are diffuse under the new globalized and virtalized world, the states still preserve most of their political and military power. And more, the regulatory role of the state is considered pivotal: In the future, national governments need to define a new code of regulation of the Internet to defend citizens’ rights in the virtual space.