New Zealand ‘open for business’ as Microsoft plans regional data center

• Microsoft is planning to open its first data center in New Zealand in the near future
• The project is expected to cost at least NZ$80 – 100 million, and be a shot in the arm to the local digital economy
• Data privacy & competition for local data center operators expected to fuel discussion on issue

Microsoft has announced plans to establish its first data center in the North Island of New Zealand, which will make it the tech giant’s 60^th data center on the planet.

The move also means that Microsoft will be the first multinational cloud service to open a physical data center in New Zealand, and the investment to the local economy is likely to be worth tens of millions of NZ dollars.

The prime minister of New Zealand, Jacinda Ardern, even addressed Microsoft’s plans in her daily COVID-19 briefing, hailing it as “signals to the world that NZ is open for business and quality investment.”

“Microsoft wouldn’t be investing here if they didn’t have full confidence in the New Zealand economy,” she continued. “And saw us as a safe place for operation in both the health and business sense.”

The multinational development project will eventually provide enterprises, public and private entities, as well as small and medium businesses (SMBs) in the region with public cloud capabilities. This should include access to Microsoft’s cloud offerings like Microsoft Azure, Microsoft 365, Dynamics 365, and Power Platform.

Once realized, the project will mean the first international competition for local data center operators since IBM’s data center in Auckland’s East Tamaki opened back in 2013, which was built at the cost of NZ$80 million (approximately US$49 million).

The Microsoft deal is expected to cost up to NZ$100 million, and is subject to approval from the country’s Overseas Investment Office. Aside from accelerating technological advancements in the region and supporting local companies who rely on cloud services, NZ’s Minister for Government Digital Services communications minister Kris Faafoi said it would provide near-term construction job opportunities and longer-term potential within the digital economy.

Apparently, Microsoft also intends to eventually offer support for educational skilling programs for the local community, boosting potential employment opportunities in the future.

President of Microsoft, Brad Smith, echoed the optimism that the company’s first data center will bring to the country, posting on social media: “Last year, I spent some time in New Zealand and met with Prime Minister Jacinda Ardern. I was so impressed by that country’s digital ambitions. Our new data center there will only accelerate its digital transformation and help propel all New Zealanders forward.”

Amidst all the positive outlook, there is concern over which country’s privacy laws will apply to the data which is stored locally, but is hosted by a foreign entity in this case, Microsoft. Communications minister Faafoi has said that protecting the data and privacy of New Zealanders’ was of vital importance. “Onshore cloud facilities give us stronger control of our data and reduce the concerns relating to storing data offshore,” he stated.

There is also contentions that encroaching foreign players will crowd out local data storage competitors like Datacom, which has been operating in New Zealand since 1965. However, PM Ardern believes the presence of internationally-recognized service providers like Microsoft empowers the local digital scene instead of weakens it, and that onshore data storage is a more reassuring option to protecting data, compared to offshore alternatives.

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