Microsoft invests in New Zealand’s digital future

On 6 May 2020, Microsoft announced it will establish its first data centre region in New Zealand.  Microsoft has data centres in 60 regions globally and provides the Microsoft Azure hosting service in more than 140 countries. Bringing this capability to New Zealand’s shores will place us within that global network and has the potential to transform the country’s digital landscape.

Microsoft’s announcement represents a significant technological investment in New Zealand. It not only demonstrates Microsoft’s faith in New Zealand’s economy and digital future but also our ability to manage a crisis, evident through the decisive handling of the COVID-19 pandemic.  Microsoft’s arrival may also be a catalyst for other market data centre leaders like Google and AWS to invest here, creating a new “data haven”.

Such a large and complex infrastructure project will be a boost for the construction sector. But it is the ripple effect extending to the energy, services and wider technology sectors, that makes it so exciting.

To be clear, this is not just the arrival of yet another place to store your photos and cat videos. We have plenty of data centre operations already here that do that. It is the accessibility and availability of the services that come with a Microsoft data centre that make it most exciting. The Microsoft platforms and services contained within its cloud offerings will be available to everyone here, under New Zealand laws and without any latency or lag issues that you get from an offshore provider.

To date, Government uptake of cloud services outside of New Zealand has been relatively low, based on the legitimate concern for “data sovereignty” (i.e. the idea of having sensitive government and general public data stored in another jurisdiction under another country’s laws can be unpalatable). Likewise, mass market uptake of off shore cloud services has been slow because of the potential for lag – it’s less appealing if we can’t access the services in hyper-quick time or lose access if the undersea fibre cable was cut.

So, with data sovereignty and latency issues largely alleviated[i], mass market and government adoption could greatly accelerate. This creates many opportunities for digital uptake – at a time when digital transformation is essential to reach customers in a locked-down or physically separated world.

Notably, it may also open opportunities to companies based in Australia or doing business in Australia to move their data here to alleviate risks raised over the ability of Australian intelligence and law enforcement agencies being able to demand access to secure platforms that are hosting data in Australia.

Concerns around Māori data sovereignty, where Māori data is hosted, processed and analysed overseas but there is no Māori representation and no control over how such information is handled, could be eased. This could open the door for Māori businesses to embrace new technologies.

The presence of an onshore data centre such as Microsoft’s will also drive further innovation. Lower latency enabled by an onshore data centre can help support a competitive gaming industry and facilitate greater innovation through AI and machine learning.  These are exciting prospects for local consumers and, alongside the rollout of the 5G network, the Microsoft data centre could facilitate and accelerate digital transformation throughout the country. These advances generate positive change to how businesses and individuals use technology and could usher in a new era of Kiwi innovation.

We are hugely excited about the opportunities presented by Microsoft’s new venture and the positive impact it will have on New Zealand’s digital future. As we progressively move out of the Coronavirus lockdown, now is the time to look to the future, embrace change and take stock of the technological landscape.

If you would like to discuss the impact or opportunities created by Microsoft’s announcement, Tom Maasland, a Partner in our TMT team, is available to share his views on the technology market and how MinterEllisonRuddWatts can help your business make the most of this exciting new project.

[i] Any information held in a Microsoft data centre will be subject to the CLOUD Act, an American law that allows US law enforcement to access data stored by a company connected to the US, where that data may relate to domestic criminal investigations. This is the case even if the data centre storing the data is physically located outside US borders.

Richard Boyd is a Senior Solicitor in MinterEllisonRuddWatts' Corporate IP/IT and Katarina Zujovic is a Solicitor.

Who can help