Both Microsoft and Amazon have now signed agreements with the government to collaborate on projects, regulatory changes and national cybersecurity priorities. Photo: 123rf
Microsoft has joined Amazon in signing agreements with the government to collaborate on projects, regulatory changes and national cybersecurity priorities.
Amazon had lobbied the prime minister behind the scenes for a say on cloud computing policies.
"The same topics raised in our [2021] letter to the then prime minister are reflected in the MOU" - or memorandum of understanding - Amazon told RNZ on Wednesday.
No New Zealand cloud service provider has an MOU.
The collaboration with the US tech giants will boost operations that were already growing rapidly.
Microsoft cracked a billion dollars in local revenues last year, while paying income tax of $11 million, and Amazon Web Services (AWS) had $372m in sales, with a $2m tax provision, or future tax expense. The local subsidiaries are charged fees for cloud and other services by their parent companies.
The Department of Internal Affairs has released the AWS agreement, and said it would shortly release the Microsoft MOU.
This comes shortly after Microsoft won approval under overseas investment laws to buy 6.5ha of land in Auckland to build a large data centre for cloud computing.
The new agreements will help cement already close private-public ties.
Amazon told RNZ its MOU was about "initiatives that we will jointly collaborate on".
Its MOU said it would "collaborate as appropriate on national cybersecurity priorities and cybersecurity capability development".
AWS and Microsoft already work with the spy agency, the GCSB - Government Communications Security Bureau.
Their joint project won an award last year and over 400 organisations use it.
The US pair dominate a market expected to double to $5b by 2026, underpinned by the government's 'Cloud First' policy that requires its agencies to adopt public cloud services in preference to traditional IT systems.
They also dominate globally.
They, and local firm Catalyst Cloud, are the only companies authorised to provide cloud services to the government. Catalyst does not have an MOU.
Amazon lobbied Jacinda Ardern in a seven-page letter in 2021 for input on "fine-tuning" government policy on cloud computing, for help setting up data centres, and talks about bringing in skilled workers.
It was also interested in "working together" so it could host secret data above the 'restricted' level, the letter released under the OIA said. The new MOU does not mention this directly.
Agreement cements 'areas we are aligned on' - Amazon
Amazon told RNZ yesterday: "We have always sought to engage the government on positive, ambitious projects for New Zealand's digital future, and these initiatives represent areas we are aligned on. The same topics raised in our letter to the then prime minster are reflected in the MOU."
It laid out a long list of "long-term significant investments" in the country.
It employed 150 people directly and had plans to hire 200 more in coming years, AWS said. It has promised the government it will train 100,000 locals.
The three-year MOU commits the Department of Internal Affairs to run promotions of cloud computing.
Microsoft declined to comment on its MOU, which has yet to be released.
Its land deal, approved in February, was considered "sensitive" because it involves over 5ha of non-urban land in an undisclosed Auckland location.
Regards an earlier land deal, a June 2021 government report said: "The New Zealand Overseas Investment Office has granted consent for Microsoft to purchase the land to enable the hyperscale data centres to be built. There is an expectation in some quarters that AWS, not wanting to be left out, will also look to solidify its presence in New Zealand."
The new land deal was approved on the grounds of "benefit to New Zealand" from building a $180m data centre, employing 300 construction workers, and then 50 permanent employees.
Data centres typically are not big employers, but they enable cloud computing, and a Microsoft study earlier this year forecast cloud-related growth would create 134,000 jobs in New Zealand by 2027.
About 300,000 tech workers in the US lost their jobs this year and last, many from among the largest firms.
AWS last week became a cornerstone customer of a major wind farm run by Mercury Energy, for its data centres.
The benefits to cutting emissions from deals like this are a matter of global debate.