Thursday, November 23, 2017

Microsoft warns UK it could build data centres in other EU countries if Brexit causes tariff hikes

PM Theresa May announcement that the UK will leave the European single market is causing some concern at Microsoft.

Microsoft has hinted that it could be moving its data centre business elsewhere if a post-Brexit UK leaves market tariffs too high.

Microsoft’s UK government affairs manager Owen Larter, said in a webinar that the company “is committed to the UK as it stands”, however, following Prime Minister Theresa May’s affirmation that the UK will leave the European single market, things could change for the technology giant.

“We are really keen to avoid import tariffs on any hardware. Going back to the data centre, for example, we are looking to build out our data centres at a pretty strong lick in the UK, because the market is doing very well,” Larter said in the ‘What Brexit Means for Tech’ webinar.

“[However,] if all of a sudden there are huge import [tariffs] on server racks from China or from eastern Europe, where a lot of them are actually assembled, that might change our investment decisions and perhaps we will build out our data centres across other European countries.”

As a member of the European Union (EU), the UK and the other 27 member states do not have customs duties, and share common external tariffs with other countries.

By leaving the EU, the UK would lose the access to such benefits. However, the government has not yet unveiled its plans on this matter.

Microsoft currently runs three data centres in the UK in Cardiff, Durham and London, following an announcement by CEO Satya Nadella in November 2015.

Enlisted in the data centres is the UK’s Ministry of Defence (MoD), which employs more than 250,000 people, as well as National Health Service trusts and organisations.

In Europe, the web scale player also operates data centres in Ireland, France, Germany, the Netherlands, Austria and Finland.

However, Larter also tipped that a ‘hard Brexit’ as it has been described by critics referring to the total exit from all EU platforms, will make it easier to move foreign developers and researchers in and out of the UK.

He said: “One thing we are really pushing for is making it easier to bring people into the UK, particularly if they fit a particular profile, if it’s for work and they’re high skilled in a certain industry.

“We have really struggled internally at Microsoft sometimes to bring people over from the US, from China, from India.

“Even just on a month or by week basis, because the restrictions on immigration from outside the EU have been so severe, because we [the UK] could not control immigration from inside the EU and we were conscious about the numbers.

“There is a complete review of the immigration system in the UK at the moment. In a way, it is an opportunity because we have an ability to completely reset things and create a 21st century migration system.”

PM May has confirmed the UK will trigger Article 50 in March 2017 which will officially initiate the negotiations between the UK and the EU Commission which will determine the exit of the country from the union.

She predicts that by March 2019, the UK will no longer be a member of the EU.


A Microsoft spokesperson has said: “The comments reported today by a Microsoft employee were not reflective of the company’s view.  As we have said both before and after the EU referendum vote, Microsoft’s commitment to the UK is unchanged.”