7 Sep 2022

Big tech data firms sought 'strategic dialogue' with NZ government, documents show

11:28 am on 7 September 2022
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Amazon Web Services (AWS) was the largest of the investors - it had suggested it would inject almost $11 billion into the economy in coming years, through three new 'hyperscale' data centres. Photo: 123rf

Major foreign tech companies with billions to spend on data centres have been strongly wooing the government.

Seven of them, including global giants Amazon Web Services and Microsoft, sought ministerial endorsement in recent months, briefings released under the Official Information Act show.

Read the document: Internal Affairs briefing to Digital Economy and Communications Minister David Clark, November 2021.

"All the providers have sought to meet with you as lead minister to share and seek your support for their plans," officials told Digital Economy and Communications Minister David Clark.

They had come "seeking your support and advocacy of their plans, and strategic dialogue on big issues of shared interest", the officials told Clark.

Amazon Web Services (AWS) was the largest of the investors - it had suggested it would inject almost $11 billion into the economy in coming years, through three new 'hyperscale' data centres.

"AWS posed several requests as part of its investment commitment," the officials advised Clark.

RNZ has asked what those requests were.

Another of the seven, Canadian-owned DCI, asked Clark in mid-2021 for support, "starting with amplification of their announcement" that DCI would build two data centres worth more than $600 million.

Last month, Clark was pictured turning a sod at the groundbreaking for construction of DCI's second centre, in Albany.

In speech notes, officials told Clark that DCI's "credentials are backed by Brookfield, a global infrastructure investor with over $600b in assets ... DCI supports the government's focus on enabling New Zealand to become a thriving digital nation".

All up, a dozen data centres were promised, hosting tens of thousands of servers each.

The briefings, from July 2022 and November 2021, showed the private sector's lobbying, and the government's enthusiastic response to the "several billion dollars" investment.

The papers had very little to say about jobs or any risks, even though RNZ asked half a dozen major agencies, including Internal Affairs which leads a lot of data work, for their most substantive internal document that addresses risks, costs and benefits of the data centres.

"These are welcome developments that will enhance our already thriving ecosystem of cloud innovators," officials said.

They lined Clark up to meet all seven offshore players, as well as three locally-owned data companies, Datacom, CCL (part of Spark) and Catalyst Cloud.

Catalyst previously accused the government of bias toward big foreign players and not engaging enough with locals.

Officials told Clark that AWS was "seeking your support, advocacy and ongoing engagement with this work programme".

The US firm had scored a coup, with one of three speaking slots at the launch of the new digital strategy for Aotearoa in Auckland on 14 September.

Prime Minister Jacinda Ardern, on her US trip in May, met the AWS chief executive and praised its "incredible investment".

Her office yesterday reiterated that AWS would train 100,000 people, either for their "existing or other jobs". It would employ another 1000 directly, they said.

AWS detailed eight training programmes it has, in a statement to RNZ. It said: "AWS NZ has ambitious goals to support the upskilling and development of new technology skills to support New Zealand's economic growth and job creation" and referred to its chief executive's meeting with Ardern.

The ministerial briefings showed Microsoft's data centre investment in Auckland to be worth about $1b.

"Microsoft has invited you to meet their executive team and visit a build site in Auckland," officials told Clark.

Singapore-owned Datagrid, which has a $1b data centre in Southland, and an undersea cable, on the go, "has invited another meeting with you as soon as it can be scheduled", the minister was told in late 2021.

Canberra Data Centres made a similar request. CDC, 48 percent owned by local investment firm Infratil, is spending more than $300m on two data centres in Auckland. It had more than a billion dollars of Australian government contracts.

Winning over government could be crucial, but the opposite was also true: In Australia, one large company Global Switch had been increasingly shunned by federal agencies on national security grounds since Chinese investors took control of it.

The government here has emphasised the security upside of not having to use offshore data centres anymore.

"Onshore cloud facilities give us stronger control as our data taonga will be stored at rest here in Aotearoa, where our laws and protections can be applied," the November briefing said.

Officials argued this amounted to full control of the data, but critics have rejected that and said overseas-owned companies can be subject to the laws in their home country.

Inland Revenue uses AWS and Microsoft offshore, and told RNZ it would "eye any developments of these services being offered out of New Zealand-based data centres with keen interest".

Police and Justice, which also handle masses of sensitive personal data, had less to say: The Justice Ministry's digital strategic plan makes only a brief mention of data centres, and Police had no guidance or report on data centres, they said.

Read the document here: Ministry of Justice Digital Strategic Plan

The Defence Force almost immediately refused to comment and instead referred RNZ to a proactively released 2020 cabinet paper that said it was going to adopt a $118m "hybrid" cloud platform.

Read the Cabinet paper here: Defence Force Enterprise Cloud and Enterprise Connectivity

Its "existing in-house IT infrastructure is out-of-date and experiencing significantly slowed and degraded performance", it said.

Auckland Transport was going the whole hog, shifting from cloud services in Singapore and Australia to Microsoft's Auckland data centres.

It expected to reap "major economic benefits" - spending $13m but saving $20m on the shift, documents released under the Local Government Official Information and Meetings Act showed.

These also showed up the public reliance on private expertise: "True partnership is key to these initiatives, as AT does not have all the skills, capability, and knowledge to do this alone," an AT board paper in February said.

"In support of this, Microsoft have prepared an investment strategy bridging operational costs (discounts and predictability), migration and modernisation costs (including credits and Microsoft funding contribution), and staff skilling to assist AT."

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