Microsoft's Australian cloud hosting provider, Canberra Data Centres (CDC), which is 48 per cent owned by NZX-listed Infratil, registered a New Zealand subsidiary in February.
CDC Datacentres NZ Ltd has two Australian directors and one New Zealand-based director, Andrew Kirker, CDC's general manager of enterprise and data centre infrastructure strategy.
CDC hosts Microsoft's Azure Australia Central cloud regions, but until the new company registration has not had a direct presence in New Zealand.
Microsoft announced on 6 May it was establishing a New Zealand datacentre region, but it did not explicitly say it was planning to build a datacentre itself. This has led to considerable industry speculation about where the region would be hosted, including about a possible New Zealand market entry by CDC.
Microsoft would not be drawn on details of where its NZ region would be hosted apart from the fact it would be based in Auckland.
"For security reasons, we do not disclose which facilities are owned and which are leased," a spokesman said.
Microsoft said the region would require Overseas Investment Office approval, something that would likely not be required if the company were simply leasing capacity from an existing provider.
That requirement indicates the project is a new build, but that could be either by an offshore partner such as CDC or directly.
(Update: the Overseas Investment Office told Reseller News today it had not received an application from Canberra Data Centre or CDC Datacentres.)
If CDC were to build a datacentre itself and lease capacity to Microsoft, as it does in Australia, the arrangement could be far more disruptive than if Microsoft were to build local datacentre capacity itself.
That is because a CDC-owned datacentre would likely compete directly with existing local providers, such as Datacom, Revera and IBM who are all on the government's infrastructure as a service (IaaS) panel, for corporate and government business.
In Australia, for instance, CDC inked a A$73 million ten year deal direct with the Australian Tax Office last month.
The New Zealand government IaaS panel is also up for renewal next year, with the option to extend the arrangement for another five years.
With many government agencies migrating to cloud-based Office 365, there is some concern about data sovereignty issues because Microsoft's desktop productivity services are currently served out of Australian datacentres.
Parliamentary Services, for instance, has paused its roll-out of Office 365 due to concerns that even encrypted data could be accessed under Australia's controversial "backdoor law".
"Today, we operate more than 160 datacentres including both owned and leased facilities," the Microsoft spokesman said.
"Our experience has enabled us to develop industry-leading business practices, privacy policies, compliance programs, operational protocols, and security measures that we apply across our cloud infrastructure.
"Microsoft datacentre regions are large-scale and complex infrastructure projects. We will provide more accurate availability dates once we’re further along in this project."
CDC and Infratil have been approached for comment.
Minister for government digital services Kris Faafoi greeted Microsoft's announcement saying the decision showed the advantage New Zealand had as a safe haven for business as it moves ahead with economic recovery from COVID-19.
"This means job opportunities in the near term for our construction industry and, in the longer term, for our ICT industry and local innovators," Faafoi said.
"This also serves as a signal to the world that New Zealand is open for business and quality investment."
The investment flowed from conversations between prime minister Jacinda Ardern and Microsoft president Brad Smith last year, Faafoi added.
"Protecting New Zealanders’ data and privacy is critically important. Onshore cloud facilities give us stronger control of our data and reduce the concerns relating to storing data offshore."