Microsoft Offers Cloud Services From Data Centers in U.K.

  • Company completes data center expansions in Ireland, Holland
  • U.K. presence helps company target government, bank clients

Microsoft Corp., which has been battling the U.S. government over the privacy of customer information stored overseas, said it will offer cloud services from data centers based in the U.K.

Microsoft will sell Azure computing power and Office 365 Internet-based apps from the U.K. starting in 2016, Chief Executive Officer Satya Nadella said at an event in London Tuesday. He also said the software maker has finished its latest phase of expansion for data centers in Ireland and the Netherlands, which serve as hubs for European customers.

Microsoft, Amazon.com Inc. and Google -- which have all benefited from a shift toward the cloud -- are building more data centers distributed around the globe, both to speed up the delivery of Web-based services and to contend with local laws and customer preferences for some digital information stay in a particular country or region. Microsoft is also awaiting an appellate-court ruling on a case against the U.S. government over whether the company has to turn over customer data stored in Ireland. 

The U.K. presence creates opportunities for Microsoft to work with public-sector agencies such as the Ministry of Defence and National Health Service, while having a data center near London means it can attract financial customers in need of high-performance computing, said Scott Guthrie, who leads Microsoft’s cloud and enterprise division.

U.K. customers already using Microsoft’s cloud include Marks & Spencer Group Plc and Virgin Atlantic Airways Ltd., he said. Guthrie said the entry into the U.K. helps Microsoft better compete against Amazon, the largest public cloud service provider.

“It’s a two-horse race between us and Amazon,” said Guthrie, adding that even though Amazon is bigger, Microsoft is growing faster and the gap is narrowing.

The Redmond, Washington-based company in 2014 said it would start letting overseas customers opt to have their personal data stored outside the U.S., in response to concerns about alleged government surveillance and spying. Microsoft said corporate cloud revenue reached $8.2 billion on an annualized basis last quarter, with commercial sales of Office 365 -- the cloud version of its productivity software suite -- rising almost 70 percent in constant currency, and Azure sales more than doubling.

Nadella told a London audience Microsoft has three objectives: to reinvent productivity and business processes, create more personal computing and build an intelligent cloud platform.

“It’s no longer about being confined to an organization’s hierarchy,” he said. “It’s the idea of having tools that allow us to bring people together. We want to build a system that helps you drive productivity of your individual time and of your organization’s.”

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