Microsoft Invests $5 Billion in AI Technology in Australia

People move past a Microsoft store in the Pitt Street shopping district in Sydney on Oct. 19, 2021. (Lisa Maree Williams/Getty Images)

Microsoft will spend $5 billion (US$3.18 billion) to expand its cloud computing and artificial intelligence (AI) infrastructure in Australia over the next two years.

The announcement was made during a meeting between Australian Prime Minister Anthony Albanese and Microsoft Vice Chair and President Brad Smith when the former visited the United States.

The software giant said it’s the single largest investment in the company’s 40-year history in Australia.

Apart from building more facilities, Microsoft will establish an academy to train the AI workforce for Australia and work with government agencies to bolster the country’s cyber security.

Microsoft’s investment will help Australia consolidate its position as a world-leading economy, Mr. Albanese said.

“A priority for my government is to ensure all Australians benefit from economic growth. This means that we need to provide the skills to enable Australians to succeed in the jobs of the future,” he said.

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“A strong economy requires protection from cyber threats. I welcome Microsoft’s collaboration with the Australian Signals Directorate to enhance cybersecurity for households and business.”

Microsoft's Vice Chair and President Brad Smith delivers a speech in Lisbon, Portugal, on Nov. 3, 2022. (Patricia De Melo Moreira/AFP via Getty Images)

Microsoft’s president also stressed the importance of new investment to the company’s operation in Australia.

“This is our largest investment in Microsoft’s 40-year history in Australia and a testament to our commitment to the country’s growth and prosperity in the AI era,” Mr. Smith said.

“We’re coupling this $5 billion in computing capacity and capabilities with AI and engineering that will strengthen the nation’s cyber defence, including a deeper collaboration with the Australian Signals Directorate.”

What Microsoft Will Invest In

Microsoft wanted to increase the number of its data centres in Canberra, Melbourne, and Sydney from 20 to 29.

The company expected the new facilities to lift its computing capacity by 250 percent in the next two years and help it meet the growing demand for cloud computing services in the country, which was estimated to reach $22.4 billion in 2026.

Besides equipping the data centres with the latest AI technology, Microsoft said it would reduce the facilities’ carbon footprint by using low-carbon materials during construction and implementing renewable energy and advanced water-cooling features and measures to decrease diesel fuel use during operation.

In addition, the software giant will partner with TAFE NSW to set up its first Data Centre Academy in Australia in early 2024.

The academy’s curriculum will specialise in training operational roles such as data centre technicians, critical environment specialists, inventory and asset management professionals, and IT operations personnel.

Microsoft said it plans to train 300,000 Australians in digital skills in response to the industry’s commitment with the government to create more than 1 million tech-related jobs in Australia by 2030.

The company also said it would collaborate with the Australian Signals Directorate (ASD) to build a cyber shield called MACS (Microsoft-Australian Signals Directorate Cyber Shield) to protect Australian residents, businesses, and government entities from cyber threats.

“This announcement builds on ASD’s strong partnership with Microsoft and will turbocharge our collective capacity to protect Australians in cyberspace,” ASD Director-General Rachel Noble said.

Australia has suffered from a massive wave of data breaches over the past year, with cyber criminals attacking many large companies (including Optus, Medibank, and Latitude) and stealing the personal data of millions of Australians.

In October 2022, Australian Cyber Security Minister Clare O'Neil admitted that the country was falling behind in the fight against cyber attacks.

The announcement comes just days after Microsoft acquired video game maker Activision Blizzard via a US$69 billion deal—one of the most expensive acquisitions in the industry’s history.

The company managed to win a lengthy antitrust fight against European authorities despite the lobbying efforts of competitor Sony.

Although there have been concerns in the gaming industry that Microsoft would stifle competition with the deal, the company believed its acquisition of Activision Blizzard would make many big game titles available to more consumers across various platforms.