Microsoft's cloud just beat Amazon to Canberra – and it's huge for startups chasing government customers

Canberra Data Centre’s Greg Boorer and Microsoft’s James Kavanagh. (Source: supplied)

Microsoft has beaten rival Amazon in installing its cloud into Canberra, which has given the tech giant and its partner startups a major advantage in bidding for big government contracts.

Microsoft’s cloud brand Azure, which competes with Amazon Web Services to allow businesses and startups to outsource their computing infrastructure and only pay for what they need, revealed on Tuesday that it would open in two Canberra locations in the “first half” of next year.

To complement its arrival into the public sector market, Microsoft also pointed out that its cloud would be would be connected directly to the ICON fast-speed network that interconnects public institutions, and that the government’s cybersecurity agency Australian Signals Directorate would certify it to host classified data categorised as “protected”.

Amazon in June announced it had established a Direct Connect presence in Canberra through a partnership with Australian supplier NextDC, which provides fast connectivity to its cloud but falls short of a full availability zone in the city.

Microsoft ANZ principal program manager James Kavanagh wouldn’t reveal the dollar value of its investment in Canberra.

“It does require us to invest in people here. And you can see the scale of the physical assets. We’ll also continue in all of the security assurance work,” he told Business Insider.

“For Microsoft, you’ve got more than 150 people in Canberra serving the needs of cloud… It’s a very, very significant investment from our perspective.”

While the federal departments for immigration and border protection, and industry, innovation and science already use Microsoft Azure, the tech giant declined to say which organisations would start as anchor tenants at its new Canberra sites.

Assistant minister for cities and digital transformation Angus Taylor said that having the Microsoft cloud in the nation’s capital would help bring government agencies into the digital age.

“Global innovation in areas such as cloud technology is an essential foundation for this transformation and will ensure we can meet the expectations and needs of all Australians.”

Amazon and Microsoft usually keep the locations of its cloud infrastructure secret, for commercial and security reasons. However, Microsoft has taken the rare move of revealing that both its Canberra sites – in Fyshwick and Hume — would be hosted by local company Canberra Data Centres.

Canberra Data Centres is a prominent data centre provider among public sector organisations, and its two buildings are understood to be the only privately owned facilities that are certified to hold government information classified as “top secret” — the highest level of sensitivity.

“This is pretty much, for us, a world first — saying this is a partnership between Microsoft and CDC. It’s a partnership that initially focuses here and will grow over time as we serve the needs of government,” said Kavanagh.

The security-certified Microsoft Azure presence is expected to provide local startups an easier way to compete for significant government contracts.

Founder of Canberra startup Gravity Consulting, Kailash Krishnamurthi, said the launch was “hugely important” to his company as it gives public sector customers an automatic assurance of security.

“Our customers demand the highest levels of security and this announcement really helps us to confidently deliver to their needs,” he said.

The co-founder of another ACT startup Intelledox, Michelle Melbourne, said the Microsoft Azure launch would “make a big difference” to all Australians by allowing government departments to modernise.

“This investment by Microsoft in Canberra opens new possibilities,” she said.

The two new Canberra sites take Microsoft Azure up to 42 locations around the world, while the market leader Amazon Web Services currently hosts 44.

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