Forty years in the making: Microsoft’s record $5 billion investment into Australia’s digital future

Prime minister Anthony Albanese has announced that Microsoft will invest $5 billion into Australia, with a focus on digital infrastructure. This is the largest investment from the tech giant during its four-decade presence in Australia.

According to the government, the cash splash aims to fortify the nation’s AI, cybersecurity and cloud capabilities as well as create employment opportunities. It will also include scaling up  Microsoft’s local datacentre footprint from 20 sites to a total of 29 across Sydney, Melbourne and Canberra.

Microsoft’s investment, which encompasses a 250% expansion of its computing capacity in the next two years, is designed to cater to the increased demand for cloud services in Australia.

As per a whitepaper by the International Data Corporation — commissioned by Microsoft — the nation’s expenditure on these services is projected to nearly double, climbing from $12.2 billion in 2022 to A$22.4 billion in 2026.

This financial commitment is not just about boosting Australian skills and deep tech capabilities. It’s a strategic pivot towards harnessing generative AI, a move that could potentially add $115 billion annually to Australia’s economy by 2030, according to a report by the Tech Council of Australia and Microsoft.

And this isn’t surprising. Australia is trying to position itself as a tech hub, but that requires investment. Cloud technology and AI are expensive, which is why Nvidia has seen its valuation skyrocket as big and small businesses alike scramble to buy up hardware.

But there’s also opportunity here. As Tech Council of Australia CEO Kate Pounder said at SXSW last week, Australia is struggling to roll out deep tech in the same way it did with SaaS. Deep tech requires substantially more investment due to manufacturing, R&D and supply chain requirements. And then there’s tech skill shortages on top of that.

Big tech companies, like Microsoft, are well placed to help inject some much-needed funds, while also securing market share in a smaller but still significant region compared to, say, the US.

“This is a major investment in the skills and workers of the future, which will help Australia to strengthen our position as a world-leading economy,” 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.”

In addition to economic benefits, there’s a strong emphasis on sustainability. Microsoft pledges to align its expanded operations with its global sustainability goals, promising that the new data centers will contribute to the company’s ambition of achieving carbon negativity, water positivity, and zero waste by 2030.

Parallel to these developments is the announcement of the Microsoft-Australian Signals Directorate Cyber Shield (MACS) initiative. This collaborative effort with the Australian Signals Directorate (ASD) underscores will focus particularly on nation-state cyber threats.

“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,” Albanese said.

TAFE NSW to get a slice of Microsoft’s $5 billion tech investment

Microsoft’s announcement also included a commitment to tech skill-building in Australia. The tech giant will be extending its global skills programs to 300,000 Australians as well as establishing the first Microsoft Datacentre Academy in Australia, in collaboration with TAFE NSW.

Microsoft says the academy will focus on nurturing talent for key operational roles; however, at the present time details are light regarding specifics and timelines around both of these programs.

SmartCompany contacted Microsoft for details but did not receive further information in time for publication.

Kate Pounder welcomed the investment, highlighting its critical role in job creation and the realisation of having 1.2 million tech jobs in Australia by 2030. Similarly, Business Council chief executive Bran Black called the investment a “game-changer” for Australian businesses and workers.

“Hyperscale cloud providers like Microsoft are integral to Australia’s tech industry — they lower the barrier to entry for startups, act as incubators for developing talent, allow scale-ups to compete on the global stage and provide the same innovation and security available to the largest companies,” Pounder said.