Communications Minister says Google upgrade a ‘shot in the arm’ for economy

Communications Minister David Clark says Google’s decision to upgrade its New Zealand service is “another major vote of confidence” for the country’s digital industries.

Google has announced it will no longer treat New Zealand customers as if they were in Australia and will create a new cloud computing region for the country, but is being coy about the specifics.

Clark said becoming a cloud region would mean businesses would have a choice to keep their data onshore and work with Google Cloud’s domestic team to “really drive digital transformation here”.

“Protecting people’s data and privacy is critically important to the Government. Onshore cloud facilities give us stronger control of New Zealand’s data because it is held here, where our laws and protections apply,” he said.

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Google has established cloud computing regions with their own data centers that customers can use to access its services in its 34 major markets around the world.

The usual advantages of having those facilities close by in a country are that it reduces lag, allowing cloud-based services to run faster, and can avoid the legal and regulatory complications some customers face when sending data overseas.

The company said it had now decided to create new Google Cloud regions in New Zealand, Mexico, Malaysia and Thailand.

However, it would not confirm that it would see it follow in the footsteps of rivals Amazon Web Services and Microsoft by building its own data centers in New Zealand.

The new cloud region would nevertheless reduce lag and allow Google customers to host their data inside the country, it indicated – which may suggest it has instead decided to partner with a local company to provide the extra services.

“While this will not be a physical data center, cloud regions are located within data centers that may be owned by Google, or by a third party co-location provider,” a spokesperson said.

“It will include the same hardware, software and operations found across our Google Cloud data centers.”

New Zealand customers would be able to run computing tasks in-country, “which is particularly useful for those in highly regulated industries such as financial services and the public sector where data sovereignty is integral”, she said.

Google would not discuss the size or the dollar-value of its planned investment.

“Bringing a new cloud region to Aotearoa shows Google’s increasing investment and will allow us to partner more deeply with local businesses, to deliver on our unique ability to bring enterprise and consumer ecosystems closer together,” country director Caroline Rainsford said in a statement.

Clark noted Google’s major rivals in the cloud computing market, Amazon Web Services (AWS) and Microsoft, had previously committed to spending billions of dollars on local IT infrastructure.

“These three investments represent … a shot in the arm for our economic rebuild but also lay the foundation for our plans to be a digital nation and out aspirations to grow the digital economy,” he said.

AWS announced last year that it expected to spend $7.5 billion over 15 years building “world class computing infrastructure” in Auckland, including at least three data centers in the city.

It estimated that investment would create 1000 jobs and contribute almost $11b to New Zealand’s GDP over that period.

Microsoft is further ahead with its investment plans.

It announced in 2020 that it would be investing in New Zealand data centers that would add the country to its 59 cloud regions around the world.

It is currently building a large data center at Westgate in Auckland and has signed up several anchor customers, including Fonterra, ASB, BNZ and Auckland Transport.