Vodafone is set to scrap its European data centres after Britain’s biggest telecoms firm unveiled a major new cloud partnership with Microsoft that includes new AI functionality.
The 10-year, $1.5 billion agreement will see Vodafone replace many of its European data centres with 'virtual' ones operated by Microsoft’s Azure cloud platform on top of the introduction of a range of AI-powered services to customers, while Microsoft will invest in Vodafone's standalone Internet of Things platform and use Vodafone’s fixed and mobile connectivity services. Vodafone also hopes to be able to use the deal to scale its African fintech platform, M-Pesa.
“We are delighted that together with Vodafone we will apply the latest cloud and AI technology to enhance the customer experience of hundreds of millions of people and businesses across Africa and Europe, build new products and services, and accelerate the company’s transition to the cloud,” Microsoft CEO Satya Nadella said.
Vodafone said scrapping its physical data centres in favour of cloud services will help with "simplifying and reducing the operational costs of its IT estate, as well as reducing energy requirements and helping deliver against its sustainable business strategy.” Its shares rose as much as 0.7% following the announcement of the deal.
Microsoft's cloud practices have come under increasingly regulatory scrutiny. In October, the UK’s Competition and Markets Authority said Britain's £7.5 billion cloud services market is to be the subject of a full investigation over concerns that dominant players like Amazon and Microsoft unfairly disincentivise customers from using smaller providers.
Francisco Mingorance, Secretary General at European cloud services trade body CISPE told the Standard: “For us it’s paramount that the CMA includes a full examination of the pernicious effect that these licencing practices have on customers and other cloud providers.”
“Monopolies like Microsoft are imposing unfair licensing practices. This is a recognition that this is problematic behaviour and it should be addressed. We would like the CMA to set some boundaries, some clear rules for the market.”
Microsoft last week overtook Apple to become the world's most valuable tech company, after its shares rose by more than 60% over the past year on the strength of its growing AI capabilities. That includes OpenAI, the maker of ChatGPT into which the firm has invested millions of dollars.
