A Microsoft employee said the company could axe UK expansion plans if there are post-Brexit trade tariffs – Business Insider UK


Satya Nadella
Microsoft CEO Satya
Nadella.

Manish
Swarup/AP


Microsoft could axe plans to expand its UK data centres if
tariffs are introduced after Britain leaves the European Union, a
senior UK employee has said.

Speaking in an online event about what Brexit means for tech,
Microsoft UK government affairs manager Owen Larter said that the
American tech company might focus on building out its European
data centres at the expense of its two British ones if UK’s
Brexit deal imposes import tariffs on hardware and other
goods. (We first heard about
his comments

via Ars Technica
and you can watch
the full webinar
below.)

“We’re really keen to avoid import tariffs on any hardware. Going
back to the data centre example, we’re looking to build out our
data centres at a pretty strong lick in the UK, because the
market is doing very well,” Larter said.

“If all of a sudden there are huge import [tariffs] on server
racks from China or from Eastern Europe, where a lot of them are
actually assembled, that might change our investment decisions
and perhaps we build out our data centres across other European
countries.” 

Reached for comment, however, a Microsoft spokesperson distanced
the company from Larter’s remarks. “The comments reported
today by a Microsoft employee were not reflective of the
company’s view,” they said. “As we have said both before and
after the EU referendum vote, Microsoft’s commitment to the UK is
unchanged.”

After months of uncertainty and confusion, the British
government’s Brexit strategy is starting to emerge. Prime
Minister Theresa May has indicated the UK will push for a “hard
Brexit” — ending freedom of movement and reducing immigration, at
the expense of unrestricted access to the European Single Market.


Theresa May
British Prime Minister
Theresa May.

Reuters/Francois
Lenoir


The government plans to trigger Article 50 — the process that
starts the UK’s exit from the European Union — by the end of
March 2017, kick-starting a two-year negotiation period between
Britain and the European Union. Under a “hard Brexit”, companies
could face tariffs or other trade barriers when trying to do
business with Europe.

The tech industry overwhelmingly supported remaining part of the
European Union prior to the referendum —
almost 90% of respondents were pro-Remain in one poll
. But
Brexit is now a reality and there are numerous points of concern
for the industry, from access to funding to the availability of
talent.

The sector is heavily reliant on skilled immigrant labour —
making it acutely vulnerable to changes in British border policy.
(Larter said 80% of skilled workers at Microsoft’s R&D centre
in Cambridge were not born in the UK.) Stricter controls could
see startups and growing businesses unable to bring over enough
talent from Europe — or even lose the talent they have, running
the risk Britain could become a less attractive place to found
and grow companies.

However, Larter suggests that immigration from outside of the EU
could help offset a potential decrease in European immigrant
labour. “We’ve really struggled internally at Microsoft sometimes
to bring people over from the US, from China, from India,” he
said. “Even just on a month or week-by-week basis, because the
restrictions on immigration from outside the EU have been so
severe, because [the UK] couldn’t control immigration from inside
the EU and we were conscious about the numbers.”

As well as tariffs on physical hardware, Larter warned that any
restrictions on the transfer of data — an issue that the European
Union is particularly strict on — could cause issues.

“The UK is actually the EU’s largest cloud market at the moment,
and is set to double by 2019,” he said. “That kind of bright
future is probably not going to be possible if we make it a lot
harder to transfer data and store data from the EU into UK data
centres.”

Here’s the full webinar:

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