Microsoft UK hosted an online event to discuss the impact of the UK’s likely departure from the European Union on the tech industry. The event was spotted by OnMSFT.
The company currently has two large datacenters in the UK, and it is expanding these in response to vigorous demand for cloud services. But Brexit could throw a spanner in the works. Owen Larter, Microsoft’s UK Government Affairs Manager, said that if import tariffs were imposed on the UK—one likely consequence of the UK leaving the EU’s single market and customs union—then the company would have to reconsider.
Larter said that the company’s servers are built both in China and Eastern Europe. Presently, the devices assembled within the EU incur no tariffs on being brought into the UK. But, if that changes and significant import tariffs are imposed on those machines, Larter said the firm might instead build out its European datacenters to avoid those extra costs.
We’re really keen to avoid import tariffs on any hardware. Going back to the datacenter example, we’re looking to build out our datacenters at a pretty strong lick in the UK, because the market is doing very well…
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 datacenters across other European countries.
Leaving the EU is likely to cause changes in how data, especially personal data, is handled. While such data can be freely moved within the EU, regulations restrict its usage outside the trading bloc, a situation that has caused court cases and disagreements between the EU and US. With the UK leaving the EU, systems and services that handle this data are likely to migrate toward continental Europe and away from the UK, at least until equivalent agreements and regulations can be put in place.
Larter did express some faint optimism about immigration, however. The UK currently imposes strict rules on migration from outside the EU, with both caps on the number of visas and a points system to qualify for entry into the UK. Larter said that the firm has “struggled internally” to bring people to the UK from the US, China, and India as a result of these policies. With the UK leaving the EU and, presumably, seeing reduced migration from EU countries, immigration caps may be raised to allow a greater number of non-EU workers.
This remains far from certain, however. With strict migration controls being a big reason that people voted to leave the EU in the first place, it’s not clear that the UK government is going to be in any great hurry to expand non-EU migration.