Wednesday, 25 January 2017

Is Microsoft's Brexit Warning More Than Just a Warning?

In the months leading up to last June's Brexit vote, numerous companies began letting their opinions be known in the hope of influencing the vote. Much to the dismay of many corporate giants, voters chose to leave the EU for a long list of reasons. Those corporations in favour of our remaining in the EU are now trying to figure out what they will do in the future. Some are making comments that could be construed as warnings.

One of the latest is a warning by Microsoft that they may pull out of building a new UK data centre if our government places restrictive tariffs on the hardware that the software giant needs to build the facility. As Tech Republic recently reported, Microsoft relies on server racks and other hardware imported from China and Eastern Europe. If they believe bringing that hardware into the UK is too expensive, they may scrap their plans, moving the data centre to another location elsewhere in Europe.

"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 will build our data centres across other European countries," said Microsoft's Owen Larter.

Some could construe Larter's comments to be more than just a warning. For example, is Microsoft trying to influence Brexit negotiations? If so, it would not be the first time, nor would Microsoft be the first foreign corporation attempting to insert itself into the Brexit issue.

Much Ado about Nothing?

A bigger question at hand is whether Microsoft's concerns are much ado about nothing. Remember what the corporate giants were saying this time last year: a successful 'leave' vote would lead to an economic collapse and another recession. It would lead to lost jobs and fewer opportunities for foreign workers. It would lead to the bottoming out of the Pound.

Though most of the dire predictions did not come true, the Pound did take a beating directly after the vote. But, as Tech Republic points out, corporations like Apple and Microsoft directly contributed to the Pound's decline by sharply increasing their prices last year. Apple raised the price of many of its retail products by hundreds of pounds while Microsoft raised its cloud computing prices for UK businesses more than 20%.

It is entirely possible that a “hard Brexit” could mean excessively high tariffs and restrictions on bringing in foreign workers. But it's hard to imagine that the Theresa May government would seek to impose restrictions severe enough to hamper business opportunities. The EU might though…

The UK has long been a leader in digital technology due to our widespread support of the sector and our willingness to invest in it. Even if we don't get what we want from the EU, is it not reasonable to assume that the government will still go out of its way to make sure companies like Microsoft and Apple still flourish here?

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