Vodafone and Microsoft signed a $1.5 billion, ten-year pact that will cause the telecom behemoth to close its physical datacenters around Europe and replace them with virtual ones that use Azure.
The generative AI component of the transaction was highlighted by both firms. Microsoft Azure OpenAI will be utilized by Vodafone “to deliver frictionless, real-time, proactive, and hyperpersonalized experiences across all Vodafone customer touchpoints.” Microsoft Copilot will also be accessible to the company’s staff.
The most noteworthy part of the transaction, though, is the replacement of Vodafone’s physical datacenters with virtual ones around Europe. Vodafone anticipates financial savings from the change, but it did not specify how consumer data will be safeguarded.
Microsoft recently declared that all personal data, including pseudonymized personal data, was now within the EU Data Boundary project, addressing the concerns of EU regulators. It has added the capability to store and handle client data inside the Microsoft 365, Azure, Power Platform, and Dynamics 365 boundaries during the past year.
Microsoft plans to invest in Vodafone’s managed IoT connectivity technology, which will become a distinct, standalone company by April 2024, in addition to substituting real datacenters with Azure. The system will join the Azure ecosystem and link 175 million devices and platforms globally.
Lastly, Vodafone will “extend its commitment” to promoting Microsoft’s offerings to business clients, including Teams Phone Mobile. In a statement, Microsoft states that “this enables business customers to deploy Microsoft’s cloud-based services at pace with low adoption and running costs.” Microsoft estimates that 24 million SMEs in Europe might gain from this.
Microsoft and telcos have a long history together.It agreed to transfer the US carrier AT&T’s 5G mobile network to the Microsoft cloud in 2021. Microsoft assumed control of AT&T’s Network Cloud development as a result of the agreement.
The new transaction is intriguing for reasons other than just the amount of money at stake. Vodafone has, in the words of Megabuyte, “decided to effectively outsource AI to Microsoft” as opposed to trying to bring in an AI solution or leverage its internal resources.
But, given the increased scrutiny that Microsoft’s cloud operations are receiving from the EU and the UK’s CMA, regulators may become interested in data sovereignty concerns.
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