Visiting Microsoft’s glass-walled office — overlooking Beirut to one side and a panoramic Mediterranean to the other — one can easily forget the enormous challenges looming on the company’s horizon. “It’s the nicest Microsoft office anywhere,” boasts Hany Morcos, the company’s public sector cloud technologies director for the MENA region.
But reality jolts quickly back into focus. Morcos, along with Cairo-based corporate affairs manager Ashraf AbdelWahab and Lebanon country manager Hoda Younan, are hoping to sell the Middle East on cloud technology, a key component of Microsoft’s latest corporate strategy. And of course, they’re hoping the world will buy that technology from Microsoft.
Later in the day that we meet, the three are due to run a workshop on these technologies for Lebanese public sector officials. Their vision is a much more efficient and secure government — and a company-saving strategy for Microsoft.
The cloud — shorthand for technologies that allow users to store files, photos and data on third-party servers and download them anywhere in the world — is one of the fiercest battlegrounds for tech companies today. Besides Microsoft, heavy-hitters Google, Apple and Amazon — among a host of smaller companies — are battling for primacy in the market.
For Younan, the future is “all about the cloud.” And the need to own the cloud — or at least be competitive — is paramount in Microsoft’s case. As the world moves from the PC to mobile, the company’s dominant Windows operating system is being gradually challenged by Apple’s iOS and Google’s Android. In effect, Microsoft is ever so slowly being kicked off people’s devices and out of their lives.
In this vein, the company’s emphasis on the cloud is effectively a hedge against declining Windows users — a notion Younan agrees with, even while maintaining the flagship operating system “is still our hero.” “Windows as a product is definitely going the right way … It’s giving life to [new] types of devices,” she claims, alluding to the system’s avant-garde user interface which has received mixed reviews.
Strategically, the emphasis on the cloud reaches all the way to the top. In February the former boss of the company’s private cloud technologies, Satya Nadella, was promoted to become just the third CEO in Microsoft’s history.
On the surface, the new emphasis suggests the company is answering the concerns of some analysts and activist investors who believe Microsoft has two core businesses — enterprise and consumer — and should focus on the former.
But for Younan, this is folly. “The line between consumer and enterprise is blurred and it will disappear,” she says, explaining that “today, customers do not accept working with lesser technology than what they use personally.” More and more, Morcos adds, devices are being used for both work and play — there’s fewer distinctions between company and personal devices.
The logical conclusion is a corporate strategy that focuses on both the cloud and devices. “Because you have this multitude of devices, you need to have your data in the cloud,” says Younan. And conversely, cloud data needs devices to be accessible and useful.
Gags and blindfolds
Under normal circumstances, the fight over cloud dominance would be a ragged battle with the competition. But when the world learned of the United States’ massive electronic espionage program last year, the cloud game became much more difficult for US-based technology firms — many of which, like Microsoft, had allegedly been silently cooperating with the government under secret court orders. One of the key components of a successful cloud strategy — trust — had been snatched from Microsoft’s grasp. “This industry relies on trust, and if this trust is missed we cannot continue,” says AbdelWahab.
On this front, the company is in a bind: it must convince potential customers that it builds secure technologies and is a good steward of data, but it cannot legally show much in the way of evidence.
All AbdelWahab is able to offer is sincere-sounding reassurances. “We do not give our customers’ data to governments, unless there is a court order,” he says. However, those court orders aren’t available to the public. AbdelWahab can only point to the fuzzy ‘transparency reports’ tech firms are now allowed to publish that give very rough estimates of government requests. For instance, in Microsoft’s first such report in February, the public learned that between January and June 2013, somewhere between zero and 999 secret court orders were issued for private content, impacting anywhere from 15,000 to 15,999 accounts.
Under current law, Microsoft can go no further. However, AbdelWahab assures that the company isn’t happy with this level of disclosure — it and several major tech companies are currently taking legal action against US authorities to provide greater details to the public. “Since these rules are affecting our trust in the market, we are suing the US government,” he explains.
A market-driven rationale for greater transparency is compelling, but it cuts both ways. As AbdelWahab points out, “the US government is our biggest customer” — reflecting the tension between establishing transparency and pleasing a major client.
But AbdelWahab ardently denies any collaboration with US authorities beyond that which is legally required. “We do not engineer backdoors in our products … We don’t give them encryption keys,” he claims. These are crucial claims when it comes to private clouds — those sold to companies and governments who then run and own them, often with high security needs.
The company offers certain high-paying private cloud customers access to its source code, allowing the buyer to fully inspect the product for vulnerabilities. However, this may be as much a threat as anything. When asked what incentive a government would have to make public a vulnerability it finds — instead of keeping quiet and exploiting it themselves — the three offered no response, instead pointing to the vibrant hacking industry that, ironically, serves to strengthen security.
New customers wanted
The tangles with the US government complicate the trio’s reason for visiting Lebanon: to educate civil servants and sell them on cloud technology. Morcos envisions a vast, government-owned, government-wide cloud that is able to service multiple ministries’ needs.
“Imagine that the Ministry of Education has a data center that serves test results for hundreds of thousands of students per year,” says Morcos. This would require “a massive data center that you’d turn on for one week and turn it off for the rest of the year.” If, however, there was a central system shared by the entire government, then that capacity could then be reallocated to another ministry saving the country money. “Most data centers have about 20 percent usage,” Morcos adds, but “with a national cloud, this goes up to about 80 percent.”
“So it’s cost effective,” Younan offers. However, she says, there’s even greater benefits: citizens get better services, the gears of government are modernized and national decision-making is simplified because “you have access to this data.”
Indeed, from within Microsoft’s pristine offices, one can imagine a bright future for cloud-based governance — and a bright future for Microsoft’s cloud strategy. But selling a private cloud to the Lebanese government would require trust that Microsoft hasn’t built weaknesses into its system on secret orders from Washington. And to that AbdelWahab can only continue to insist, “we don’t do that.”