Microsoft Brazilian Cloud Contract Blocked

The $352 million cloud contract that was recently awarded to Microsoft Corporation by the State Court of Justice of Sao Paulo, Brazil, has just been blocked by the National Justice Council (CNJ) of Brazil over Data Sovereignty concerns.

The Court of Justice of Sao Paulo (TJ-SP), presented reasons that supports its decision to choose Microsoft for the cloud contract amongst other rivals such as AWS and Google. They also added that the deal was expected to generate an approximate savings of $270 million over a period of ten years as data management expenses will be reduced by 40% in just the five years of this contract.

The CNJ on the other hand is concerned about having sensitive court data stored on a facility that is outside its jurisdiction (Brazil).

This contract which is to have Microsoft handle the Brazilian court data for a period of five years can be a never accomplished one if the CNJ are not assured of having its national and legal data in Brazil.

The TJ-SP however defended its decision to a great extent when they explained that the contract was awarded to Microsoft Informática and Microsoft Games which are both registered in Brazil. They went on to describe these Microsoft companies as “Brazilian”.

According to the chairman of the Commission on Information Technology and Infrastructure, Counselor Marcio Schiefler Fontes, the issue of data security is of major concern as the interest of the country will not be protected, especially when international disputes are focused on such data.  For him, having a foreign company, on foreign soil, to maintain custody and access to judicial and economic data of Brazil, is certainly a dangerous deal.

Manoel de Queiroz Pereira Pires, president of the TJ-SP, clarified thus, “It should be noted that the signed agreement respects the legal framework for data protection of users and does not pose any security risk, and this Court has taken all necessary precautions.”

It is however reported in the national dailies that if Microsoft can affirm that all TJ-SP data will be exclusively stored and managed in Brazil, then the contract may be approved. Thereby having the CJN to lift the injunction.

The good news for Microsoft is that they already have their Azure datacenter facilities in Sao Paulo which was opened in 2014.