Microsoft (NASDAQ: MSFT) has pledged to invest R5.4 billion ($297.5 million) over the next three years to expand its artificial intelligence (AI) and cloud infrastructure in South Africa.
The American tech giant announced the investment on March 6, which it says will bring down the cost of access to the latest tech for South African startups, multinationals and government organizations.
The latest investment builds on Microsoft’s R20.4 billion ($1.12 billion) investment over the past three years in South Africa, where it has established the country’s first world-class enterprise-grade data centers in the two largest cities: Johannesburg and Cape Town. The ultimate goal is to make AI so easy for South Africans to access that it’s integrated into every other sector, “driving growth and innovation,” the company says.
During the launch of the new initiative, President Cyril Ramaphosa described the investment as a “vote of confidence” in the country’s economy.
“They signal to the business and investor community that South Africa’s economy continues to hold immense potential and that it is a favourable place to do business where their investments are secure,” the president stated.
The investment is part of Microsoft’s splash on AI globally. Earlier this year, the company’s president, Brad Smith, revealed
that it intends to invest $80 billion in AI data centers, training AI models, and other infrastructure that supports the technology.
While half the amount will be invested in the U.S., the company plans to channel a significant portion to the Global South. This will not only give Microsoft an advantage over its American AI rivals in some of the fastest-growing populations, but also counter China’s charm offensive in Africa, where the Asian nation has become the biggest investor through its Belt and Road initiative.
In 2024, Microsoft partnered with G42, the UAE government’s AI outfit, to invest up to $1 billion in Kenya. One of the biggest projects in the East African nation will be a 100MW green data center that will power Microsoft’s Azure cloud infrastructure.
Other American tech giants are also investing in AI initiatives in Africa, many aimed at upskilling Africans to remain competitive as the age of artificial generative intelligence (AGI) beckons.
Intel (NASDAQ: INTC) partnered with the African Development Bank to train at least three million Africans and over 30,000 government officials on AI last year. Google (NASDAQ: GOOGL) announced a similar initiative last October, investing $6 million to boost AI skills in sub-Saharan Africa.
Back in South Africa, Microsoft’s Smith says the new venture will ensure that young South Africans can evolve to remain competitive in the AI age.
“This latest investment is part of our broader focus in helping South Africans build a future where technology drives prosperity and young workers have the skills they need to thrive,” he commented.
Initiatives like Microsoft’s are critical to the growth of South Africa and the region at large. According to one study by the World Economic Forum (WEF), the skills gap in the latest technology is the biggest hindrance to adopting new technology. AI’s rapid growth could further exacerbate this gap as the skills demanded are evolving faster than ever before.
US gov’t investigating Scale AI for exploiting employees
In the U.S., an AI startup backed by Amazon (NASDAQ: AMZN) and Meta (NASDAQ: META) is under investigation for exploiting its employees.
Scale AI, a data-labelling company catering to AI firms, has been under investigation by the U.S. Department of Labor for eight months now, documents seen by Reuters revealed. The investigation, which started under the Biden administration, probes whether the company violated the Fair Labor Standards Act, which protects workers against unpaid wages and other forms of mistreatment by their employers.
The company’s spokesperson, Joe Osborne, acknowledged the investigation following the Reuters report. He said that the company has cooperated with the Labor Department and that the investigation has been smoother since Trump took over.
The investigation isn’t a big surprise. After all, Scale AI has long been accused of exploiting its contributors and paying them way below market rates. Its business model relies on thousands of contributors globally, who manually label data for AI clients to better train their AI models.
Two years ago, an investigation by the Washington Post unearthed Scale AI’s exploitation of workers in developing nations such as the Philippines, who reported getting very low pay for highly demanding work.
Last December, a former employee filed a class-action lawsuit against the company in a San Francisco court. He accused it of deliberately misclassifying workers to pay them lower fees. A month later, another former employee filed a similar lawsuit, alleging the company has been paying its employees below California’s minimum wage.
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