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Microsoft backs Australia’s next phase of digital government with new AI and cloud agreement

Australia’s rise to second place in the OECD Digital Government Index signals renewed momentum for national digital transformation.

A shift that comes as Microsoft signs a new five-year Volume Sourcing Arrangement with the Federal Government, designed to underpin modernisation across public services and create a secure, future-ready foundation for responsible AI adoption.

The agreement led by the Digital Transformation Agency gives agencies access to Microsoft Copilot, Azure, Microsoft 365, Dynamics 365 and a strengthened security and compliance framework instead of continuing reliance on ageing systems.

The arrangement sets clearer strategic pathways for innovation, procurement and skills development through an enhanced governance structure.

It recommits both sides to national security requirements, including the Security of Critical Infrastructure legislation, the Cloud Hosting Certification Framework and IRAP.

These measures allow agencies to expand AI use while retaining control of data and meeting the expectations placed on government institutions.

A successful Copilot trial in 2024 already demonstrated personal productivity gains of around one hour per day for participating staff.

Microsoft is also establishing a $1.55 million training fund for the Australian Public Service to support capability building in ethical AI use and modern cloud operations.

The company emphasises that Australia’s partner ecosystem will gain new opportunities because the agreement simplifies how local firms engage with government agencies. Such an approach forms an important part of the wider public sector reform agenda announced last year.

The new deal aligns with national priorities set out in the Whole-of-Government Cloud Computing Policy and the National AI Plan.

Australia now enters a pivotal period in which digital transformation is guided not only by technological capacity but by the frameworks of trust, resilience and public benefit that shape how government services evolve.

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Democratising AI in business without risking security

Across organisations, AI tools are moving beyond IT teams and into everyday business functions. CIOs now face the challenge of widening access while protecting data, security and trust.

Earlier waves of low-code platforms and citizen data science showed that empowerment can boost innovation but also create shadow IT and technical debt. AI agents and generative systems raise the stakes, with risks ranging from data leaks to flawed automated decisions.

Pressure from boards and business leaders means AI cannot be restricted to a small pilot group. Transparent governance, approved toolkits, and updated data policies are essential to prevent misuse while still enabling experimentation.

Long-term success depends on culture as much as technology. Leaders must define a focused AI vision, invest in literacy and adapt change management so employees use AI to improve decisions rather than accelerate flawed processes.

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Microsoft expands Sovereign Cloud with secure offline support for large AI models

Digital sovereignty is gaining urgency as organisations seek infrastructure that remains secure and reliable under strict regulatory conditions.

Microsoft is expanding its Sovereign Cloud to help public bodies, regulated industries and enterprises maintain control of data and operations even when environments must operate without external connectivity.

The updated portfolio allows customers to choose how each workload is governed, rather than relying on a single deployment model.

Azure Local now supports disconnected operations, keeping mission-critical systems running with full Azure governance within sovereign boundaries. Management, policies and workloads stay entirely on site, so services continue during periods of isolation.

Microsoft 365 Local extends the resilience to the productivity layer by enabling Exchange Server, SharePoint Server and Skype for Business Server to run locally, giving teams secure collaboration within the same protected boundary as their infrastructure.

Support for large multimodal AI models is delivered through Foundry Local, which enables advanced inference on customer-controlled hardware using technology from partners such as NVIDIA.

Such an approach helps organisations bring modern AI capabilities into highly restricted environments while preserving control over data, identities and operational procedures.

Microsoft positions it as a unified stack that works across connected, hybrid and fully disconnected modes without increasing operational complexity.

These additions create a framework designed for governments and regulated industries that regard sovereignty as a strategic priority.

With global availability for qualified customers, the Sovereign Cloud aims to preserve continuity, reinforce governance and expand AI capability while keeping every layer of the environment within local control.

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Over 299 million people gain internet access through global connectivity

Microsoft has exceeded its 2025 internet access target, reaching over 299 million people globally, including more than 124 million in Africa. The milestone reflects years of partnerships to connect communities lacking reliable digital access.

Efforts are shifting from simple coverage to holistic digital participation, combining connectivity with energy, devices, digital skills, and AI tools.

Microsoft aims to enable meaningful adoption, ensuring communities can fully engage in the growing AI economy. Partnerships focus on scalable, community-based models aligned with national development priorities.

As adoption accelerates, Microsoft plans to expand its approach by integrating financing, energy access, and community-first AI solutions. The initiative highlights the need for long-term, locally led strategies for fair participation in the digital and AI economy.

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New Relic advances AI agents for enterprise observability

The expansion into enterprise AI comes with a no-code platform from New Relic that allows companies to build and supervise their own observability agents.

A system that assembles AI-driven monitors designed to detect bugs and performance problems before they affect users, instead of leaving teams to rely on manual tracking.

It also supports the Model Context Protocol so organisations can link external data sources to the agents and integrate them with existing New Relic tools.

The company stresses that the platform is intended to complement other agent systems rather than replace them.

As AI agent software spreads across the market, enterprises are searching for ways to manage risk when giving automated tools access to internal systems.

Industry players such as Salesforce and OpenAI have already introduced their own agent platforms, and assessments from Gartner describe these frameworks as essential infrastructure for wider AI adoption.

New Relic also introduced new tools for the OpenTelemetry framework to remove friction around observability standards.

Its application performance monitoring agents now support OTel data, allowing enterprises to manage these streams in one place instead of operating separate collectors.

The update aims to reduce fragmentation that has slowed OTel deployment across large organisations and to simplify how engineering teams handle diverse observability pipelines.

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NVIDIA drives a new era of industrial AI cybersecurity

AI-driven defences are moving deeper into operational technology as NVIDIA leads a shift toward embedded cybersecurity across critical infrastructure.

The company is partnering with firms such as Akamai Technologies, Forescout, Palo Alto Networks, Siemens and Xage Security to protect energy, manufacturing and transport systems that increasingly operate through cloud-linked environments.

Modernisation has expanded capabilities across these sectors, yet it has widened the gap between evolving threats and ageing industrial defences.

Zero-trust adoption in operational environments is gaining momentum as Forescout and NVIDIA develop real-time verification models tailored to legacy devices and safety-critical processes.

Security workloads run on NVIDIA BlueField hardware to keep protection isolated from industrial systems and avoid any interference with essential operations. That approach enables more precise control over lateral movement across networks without disrupting performance.

Industrial automation is also adapting through Siemens and Palo Alto Networks, which are moving security enforcement closer to workloads at the edge. AI-enabled inspection via BlueField enhances visibility in highly time-sensitive environments, improving reliability and uptime.

Akamai and Xage are extending similar models to energy infrastructure and large-scale operational networks, embedding segmentation and identity-based controls where resilience is most critical.

A coordinated architecture is now emerging in which edge-generated operational data feeds central AI analysis, while enforcement remains local to maintain continuity.

The result is a security model designed to meet the pressures of cyber-physical systems, enabling operators to detect threats faster, reinforce operational stability and protect infrastructure that supports global AI expansion.

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AI data centre surge pushes electricity demand in the UK to new heights

The UK faces rising pressure on its electricity system as about 140 new data centre projects could demand more power than the country’s current peak consumption, according to Ofgem.

The regulator said developers are seeking about 50 gigawatts of capacity, a level driven by rapid growth in AI and far beyond earlier forecasts.

Connection requests have surged since late 2024, placing strain on a grid already struggling to support vital renewable projects that are key to national climate targets.

Work needed to connect expanding data centre capacity could delay schemes considered essential for decarbonisation and economic growth, instead of supporting the transition at the required pace.

The growing electricity footprint of AI infrastructure also threatens the aim of creating a virtually carbon-free power system by 2030, particularly as high costs and slow grid integration continue to hinder progress.

A proposed data centre in Lincolnshire has already raised concerns by projecting emissions greater than those of several international airports combined.

Ofgem now warns that speculative grid applications are blocking more viable projects, including those tied to government AI growth zones.

The regulator is considering more stringent financial requirements and new fees for access to grid connections, arguing that developers may need to build their own routes to the network rather than rely entirely on existing infrastructure.

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AWS warns of AI powered cybercrime

Amazon Web Services has revealed that a Russian-speaking threat actor used commercial AI tools to compromise more than 600 FortiGate firewalls across 55 countries. AWS described the campaign as an AI-powered assembly line for cybercrime.

According to AWS, the attacker relied on exposed management ports and weak single-factor credentials rather than exploiting software vulnerabilities. The campaign targeted FortiGate devices globally and focused on harvesting credentials and configuration data.

AWS said the potentially Russian group appeared unsophisticated but achieved scale through AI-assisted mass scanning and automation. When encountering stronger defences, the attackers reportedly shifted to easier targets rather than persist.

The company advised organisations using FortiGate appliances to secure management interfaces, change default credentials and enforce complex passwords. Amazon said it was not compromised during the campaign.

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Cloudflare outage causes global internet disruption after an internal error

A major outage on 20 February disrupted global internet traffic after an internal configuration failure at Cloudflare caused the unintended withdrawal of customer BGP routes.

The incident lasted just over six hours and left numerous services unreachable, despite early fears of a cyberattack. An internal update led to the systematic deletion of more than a thousand Bring Your Own IP prefixes, which pushed many connections into BGP path hunting instead of stable routing.

Engineers traced the disruption to an error in the company’s Addressing API, introduced during an automated cleanup task under the Code Orange resilience programme.

A flawed query interpreted an empty value as an instruction to delete all returned prefixes, removing essential bindings for hundreds of customers. Some users restored connectivity through the dashboard, while others required manual reconstruction carried out across the edge network.

An outage that affected a series of core offerings, including content delivery, security layers, dedicated egress and network protection services. Restoration took several hours because the withdrawn prefixes varied in severity, demanding different recovery methods instead of a uniform reinstatement process.

The error triggered widespread timeouts on dependent websites and applications, along with 403 responses on the 1.1.1.1 DNS resolver.

Cloudflare plans to introduce stricter API validation, circuit breakers for abnormal deletion patterns, and improved configuration separation. It has also issued a public apology for a failure that undermined its assurances of network resilience.

An event that reaffirmed the risks posed by internal automation faults when they interact with critical internet infrastructure.

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Secure quantum-safe optical transport strengthens Japan’s AI data center infrastructure

Nokia and KDDI Corporation demonstrated quantum-safe optical transport at Sakai Data Center, supporting advanced AI workloads. The network aims to deliver secure, uninterrupted data transfer while protecting sensitive AI operations.

The demonstration showcases KDDI’s scalable AI-ready infrastructure for real-time training, inference, and analytics. Quantum-safe encryption and resilient transport protect customer data and critical infrastructure across Japan’s distributed data centres.

Using Nokia’s 1830 Photonic Service Switch (PSS) and 1830 Security Management Server (SMS), the partners validated high-capacity, secure optical connectivity. The solution delivers privacy, reliability, and fast quantum-safe encryption for modern AI workloads.

Executives from both companies emphasised the importance of secure, scalable networks in enabling AI-driven services. Nokia and KDDI will continue advancing quantum-safe data centre connectivity, supporting Japan’s digital infrastructure and key enterprise applications.

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