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Israel signs deal for cloud services with Google, Amazon

Contracts ensure continuity of service even if tech giants may come under pressure to boycott Israel, Finance Ministry officials say

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

This undated photo made available by Google shows colorful pipes sending and receiving water for cooling Google's data center in The Dalles, Oregon (photo credit: AP/Google, Connie Zhou)
This undated photo made available by Google shows colorful pipes sending and receiving water for cooling Google's data center in The Dalles, Oregon (photo credit: AP/Google, Connie Zhou)

Israel on Monday officially announced its signing of a deal with Google and with Amazon Web Services to set up regional data centers in Israel, which, according to Finance Ministry officials, will ensure continuity of service even if the tech giants come under pressure to boycott the country.

The two tech firms were selected as the winners of the NIS 4 billion tender to build and provide cloud-based regional data centers and services to the nation. The nation signed the contracts a few days ago and ministries and other entities will be able to start moving their data onto the cloud in two months, the officials said.

The announcement comes as Google employees asked management to review the company’s contracts and corporate donations with “institutions that support Israeli violations of Palestinian rights,” citing the Israel Defense Forces as an example of such an institution.

The letter, by Jewish employees of Google, was sent to the CEO Sundar Pichai last week, calling on the tech giant to increase its support of Palestinians as a response to the fighting between Israel and the Hamas terror group that rules the Gaza Strip.

The accountant general at the Finance Ministry, Yahli Rotenberg, center, along with other officials, in Jerusalem on May 24, 2021 (Shoshanna Solomon/Times of Israel)

Asked if the tech giants could decide at any point to shut down services, leaving Israel in the lurch, attorney Zviel Ganz of the legal department at the Finance Ministry said, “According to the tender requirements, the answer is no.” The contracts also bar the firms from denying services to particular government entities, he said at a briefing with reporters on Monday.

Ganz added that such scenarios had been taken in consideration when formulating the tenders. “We made several models for these scenarios and addressed them in the tender,” he said.

One security measures within the contracts is the requirement for the multinationals to each set up local Israeli companies that will be in charge of building and then operating the data centers, and that will be subject to local laws.

The two tech giants won the bid against Microsoft, Oracle and IBM. They will build the data centers and provide cloud services to local public entities, with all of the data secured within the borders of Israel under strict security guidelines, and under Israeli law. The Israeli employees will have to pass security clearances.

The cloud project, called the Nimbus, is one of Israel’s biggest information technology projects. It will enable government ministries and other public entities to transfer servers and services into the cloud provided by the two tech firms. Until the data centers are built locally — within an estimated two years — cloud services will be provided by Google and Amazon AWS data centers in Ireland, Holland and Frankfurt. All of that data will then be transferred to the ones set up in Israel, the officials said.

The government contract with Google and Amazon for the services is for an initial seven years, with an option to extend it for a total of 23 years, the officials said. After the first seven years Israel will be able to add other suppliers or halt work with the current ones.

The project, which envisages six data centers being set up in Israel at an investment of at least NIS 4 billion ($1.23 billion), will provide some 500 direct jobs for each center but also boost employment indirectly via the services these centers will be using from other suppliers.

The centers will also help create an ecosystem for startups that provide cloud-based services, the officials said, and train the workforce with the appropriate skills that will then trickle down into the nation’s tech ecosystem. Neighboring countries will also be able to tap into the cloud infrastructure set up in Israel, the Finance Ministry said.

The Nimbus project was divided into four parts with four separate tenders: to build the data centers and provide cloud services to the government on a public platform – won by Google and AWS; to help set out a government strategy to move operations to the cloud; to provide technical help in implementing the move; and an as-yet unpublished one to provide optimization services for use of the cloud.

Consultants KPMG are the winners of the second tender, and will help set up a Cloud Center of Excellence, which will help set out government strategy to move activities to the cloud.

The ministry said that the tender to choose dozens of local small and medium-sized suppliers to help the government entities move systems to the cloud and to develop cloud-based systems is underway. The fourth tender is still being formulated, the ministry said.

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