Microsoft's Quincy data center

Microsoft's decision to shift its Azure cloud-computing platform away from its data center in Quincy, Wash., may have left the impression that the company was giving up on the facility entirely. Not so, Microsoft says. Even though the company won't be offering storage and computing to others from the facility via Azure, it still plans to run its own online services there.

In the meantime, the Azure decision is fueling an intense debate over the state's tax policy. In announcing the move last week, Microsoft cited "a change in local tax laws," referring to a controversial decision that excluded data centers from a rural manufacturing sales tax exemption under Washington state law.

Following the Azure announcement, Mike Manos, a former Microsoft data center leader now with Digital Realty Trust, made some pointed remarks in a post on the topic -- comparing it to similar cases involving Yahoo in Washington and Google in North Carolina.

"You are essentially seeing the beginning of a cat and mouse game that will last for some time on a global basis," Manos said. "States and governments are currently using their blunt, imprecise instruments of rule (regulations and taxes) to try and regulate something they do not yet understand but know they need to play apart of. (It's) no secret that technology is advancing faster than our society can gauge its overall impact or its potential effects and the cloud is no different."

Added Carl Gipson on the Washington Policy Blog: "Companies do not make this kind of decision lightly. They are expensive and time-consuming -- not to mention the loss incurred from abandoning projects mid-stream. But this week Microsoft basically told Washington state policymakers that when it comes to data centers, they are betting against us."

The Spokesman-Review of Spokane first noted last week that Microsoft would remain in Quincy to some extent. A Microsoft representative confirmed the stance today: "Microsoft will continue to host many Microsoft online services out of its mega data center in Quincy, and its other locations. Microsoft continues to be committed to our business in the state of Washington and the Quincy data center."