Iran’s Strike on the UAE Exposes the Cloud’s Weakest Link

When Iran launched drone and missile strikes on Dubai on February 28, the immediate shock rippled through stock markets and shuttered airports. But the deeper consequences quickly surfaced in a less visible arena: the Gulf’s digital backbone.

In a stark reminder of how modern conflict can reach digital economies, technology infrastructure across the UAE and the wider Gulf has come under strain, disrupting cloud services and everyday business operations.

Within hours of the strikes, parts of the UAE’s cloud infrastructure began to falter, exposing the vulnerability of digital systems that underpin banking, logistics, government services and AI computing.

Drone strikes triggered fires and power outages at AWS data centres in the UAE and Bahrain, forcing the shutdown of its ME-CENTRAL-1 Region and disrupting services for at least a day. Authorities cut power to affected clusters as restoration efforts began.

Meanwhile, Claude by Anthropic suffered its second outage in 24 hours, following a March 2 disruption that drew over 1,000 user complaints in India. The strike on the UAE facility marks the first time a major US tech company’s data centre has been disrupted by military action.

It also raises questions around Big Tech's pace of expansion in the region. Notably, Google, Microsoft and Oracle also have data centres in the UAE.

AWS in the Crossfire

AWS was the first to experience disruption in services after one of its data centres in the UAE reported a fire after being hit by “objects” on March 1. Authorities eventually cut power to a cluster of Amazon data centres in the UAE.

"These strikes have caused structural damage, disrupted power delivery to our infrastructure, and in some cases required fire suppression activities that resulted in additional water damage," AWS said in a statement.

Financial institutions that rely on AWS services have been affected by the outage, according to a person familiar with the situation who spoke to Reuters on condition of anonymity. “Even as we work to ‌restore these ⁠facilities, the ongoing conflict in the region means that the broader operating environment in the Middle East remains unpredictable,” AWS added.

Amazon has also closed its fulfilment centre in Abu Dhabi and suspended deliveries across parts of the region as instability in the Middle East escalates.

Since launching its official regional cloud hub in late 2022, the tech giant has committed to a $5 billion long-term investment in the Middle East. ME-CENTRAL-1, which comprises three geographically-separated availability zones, houses one or more data centres designed to provide high availability and fault tolerance.

“Organisations representing critical infrastructure should be in a state of heightened monitoring and have an enhanced level of readiness to deal with any unprecedented situation,” says Atul Gupta, Partner, KPMG. 

Claude Goes Dark

Anthropic was another prominent tech company impacted by the ongoing conflict. While the company has not officially confirmed the cause, the disruption may be linked to the AWS outages, considering Amazon is Anthropic’s primary cloud service provider and training partner.

Meanwhile, Claude’s status page described the incident as an “elevated error” that impacted both the chatbot and other tools like CoWork. These tools recently gained attention for their potential impact on the SaaS industry.

According to outage-tracking platform Downdetector, more than 4,000 users in the US had reported issues as of 9.35 am local time. Around 40% flagged problems with Claude chat, 34% with the app, and about 15% with the website.

In India, nearly 300 users reported similar issues. While 71% cited issues with the Claude chat, 15% pointed to the app and 14% to the website. The disruption follows a previous outage on March 2, when the chatbot was unavailable across several regions for a few hours.

Billions at Stake

For businesses, the effect was immediate. Banking apps slowed or went offline. Corporate dashboards froze. Developers found themselves locked out of virtual machines that only minutes earlier had been humming in distant server halls. For Big Tech companies that have invested billions in the UAE’s digital infrastructure, the disruption is deeply concerning.

Over the past few years, cloud providers including AWS, Microsoft, Google, and Oracle, have expanded data centre regions in the UAE. These facilities offer high-performance computing infrastructure critical for training and running large language models. While AWS initially held a first-mover advantage, its competitors have significantly accelerated their investments in the UAE.

Microsoft is currently the largest investor in the UAE’s digital infrastructure, driven by its strategic partnership with Abu Dhabi’s G42. Between 2023 and 2029, the company has committed $15.2 billion and operates two cloud regions in Abu Dhabi and Dubai.

It has also secured rare US export licenses to deploy over 21,500 NVIDIA GPUs, including A100, H100, and H200 chips, to support regional AI development.

Google’s strategy centres on a ‘sovereign cloud’ model, ensuring government data stays within UAE borders while still enabling access to Google’s global AI tools. The company is involved in the Stargate UAE project, a massive 1-gigawatt AI data centre initiative in Abu Dhabi.

Oracle, meanwhile, has been aggressively building high-performance computing infrastructure for the Abu Dhabi government. In November 2025, it launched the Middle East’s first OCI Supercluster in Abu Dhabi, powered by over 4,000 NVIDIA Blackwell GPUs. This infrastructure is the backbone of Abu Dhabi's ambition to become the world’s first AI-native government by 2027.

Apart from the giants, SaaS firm Zoho launched its first data centres in the UAE and Abu Dhabi in January. Its $27.2 million investment focuses on “transnational localism”—investing in local infrastructure to ensure data sovereignty and compliance for SMEs and government entities. 

“Our growth in the UAE reflects the growing confidence of local businesses in Zoho’s solutions. These new data centres will further strengthen our ability to support customers with secure, high-performance cloud services,” Hyther Nizam, President, Middle East and Africa, Zoho, had said during the launch.

Strategic Infrastructure in a Conflict Zone

The irony is stark.

In recent years, US technology giants have positioned the UAE as a strategic hub for global AI computing. The country offered abundant capital, state-backed ambition and vast energy resources suited to the enormous power demands of AI data centres. It marketed itself as a neutral digital crossroads linking Europe, Asia and Africa.

The recent conflict has raised doubts about whether the region can remain a stable haven for digital infrastructure. Data centres were once seen as insulated fortresses designed for redundancy and resilience. Increasingly, however, they resemble strategic infrastructure—similar to ports, pipelines or power plants.

“Cyber conflict is now inseparable from kinetic conflict,” says Vinayak Godse, CEO, Data Security Council of India. “The Iran strikes demonstrate that cyber operations can precede and parallel military action. The impact will be felt across multiple sectors, particularly by tech companies with physical presence in the UAE. Active monitoring, resilience, rapid detection, and recovery are now just as critical as prevention.”   

Google Cloud told AIM its systems were operating normally. “All of our systems are working as intended. We don't have any other info to share at this point,” it says. Similar updates were shared by Microsoft, Oracle and Zoho, who revealed their services remain unaffected.

Threat To Cyber Security

For global companies, the threat now extends beyond physical attacks to the cyber operations that often accompany geopolitical conflict. Experts believe the ongoing conflict marks a phase in which cyber operations are no longer a supporting tool for warfare, but a core instrument of conflict—with potential spillover effects for businesses worldwide. 

Historically, geopolitical escalations have often triggered waves of asymmetric cyber activity. 

“You need not be an American or Israeli company to be at the receiving end. Even organisations perceived to be close to such firms—or that are part of their supply chain—could be caught in the crossfire,” Sundareshwar Krishnamurthy, Partner and India Cyber Leader, PwC India, tells AIM.

What makes the situation different this time is the scale and immediacy: cyber operations are unfolding alongside kinetic action, not after it. The goal is often sustained disruption—through phishing campaigns, reconnaissance, web compromises, distributed denial-of-service (DDoS) attacks and credential intrusions.

Indian IT firms, cloud providers, banks, telecoms and GCCs are especially exposed due to Western supply-chain connections. “Organisations must enforce phishing-resistant MFA, secure OT systems and treat geopolitical cyber risk as a core business continuity threat,” he advises.

Threat actors during this period are generally focused on inflicting damage to the nation’s digital assets engaged in the conflict. However, this also has a collateral impact on many other organisations that may represent the industry sectors prevalent in the conflicting countries or be associated with these countries.