As demand for cloud access soars, AWS announced Tuesday that it would spend £8 billion (about US$10.4 billion) over the next five years in UK data centers. This appears to put AWS at roughly the same UK investment level as rivals Microsoft and Google.
The money will be spent “building, operating and maintaining data centers in the UK,” an AWS statement said. “These positions all form part of the AWS data center supply chain, ranging from construction, facility maintenance, engineering, telecommunications, and other jobs within the broader local economy.”
Given that AWS did not break down the investment in terms of employees, contractors, hardware, software, and other items, it’s impossible to know what this investment will specifically buy. Google and Microsoft have historically been similarly vague about their European cloud budgets.
An AWS manager in the UK, who asked that her name not be used, confirmed that AWS will not break down the disposition of the investment money.
“The planned investment will include both capital expenditure (capex) and operating expenditure (opex). By capex we mean data center construction and purchase of servers and server racks, and networking infrastructure,” she said in an email to Network World. “By opex, we mean things like rent, power, and network utilities. Not able to provide a breakdown, I’m afraid.”
One of the driving factors behind the investment is British data sovereignty rules that require much of the data storage happen within its borders.
British cloud demand, very much fueled by generative AI needs, far exceeds the capacity of currently available cloud environments, said Gartner VP Analyst Sid Nag. “The UK needs a lot more cloud resources,” Nag said.
“Amazon has had challenges in the European market related to pricing. It is clear that they are responding to a capacity issue,” Nag said. “They are not spending £8 billion for the fun of it.”
Forrester Principal Analyst Lee Sustar agreed with Nag’s take.
“AWS’ £8 billion investment in the UK is noteworthy, as AI competition requires expensive buildouts along with the already vast spending needed to sustain hyperscale cloud services. Upstart cloud providers focusing on GPUs for AI are forcing AWS and other big players to pour far more money into infrastructure than they have in the past,” Sustar said. “Although it isn’t clear what percentage of this spending will be devoted to AI capacity, it is reasonable to assume that the AI arms race is a driver here.”
Another analyst, Sean Graham, IDC’s research director for data centers, said the lack of details in AWS’ spending announcement was quite deliberate.
“They are purposely worded that way to give them wiggle room. But even if we don’t know the breakdown, $10 billion is significant,” Graham said. “The average cost to build a datacenter in London is about $10 million/megawatt. If this was all for construction, which it’s not — the breakdown of new build versus maintenance is unclear — that would equate to about to about 1 GW of datacenter capacity, which is on par with their Talen Energy announcement.”
Graham added that this ideally signals good news for cloud purchasers. “For cloud buyers, this investment signals increased infrastructure reliability, scalability, and potentially better pricing or features in the UK market as competition intensifies. AWS expanding its UK presence also suggests that purchasers may benefit from reduced latency, enhanced data sovereignty compliance, and localized services tailored to the UK and Europe,” he said. “It also signifies AWS’s intent to expand capacity, which is mostly likely for more advanced offerings in AI.”
Scott Dylan, the founder of NexaTech Ventures, said that AWS’s move is similar to that of its major rivals.
“Microsoft’s Azure and Google Cloud are also scaling their investments to meet growing demand, with both companies making similarly large commitments globally. However, what sets AWS apart is its long-standing integration within the UK economy. AWS launched its first region in the UK back in 2016, and with this latest round of funding, the company will bring its total UK investment to over £11 billion by 2028,” Dylan said. “This is a testament to AWS’s deepening roots in the region, and the company’s strategy to future-proof the UK’s digital infrastructure.”
A slightly different take came from Matt Biringer, CEO of North, a cloud AI optimization company. He sees Amazon’s UK investment as significantly more than that of its rivals.
“£8 billion, roughly about $10.5 billion, is definitely not a small investment. Amazon is committing to spend $100 billion in new data centers in the next few years, and this represents a tenth of that total. Amazon is also clearly outspending its competitors,” Biringer said. “They’re pouring in about three times more than the $3.2 billion Microsoft invested in the UK, and eight times more than Google’s recently announced $1 billion for the area.”
AWS has been making cloud investments globally, including in Japan. Microsoft and Google have also been actively investing in Europe.
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