Amazon, Google, Microsoft nascent datacentres: How Will These Affect Africa?

Giant tech companies, Amazon, Microsoft and Google are building datacenters that deploy vast amounts of water in some of the world’s driest areas, an investigation by Source Material and the Guardian has revealed.

Before proceeding, let us pause at this juncture, for a comparative analysis of the three giants.

Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) remain the world’s dominant cloud providers, which is an increasingly nice position to be in as market revenues continue to surge.

Synergy Research Group (SRG) reports that AWS maintained its sizeable advantage over Microsoft and GCP during the third quarter, holding 31% market share compared to 20% for Microsoft and 13% for GCP. All three were noted to have witnessed increased growth rates over the past year, “with particularly strong improvements at Amazon and Google.”

Those growth rates come as overall enterprise spend on cloud infrastructure surged 23% year over year during Q3, hitting $84 billion for the quarter. This includes spending on infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and hosted private cloud services.

Other vendors taking a piece of that pie include Oracle, Huawei, Snowflake, and Cloudflare.

SRG pinned the surge in cloud revenues on increased investment in artificial intelligence (AI) and its generative AI (genAI) appendage, which have overcome lingering “economic, currency, and political headwinds.”

“While some market headwinds have diminished, it is undoubtedly AI that is a prime factor behind this increased growth rate,” SRG Chief Analyst John Dinsdale explained. “New AI-oriented services and technology are helping the major cloud providers to ride a wave – new capabilities lead to increased demand, which leads to increased revenues, which then enables more investment in underlying technologies.”

So much for the comparative x-ray. Enter the essay proper. SourceMaterial compiled a map of 632 datacentres – either active or under development – owned by Amazon, Microsoft and Google.

It shows that those companies’ plans involve a 78% increase in the number of datacentres they own worldwide as cloud computing and AI cause a surge in the world’s demand for storage, with construction planned in North America, South America, Europe, Asia, Africa and Australia.

In parts of the world where water is plentiful, datacentres’ high water usage is less problematic, but in 2023 Microsoft said that 42% of its water came from “areas with water stress”, while Google said 15% of its water consumption was in areas with “high water scarcity”. Amazon did not report a figure.

Now these companies plan to expand their activities in some of the world’s most arid regions, SourceMaterial and the Guardian’s analysis found.

“It’s no coincidence they are building in dry areas,” as datacentres have to be built inland, where low humidity reduces the risk of metal corrosion, while seawater also causes corrosion if used for cooling, Jaume-Palasí said.

Amazon’s three proposed new datacentres in the Aragon region of northern Spain – each next to an existing Amazon datacentre – are licensed to use an estimated 755,720 cubic metres of water a year, roughly enough to irrigate 233 hectares (576 acres) of corn, one of the region’s main crops.

In practice, the water usage will be even higher as that figure doesn’t take into account water used to generate the electricity that will power the new installations, said Aaron Wemhoff, an energy efficiency specialist at Villanova University in Pennsylvania.

Between them, Amazon’s new datacentres in the Aragon region are predicted to use more electricity than the entire region currently consumes.

The cloud giants have been investing in that opportunity, with a previous SRG report finding AWS, Microsoft, and GCP were in the midst of a data center expansion spree that will see them control nearly two-thirds of all data center capacity worldwide by the end of this decade, which is eight-times the capacity they controlled in 2017.

ABI Research noted in a report that this AI-fueled investment spree will also angle toward “large and mega-sized colocation facilities.” The firm noted that 28% of total worldwide data centers currently fit this size definition, but that “number will grow to 43% by 2030 as companies build larger data centers that can accommodate AI/generative AI workloads and other data-hungry applications.

However, those hyperscalers are also attempting to manage that data center investment.

“We are – and we’ve talked about now for quite a few quarters – we are constrained on AI capacity,” Microsoft CFO Amy Hood said during Microsoft’s Q2 earnings call. “And because of that … we’ve … signed up with third parties to help us as we are behind with some leases on AI capacity. We’ve done that with partners who are happy to help us extend the Azure platform, to be able to serve this Azure AI demand. And you do see us investing quite a bit as we’ve talked about in builds so that we can get back in a more balanced place.”

AWS CEO Andy Jassy during the company’s latest earnings call said its data center investment plans include having to work through logistical challenges.

“If you think about, we have 35 or so regions around the world, which is an area of the world where we have multiple data centers, and then probably about 130 availability zone through data centers, and then we have thousands of SKUs we have to land in all those facilities,” Jassy said. “And if you land too little of them, you end up with shortages, which end up in outages for customers. So most don’t end up with too little, they end up with too much. And if you end up with too much, the economics are woefully inefficient.”

Ongoing cloud infrastructure demand will mean that sort of planning will have to continue for the foreseeable future.

IDC predicts spending on cloud infrastructure will increase at an 18.1% compound annual growth rate (CAGR) through 2028, hitting $253 billion and accounting for more than three-quarters of total compute and storage infrastructure spend. Most of that will be spent by service providers on shared cloud infrastructure.

“Hyperscalers, digital service providers, and major cloud service providers are the ones that keep pushing the growth and that will continue to have a positive impact on the market during 2024 and 2025,” Juan Pablo Seminara, research director for IDC’s Worldwide Enterprise Infrastructure Trackers, explained. “And the improved economic prospects will help to extend the positive mood even further.”

Meanwhile, Amazon in December asked the regional government for permission to increase water consumption at its three existing datacentres by 48%.

Opponents have accused the company of being undemocratic by trying to rush through its application over the Christmas period.

More water is needed because “climate change will lead to an increase in global temperatures and the frequency of extreme weather events, including heat waves”, Amazon wrote in its application.

“They’re using too much water. They’re using too much energy,” said Aurora Gómez of the campaign group Tu Nube Seca Mi Río – Spanish for “Your cloud is drying my river” – which has called for a moratorium on new datacentres in Spain due to water scarcity.

Spain has seen rising numbers of heat-related deaths in extreme weather events linked by scientists to the climate crisis. Last month, Aragon’s government asked for EU aid to tackle its drought.

Farmer Chechu Sánchez said he’s worried the datacentres will use up water he needs for his crops.

“These datacentres use water that comes from northern Aragon, where I am,” he said. “They consume water – where do they take it from? They take it from you, of course.”

With 75% of the country already at risk of desertification, the combination of the climate crisis and datacentre expansion is “bringing Spain to the verge of ecological collapse”, Jaume-Palasí said.

Asked about the decision to approve more datacentres, a spokesperson for the Aragonese government said they would not compromise the region’s water resources because their impact is “imperceptibly.”

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Amazon does not provide overall figures for the water its datacentres use worldwide. But it does claim that it will be “water positive” by 2030, offsetting its consumption by providing water to communities and ecosystems in areas of scarcity elsewhere.

Amazon says it is currently offsetting 41% of its water usage in areas it deems unsustainable. But it’s an approach that has already caused controversy inside the company.

“I raised the issue in all the right places that this is not ethical,” said Nathan Wangusi, a former water sustainability manager at Amazon. “I disagreed quite a lot with that principle coming from a pure sustainability background.”

Microsoft and Google have also pledged to become “water positive” by 2030 through water offsetting, as well as finding ways to use water more efficiently.

Water offsetting cannot work in the same way as carbon offsetting, where a tonne of pollutants removed from the atmosphere can cancel out a tonne emitted elsewhere, said Wemhoff, the Villanova University specialist. Improving access to water in one area does nothing to help the community that has lost access to it far away.

“Carbon is a global problem – water is more localised,” he said.

Having dissected the fundamentals of the essay, it is pertinent here to find out how these gigantic novel projects will impact Africa. Will giants Microsoft, Amazon and Huawei outpace African operators in race to dominate the Cloud? Though there are still very few data centres on the African continent, in no small part due to a lack of reliable power, a few independent groups have managed to break into the sector. But they are now facing a serious challenge with the arrival of the world’s internet giants, which are targeting South Africa to place their infrastructure.

Will giants Microsoft, Amazon and Huawei outpace African operators in race to dominate the Cloud? Though there are still very few data centres on the African continent, in no small part due to a lack of reliable power, a few independent groups have managed to break into the sector. But they are now facing a serious challenge with the arrival of the world’s internet giants, which are targeting South Africa to place their infrastructure.