Google to open new $1 billion UK data centre amid heightened scrutiny of cloud market

Google has unveiled plans for a $1 billion UK data centre as it ramps up its capacity to deliver more cloud and AI services to customers.

The US tech giant today said it had begun construction on a 33-acre site in Waltham Cross, Hertfordshire that it purchased in October 2020. Once construction is complete, the data centre will support the company's artificial intelligence innovations and growing cloud-based operations, including Google Cloud, Workspace, Search and Maps.

The move adds to the UK's growing AI capability, after ChatGPT maker OpenAI opened its first office outside the US in London and US giant C3.AI moved its Europe headquarters to the capital. Top British AI entrepreneurs have built stakes in businesses worth billions of dollars in recent years, including the founders of London-based Deepmind, which is now owned by Google.

Ruth Porat, President & Chief Investment Officer at Google, said: This new data centre will help meet growing demand for our AI and cloud services and bring crucial compute capacity to businesses across the UK while creating construction and technical jobs for the local community.

"Together with the UK government, we are working to make AI more helpful and accessible for people and organisations across the country.”

Chancellor Jeremy Hunt added the move was a "huge vote of confidence in Britain as the largest tech economy in Europe, bringing with it good jobs and the infrastructure we need to support the industries of the future.”

The investment comes amid a period of increasing regulatory scrutiny of the world's biggest cloud providers. In October, the UK’s Competition and Markets Authority said Britain's £7.5 billion cloud services market is to be the subject of a full investigation over concerns that dominant players like Amazon and Microsoft unfairly disincentivise customers from using smaller providers.

It follows a market study into the sector by media watchdog Ofcom, which urged the CMA to investigate the major cloud providers more deeply.

Ofcom said it was concerned about high exit fees charged by cloud providers as well as interoperability barriers that have been artificially raised to make it hard to switch providers.

Francisco Mingorance, Secretary General at European cloud services trade body CISPE told the Standard: “For us it’s paramount that the CMA includes a full examination of the pernicious effect that these licencing practices have on customers and other cloud providers.”

“Monopolies like Microsoft are imposing unfair licensing practices. This is a recognition that this is problematic behaviour and it should be addressed. We would like the CMA to set some boundaries, some clear rules for the market.”

Earlier this week, telecoms giant Vodafone said it was shutting its European data centres after striking a $1.5 billion deal with Microsoft which includes the provision of cloud and AI services.