Tech giants still bet on US datacentres despite NSA fears

Microsoft, Google and Facebook not put off by recent bad press for US data privacy

Much has been written about the reluctance to engage US-based cloud services in the wake of NSA surveillance leaks by contractor-turned-whistleblower Edward Snowden.

But the ongoing concerns about privacy and security - and a resulting softness in the market for US datacentre services - isn't keeping Microsoft and a host of other tech giants from making big bets smack in the middle of the nation's heartland.

Late last week, Microsoft confirmed plans for a massive 1.16 million square foot datacentre in southeast West Des Moines, Iowa. The project will cost an estimated $1.1bn (£66m) and will be one of the company's largest datacentres in the US, according to officials.

Code named Project Alluvion, the datacentre will take over about 154 acres that currently serves as a golf course. It's the second such Microsoft datacentre in West Des Moines; the facilities are used to support a number of cloud-based services including Microsoft Azure, Office 365, Outlook.com, Skype and Xbox Live.

The Microsoft plans are part of a boom going on in what Des Moines-area officials have dubbed the Grand Technology Gateway, a technology corridor in the state that runs for several miles west of interstate 35.

Other tech heavyweights investing heavily in the area include Facebook, which is developing a $1.5bn datacentre in Altoona, Iowa. Phase one includes a 476,000-square-foot datacentre, but the 194-acre Altoona site can accommodate two additional datacentre that are planned for future phases.

Keeping it local

Meanwhile Google has invested about $1.3bn in two similar facilities around Iowa.
More importantly, plans by Microsoft et al to expand datacentre assets in support of cloud offerings in the US indicates an encouraging optimism in the face of the fear, uncertainly and doubt stirred up by the NSA leaks.

Data from the Cloud Security Alliance gathered in the wake of the Snowden scandal showed growing reluctance to engage cloud services providers, particularly among businesses outside the US, where concerns raised by the NSA leaks about the integrity of datacentre assets housed in the US are at an all-time high.

"The results point to a great deal of concern as to the impact on commercial cloud computing activities as a consequence of [the Snowden incident]," the CSA report authors wrote, adding that key stakeholders in the matter should "have a public dialogue to discuss issues of citizen privacy and transparency in addition to the very important topic of maintaining a nation's security."

The survey of 456 CSA members found 56 per cent of those based outside the US said they are less likely to use US-based cloud providers as a result of the Snowden affair.

Some 10 per cent said they had already cancelled a project with a US-based cloud provider. More than a third of US-based respondents say the Snowden affair is making it difficult for them to do business overseas.

Daniel Castro, senior analyst at the Information Technology and Innovation Foundation, predicted the US cloud industry could lose $35bn over the next two years. "It's clear to every single tech company that this is affecting their bottom line," Castro said.

Forrester Research estimated the cloud losses at closer to $180bn in the same period. That's nearly a quarter of total industry revenue.

That's led some US-based firms to look outside the nation's borders for expansion opportunities.

IBM said in January that it planned to spend some $1.2bn for 15 new datacentres places like Hong Kong, London and Sydney, Australia. The plans were made specifically in response to heightened concerns among foreign customers about the location of their data. Salesforce.com announced similar plans in March.

But the Iowa datacentre endorsements from Microsoft, Google and Facebook indicate that, perhaps, things are not going to be so bad in the US after all.

"We're excited to have found a new home in Iowa, which has an abundance of wind-generated power and is home to a great talent pool that will help build and operate the facility," said Jay Parikh, vice president of infrastructure engineering at Facebook when the project was announced.

"Altoona will be our fourth owned and operated datacentre, and our third in the US. Thanks to Iowa, we're building the global infrastructure to bring the next billion people online."

As part of our special editorial relationship, CRN is publishing this article from Channelnomics.