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The biggest data center news stories of the last three months
KKR & GIP acquire CyrusOne for $15bn, American Tower acquires CoreSite for $10.1bn
CyrusOne and CoreSite are both to be taken over in multi-billion dollar acquisitions.
CyrusOne will be taken private in an acquisition by KKR and Global Infrastructure Partners, while CoreSite has been taken over by American Tower, a publicly-listed Real Estate Investment Trusts (REIT) traditionally focused on cell tower infrastructure.
The two data center REITs were both rumored to be potentially exploring sales. The deals mean three such publicly-listed data center firms have been acquired this year.
CyrusOne, which operates around 50 data centers globally, was acquired for $15bn.
“We have built one of the world’s leading data center companies with a presence across key US and international markets supporting our customers’ mission-critical digital infrastructure requirements while creating significant value for our stockholders,” said Dave Ferdman, co-founder and interim president and CEO of CyrusOne.
The deal is expected to close in the second quarter of 2022. Upon completion of the transaction, CyrusOne will be a privately held company wholly owned by KKR and GIP. KKR’s investment is being made primarily from its global infrastructure and real estate equity strategies, and GIP’s investment is being made from its global infrastructure funds.
On the same day as the acquisition was announced, American Tower bought CoreSite for $10.1 billion. CoreSite operates around 25 data centers across the US.
American Tower said the deal will be “transformative” for its mobile edge compute business, allowing it to establish a “converged communications and computing infrastructure offering with distributed points of presence across multiple Edge layers.”
Tom Bartlett, American Tower CEO, said: “We are in the early stages of a cloudbased, connected and globally distributed digital transformation that will evolve over the next decade and beyond. We expect the combination of our leading global distributed real estate portfolio and CoreSite’s high quality, interconnectionfocused data center business to help position American Tower to lead in the 5G world.”
Another publicly-listed REIT, QTS, was acquired by Blackstone this year for $10bn, while Cyxtera recently became the latest publicly-listed data center firm after completing a SPAC merger with Starboard Value Acquisition Corp. bit.ly/MegaDataCenterDeals
NEWS IN BRIEF
Partners Group buys Iceland’s atNorth
atNorth has two facilities in Iceland totaling 83MW, and is building an 11MW site in Stockholm, Sweden. Partners Group says atNorth is its fourth digital infrastructure investment in 2021.
TikTok’s €420m Irish data center delayed due to Covid-19
Construction shutdowns have pushed the Chinese social media’s facility opening from early 2022 to late in the year.
Chip shortages cause server delays at Final Fantasy XIV data centers
Players are struggling to access the video game Final Fantasy XIV due to publisher Square Enix being unable to acquire servers fast enough due to semiconductor shortages.
China says local govs should stop “blind and disorderly development” of data centers to hit green targets
Local governments have been told “in principle” not to provide incentives to data center companies to build facilities in areas that aren’t classified as national hubs by the government.
US FTC sues to stop Nvidia’s Arm acquisition, says it would harm data center chip innovation
The US agency said that the deal would give Nvidia too much control over the technology and designs of rival firms, and give it the means and incentive to stifle innovation. The vote to issue the administrative complaint was 4-0.
Korea Gas and KT announce data center at LNG terminal
The two companies will develop a data center that would use the cold energy from regasification at the LNG import plant near Seoul, Korea. The combination would save energy at the data center and use waste cold energy. The use of LNG cold energy could save around 12MW of power at a data center such as the one KT runs in Yongsan.
AtlasEdge, the recently formed joint venture between Liberty Global and DigitalBridge, has acquired twelve data centers from Colt Data Centre Services (DCS).
Colt said it is focused on building and developing larger hyperscale data center sites, and the divested facilities were ‘better suited’ to an operator exclusively focused on developing the emerging colocation market within Europe.
The portfolio includes data centers in 11 tier one and tier two markets across Europe, including Amsterdam, Barcelona, Berlin, Brussels, Copenhagen, Hamburg, London, Madrid, Milan, Paris, and Zurich. AtlasEdge said it now operates more than 100 data centers across 11 countries in Europe. The financial terms of the deal were not disclosed.
Colt Technology Services will become an anchor tenant across multiple facilities. Atlas noted that as well as helping the company enter new geographies, the deal will help establish a collaboration between itself and Colt DCS.
“We are delighted to welcome these sites into our expanding portfolio” said Josh Joshi, executive chairman, AtlasEdge. “We are tapping into an exciting and emerging market where real-time data traffic is growing and compute gravitating to the edge of the network. Our approach is open, carrier-neutral and collaborative, and we look forward to working alongside Colt.”
In May, telecoms company Liberty Global and digital infrastructure fund Digital Colony (now DigitalBridge) announced plans to launch AtlasEdge to operate more than 100 Edge data centers across Europe. The deal brings together DigitalBridge’s Edge assets and Liberty Global’s real estate portfolio, with several Liberty Global operating companies acting as anchor tenants; Virgin Media in the UK, Sunrise-UPC in Switzerland, and UPC in Poland. Last month Digital Realty announced it was investing in Atlas.
Colt has six remaining facilities across Europe; two each in London, UK, and Frankfurt, Germany; and one each in Paris, France, and Rotterdam, the Netherlands. It retains its portfolio of facilities across APAC.
“Having conducted a thorough review of its portfolio, Colt DCS identified twelve colocation sites that were better suited for an operator such as AtlasEdge, which is exclusively focused on developing the emerging colocation market across Europe,” the company said of the news.
It said the hyperscale facilities currently owned and operated by Colt, as well as those in development, are unaffected by the deal. In July, Japanese conglomerate Mitsui and investment firm Fidelity formed a joint venture to build hyperscale data centers in Japan that would be operated by Fidelityowned Colt.
Niclas Sanfridsson, CEO of Colt DCS, added: “By restructuring and focusing on our hyperscale facilities, we can meet our customers’ needs on-demand with true scalability and efficiency, while meeting their sustainability targets.” bit.ly/AtlasConsumed
Iron Mountain to acquire ITRenew for $725 million
Data center and storage company Iron Mountain has acquired IT Asset disposal & recycling firm ITRenew.
Iron Mountain will acquire 80 percent of ITRenew from private equity firm ZMC for approximately $725 million in cash, with the remaining 20 percent acquired within three years of close for a minimum enterprise value of $925 million. The transaction is expected to close in the first quarter of 2022.
Founded in 2000, ITRenew provides decommissioning and asset disposal services for data centers while also reselling recovered hardware. Following the close of the transaction, ITRenew will form the platform for Iron Mountain’s Global IT Asset Lifecycle Management business.
“This strategic transaction marks an important step in advancing Iron Mountain’s position in Asset Lifecycle Management and accelerating our enterprise growth trajectory,” said William Meaney, CEO of Iron Mountain.
“ITRenew complements our fast-growing IT Asset Lifecycle Management and Data Center businesses bringing capabilities to serve some of the largest and most innovative companies in the world.” ZMC acquired a majority stake in ITRenew in 2017 for an undisclosed amount.
Morgan Stanley & Co. LLC, is serving as financial advisor, and Weil, Gotshal & Manges LLP is serving as legal counsel to Iron Mountain. bit.ly/RecycledMountain
Zeewolde approves Facebook to build Netherlands’ largest data center
The small town of Zeewolde has granted Meta a permit to build the largest data center in Netherlands, for its Facebook, Instagram and WhatsApp applications.
The facility, which will potentially have five halls and use 200MW of electrical power, was approved in late December by a meeting of the council of the 22,000 population town, 50km East of Amsterdam in the province of Flevoland.
The data center will be built on 166 hectares (410 acres) of farmland, currently known as Trekkersveld IV (Tractor field IV).
The role of data centers has been controversial in the Netherlands, with opponents claiming they soak up available renewable energy and land, and create very few jobs in return.
The province of Flevoland currently has a ban on new data center constructions, pending a study into their impact on the community. However, Meta evaded the June ban by applying in February. bit.ly/ZeewoldesLargest
Facebook plans huge $29-34 billion capex spending spree in 2022, will invest in AI, servers, and data centers
Up from around $19bn in 2021
Facebook expects to spend tens of billions of dollars on data centers, servers, and offices in 2022.
The company, which is undergoing a rebrand to Meta, said that it expected capital expenditures of $29 billion to $34 billion next year - up from $19bn this year.
In its latest earnings call, chief financial officer David Wehner said that the increase in expenditure was “driven by our investments in data centers, servers, network infrastructure, and office facilities.”
This comes despite the fact that Facebook plans to offer remote work to staff, even after Covid-19 is under control.
Wehner added: “A large factor driving the increase in capex spend is an investment in our AI and machine learning capabilities, which we expect to benefit our efforts in ranking and recommendations for experiences across our products, including in feed and video, as well as improving ads performance and relevance.”
As part of the AI spending, it is developing its own in-house AI chips for video transcoding and recommendations, which would only be used in its own data centers and wholesale footprint.
The company did not break down how much would be spent on each area.
The planned investment will be Facebook’s largest annual capex yet. Facebook first crossed the $1bn expenditure line in 2012, steadily increasing to $7bn a year by 2017.
The next year, costs jumped to $13.9bn, followed by $15bn in 2019. It had planned to spend around $19bn in 2020, but deferred $3bn in infrastructure spend into 2021 due to Covid-19.
That helped make 2019 its biggest capex year to date, with $4.5bn spent last quarter alone. Now, however, ‘Meta’ hopes to increase that spend by as much as 79 percent.
News of this surge in spending helped raise the share price of Facebook suppliers, including networking company Arista.
“This is a very positive read for Arista as Facebook is one of the two cloud titans that account for a large portion of Arista revenue,” Evercore ISI analyst Amit Daryanani wrote in a note to clients.
“This is also a positive for Cisco, to a lesser extent, as we think they may gain some share at Facebook in the 2022/23 time frame,” Daryanani said. bit.ly/FacebooksSpendingSpree
Facebook turns to AWS as “longterm strategic cloud provider” for acquisitions, thirdparty collaborations, and AI
Meta has deepened its ties to Amazon Web Services.
The company said that it already uses Amazon’s cloud to complement its existing on-premises infrastructure, but will expand its use of the world’s largest cloud provider.
Meta said that it will run third-party collaborations in AWS and use the cloud to support acquisitions of companies that are already powered by AWS.
It will also use AWS’s compute services for artificial intelligence research and development for its Meta AI group.
The two firms work together on improving the performance for customers running PyTorch on AWS, the open source machine learning library primarily developed by Facebook’s AI Research lab.
“Meta and AWS have been expanding our collaboration over the last five years,” Kathrin Renz, AWS VP, said. bit.ly/StatusItsComplicated
Attempted theft at Abkhazia cryptocurrency data center leads to gunfight, one dead
A man was killed during an attempted robbery at a cryptocurrency mining data center in Abkhazia, a partially recognized separatist state that is seen as part of Georgia by most nations. According to police, one of the men running the illegal facility accidentally shot one of his own friends during the incident.
One of the data center’s operators, Renat Temurovich Pachalia, allegedly used an illegal Kalashnikov assault rifle, while his friends used Kalashnikovs and Makarov pistols, to defend the facility from at least five people, police state.
At some point during the firefight, Pachalia accidentally shot his friend, Ardzinba A.B.
Cryptocurrency mining has boomed in Abkhazia due to its unique political situation. The Abkhaz–Georgian conflict has been long and bloody, with Abkhazia seeking full independence and Georgia offering significant autonomy.
The conflict spiraled into an all-out war in 1994, along with ethnic cleansing of Georgians in the region. Efforts to repair relations were dashed during the 2008 Russian invasion of another disputed Georgian territory, South Ossetia. The five-day war had a lasting impact, with Russia and its allies officially recognizing both Abkhazia and South Ossetia as independent states, and stationing military bases in the regions.
That brings us to power. The Enguri hydroelectric power station, the world’s second-highest concrete arch dam, spans both Georgia and Abkhazia, so the crucial power plant can only function if the two sides cooperate. This has led to an uneasy truce on the dam, with a 1997 agreement meaning that Georgia gets 60 percent of the energy generated by the 1,320MW power station and Abkhazia gets the remaining 40 percent.
Critically, Abkhazia essentially gets that energy for free (they just pay for distribution, not generation), leading to consumer prices of just $0.005 per kilowatt-hour in Abkhazia, compared to Georgia’s $0.08 per kWh.
This has made it perfect for Bitcoin and other cryptocurrency mining operations - which, after initial hardware costs, profit from the margin between electricity costs and the value of imaginary coins.
But a Bitcoin boom risks upsetting the uneasy power balance between the two regions. Georgian politicians claim that since 2018 power consumption in Abkhazia has grown significantly due to crypto mining. bit.ly/CryptoPowerStruggle
German court convicts eight over illegal data center in former NATO bunker
A German court has convicted eight people who were involved in operating a data center at a former NATO bunker.
Among the illegal services allegedly hosted at the German data center were Cannabis Road, Fraudsters, Flugsvamp, orangechemicals, and the world’s secondlargest narcotics marketplace, Wall Street Market.
A large-scale attack on Deutsche Telekom routers in November 2016 is also thought to have been controlled via servers hosted there.
The ‘CyberBunker’ facility in Traben-Trarbach, western Germany, was raided by more than 600 police officers in September 2019.
Built by the West German military in the 1970s, the site was used by the Bundeswehr’s meteorological division until 2012. A year later, it was sold to HermanJohan Xennt, who told locals he would build a webhosting business there.
Instead the company hosted illegal material, offering help to clients. bit.ly/BadDataCenters
Cryptocurrency miners fled China for Kazakhstan, now they’re causing power shortages
A surge in cryptocurrency mining in Kazakhstan is causing power shortages, forcing the government to temporarily cut off some miners.
China’s efforts to ban mining and the high price of some cryptocurrencies have led to a huge growth in mining in the country, with the energy ministry estimating that electricity demand has jumped by eight percent so far in 2021 versus the usual one or two percent.
Since October, six regions in the country have faced blackouts. Following three major power plants in the north going into emergency shutdown last month the state grid operator, Kegoc, said that it would start rationing power to the country’s 50 registered miners, which consume around 600MW.
The Financial Times believes that around 87,849 mining rigs were brought to Kazakhstan from China, following the ban. Many are not officially registered with the government, with the Ministry of Energy estimating as much as 1,200MW is siphoned off by illegal miners. bit.ly/CryptoExodus
Contractor Mortenson shuts down Meta/ Facebook data center construction site in Utah due to racist graffiti
Contractor M.A. Mortenson shut down work on a Meta/ Facebook data center after discovering racist graffiti at the Eagle Mountain, Utah, site.
The incident was the second at the construction site in just over a week, with Mortenson imposing a sitewide stand down both times. The graffiti, found at the construction toilets, said “Kill a n***** day 11/29.”
Mortenson said that it will use the time to put additional training, safety, and security enhancements in place, and train workers on its antiharassment policy.
“These measures include but are not limited to respectful workforce training for everyone on the project, additional security cameras, investigative assistance from external resources, access monitoring throughout the site, a heightened security presence and relocation of portable toilets into controlled areas,” the company said in a statement.
Last year, contractor Turner shut down two Facebook data center projects in Ohio and Iowa when racist graffiti - and even a noose - were found on site. bit.ly/AGrowingProblem
Google backtracks on not paying data center contractors a promised pandemic bonus
After union workers threaten action
Google will pay its data center contractors a promised bonus that had been introduced due to the Covid-19 pandemic, and then withdrawn.
The company had originally told employees of contractor Modis that they would receive $200 extra a week until the end of the year, if they worked a full week. Then it stopped sending the payments inby October, including promised back pay.
Following the sudden stoppage - which Modis said was due to Google managers raising issues with the scheme - the Alphabet Workers UnionCWA threatened action.
The New York Times reports that the temps and contractors sent more than 100 messages and emails to managers over the lost pay. They arranged a videoconference of 130 data center workers discussing possible action, with some even suggesting work stoppage.
“Temps, vendors, and contractors (TVCs) are scared and feel replaceable all of the time,” former Google/Modis data center contractor Shannon Wait told DCD in our six-month investigation into worker abuses and labor rights violations at the company’s data centers.
She added: “Together, they’re so strong.”
In the US, Google Modis contractors usually receive around $15 an hour, and are given few of the benefits afforded to full-time Google staffers. TVCs originally filled additional roles at the company’s data centers, but have increasingly become the backbone of the cloud provider’s operations. bit.ly/GoogleHowToFormAUnion
Peter’s Google factoid
Google attempted to hide documents from a trial into whether it illegally fired employees, the NLRB found. Among the docs were training materials on how to campaign against unionization.
Worker trapped inside shipping container at data center
A worker was trapped in a shipping container at a Facebook/Meta data center construction site in DeKalb County, Illinois.
The individual appeared not to know where they were, with emergency services having to play air horns to try and locate where they were hidden. The person was recovered unharmed.
“The person was found safe,” Fire Chief Jeff McMaster told DCD. “The fire department did find somebody and they were all well - I cannot ascertain how long they were actually trapped. But we did receive a 911 call, we searched the area, and we found where the person was located. And they were released without incident.”
From the department being called to the person being freed took 13 minutes, McMaster said. Local groups that transcribe emergency service scanners reveal that rescue personnel had a hard time locating the shipping container, so used an air horn while the trapped person made noises.
Contractor Mortenson said in a statement: “A worker on the DeKalb project site was accidentally locked in a Conex box for a short period of time.” bit.ly/ContainerizationGetsOutOfHand
Northern Virginia tops data center location list dominated by the US
Despite its ban on new data centers, Singapore lists
Northern Virginia has once again been named the world’s most desirable data center location, in the annual list from property specialist Cushman & Wakefield.
Eight of the top spots go to US cities in the Global Data Center Market Comparison report which ranks Internet hubs according to criteria including fiber connectivity, tax breaks, and the price of land and power. The top 10 list is heavily US-dominated, and Cushman predicts that Northern Virginia will likely reach more than 2GW in the next two years, with a current capacity of 1.7GW.
Singapore climbed from number five to tie second, despite having had a long-standing moratorium on new data center projects, which is only now beginning to open. the list also included four new entrants.
After Northern Virginia, Silicon Valley and Singapore tie for second place, followed by Atlanta and Chicago tied fourth. Hong Kong, Phoenix, Sydney, Dallas line up in sixth to ninth place, with a tie for tenth place going to Portland and Seattle. bit.ly/CantKillTheKing
JPMorgan spent $2bn on new data centers in 2021, and plans to spend more
A total of $12 billion on tech - and the big bank is still moving to the cloud
JPMorgan spent $2 billion on new data centers in 2021, despite a continued move to get its IT into the cloud.
The US finance giant spent $12 billion on technology in 2021, and plans to increase that further by eight percent in 2022, it revealed in an earnings call last week which prompted criticism from analysts, and a small drop in its share price, according to the Financial Times. Executives on the call explained that the investment was needed to provide data centers and cloud services enabling it to expand into new markets like the UK.
Pushed by analysts on the call, chief executive Jaimie Dimon explained that even though the company is moving to the cloud, it needs to keep opening new data centers - and still keeping its old data centers running.
“We spent $2 billion on brand-new data centers, OK, which have all the cloud capability you can have in private data centers and stuff like that,” said Dimon, in response to a question from Mike Mayo of Wells Fargo Securities. “We’re still running the old data centers.”
He said that the investment in new data centers was mostly on applications, which would be ready to move to the cloud: “All this stuff going to these new data centers, which is now completely up and running, are on apps. Most of the applications that go in have to be cloud-eligible. Most of the data that goes in has to be cloud eligible.”
The bank has multiple cloud capabilities and is running a lot of major programs on AWS, but also has some on Google and Microsoft.
Between 30 and 50 percent of the company’s apps, and all its data, would be moving to “cloud-related type of stuff,” said Dimon: “This stuff is absolutely totally valuable,” he said praising the power of the cloud and big data to deal with “risk, fraud, marketing, capabilities, offers, customer satisfaction, do with errors and complaints, prospecting, it’s extraordinary.”
Asked to give more detail on the technology expenditure, Dimon said the company’s credit card business runs applications on a mainframe in an old data center which are going to be moved to the cloud: “Card runs a mainframe, which is quite good,” he said. The mainframe handles 60 million accounts efficiently and economically, and has been updated recently, he said: “But it’s a mainframe system in the old data center.”
Moving to the cloud is not about savings, he said: “The cost savings by running that will be $30-$40m, but,” he said, the real benefit is security. bit.ly/JP-More-Gan
Tonga volcanic eruption damages subsea cables
Tonga is likely to be without its subsea cables for weeks in the wake of a devastating underwater volcanic eruption and subsequent tsunami.
On January 15, the country was devastated by a three foot tsunami, triggered by an underwater volcanic eruption.
The scale of the devastation is not yet known due to communication issues. This is made worse by the fact that the nation’s only submarine cable was damaged.
The international Tonga Cable, laid in 2013, runs 827km to Fiji. The Tonga Domestic cable connects the islands of Vava’u (landing at Neiafu), Lifuka (Pangai), and Tongatapu (Nuku’alofa); it was laid in 2018.
Digicel, which is a minority shareholder in the majority Tonga government-owned cable, said in that statement that “all communication to the outside world in Tonga is affected due to damage on the Tonga Cable Limited submarine cable.”
The company said it was working urgently with local authorities to “resolve the damage.” bit.ly/CableCut
