The Geopolitics Driving Cloud Data Center Location

Stability uber alles. JL

Tomer Simon comments in Medium:

Avoidance factors apparent from the choice of locations: none of the host countries share a border with Russia (Except Google in Finland, and in China but the data centers are the furthest possible from the border). Avoiding an ethnic mix: the countries in which Amazon, Microsoft and Google choose to build data centers are countries in which there is a clear majority for one ethnic group.

A year ago I got interested in the reasons behind the choice of locations of the public cloud data centers, and mainly those outside the US. Microsoft, Amazon, Google (and IBM up to a point) have built, or acquired, data centers throughout the world. I wanted to know why they chose these locations, but I dropped the issue.

Only after the switch in the US presidency did my interest in the subject rekindle. As it happened most of the CEO’s of these mega-companies publicly shared their view on politics and globalization, as the new executive branch started sharing their executive orders and worldview. To understand how it connects to the data centers a very short background is needed.

What happened in the US represents only one example, but a major one, of a return of nation-states to a more aggressive nationalism and patriotism. All around the world we can see nations and various ethnic groups trying to regain, or reconstitute, their independence. The latest examples were Brexit and the Scottish referendum. Today we have 200 countries (nation-states) in the world, but there are more than 5,000 different ethnic groups. If a large number of ethnic groups fought for their independence, can the destabilized world and its operating system (the UN) survive the upheaval?! The answer is most probably not. These numbers may present a risk to countries where they have a large ethnic minority which can be perceived as a potential threat. In most cases the largest or strongest ethnic group established their modern country.

Halford Mackinder is the “father” of Geopolitics and the creator of a very famous map — “The Mackinder System” and his architecture of power. To put it very simply — according to Mackinder (and the second half of the 20th century’s history) the world is doing everything it can to contain the core, or the pivot area, which is in fact Russia (Cold War, Georgia 2008, Ukraine 2014, Syria 2016, Eurasian Union). This was achieved, among other ways, through military and economic alliances. Trump and his unknown relations with Putin, and apparently favoring Russia, may undermine this world order as many fear.

Although these two issues (the rise of nationalism, and the containment of the Pivot Area) seem disconnected, they are in fact the two avoidance factors that are apparent from the choice of the locations:

1. Avoiding the “Pivot Area” — The one major aspect that is visible from the locations of the cloud data centers in that none of them reside in the Pivot Area, or more specifically in Russia. All of them reside in the inter-crescent and outer-crescent, creating a “cloud-containment” region. None of the host countries share even a border with Russia (Except Google in Finland, and in China but the data centers are the furthest possible from the border)

2. Avoiding an ethnic mix — There is a very clear trend when analyzing the demographics of these cloud-states, and more specifically the ethnic mix of them. The countries in which the three giants (Amazon, Microsoft and Google) choose to build their data centers are countries in which there is a very clear majority for one ethnic group. Google has the only exception with their data center in Belgium, where the country is split approx. 50/50. IBM received their data centers through an acquisition (SoftLayer), so the locations were not their choice.

Presumably financial considerations are very important for these companies and the leading factor as they choose and negotiate their next location. But, as they invest many billions of dollars in each data center the stability of the host country may be of higher importance. This stability (or vulnerability) of a country is not only measured through its demographics, but includes a number of additional factors that need to be considered i.e. — the political system and its structure, the natural and environmental conditions, scale of development, and good infrastructure. The vast majority of the host countries answer most of these parameters with flying colors.

Another title that companies like Microsoft, Amazon, and Google go by is “multi-national”. Nation states need to operate within a system, which today is globalization. These multi-nationals are the operators of globalization and are de-facto “states”, but without elections and without most state responsibilities.

It seems that these multi-nationals choose “uni-national” states in which they can operate their data centers securely, so that the globalization and liberal values promoted through them can be accelerated, but without the risk of damaging their amenable host.

With the new U.S. administration apparently reversing course and thereby threatening many factors which allowed these multinationals to survive & thrive, will the CEOs manage to combine concern for refugee and expatriates rights, while at the same time securing their business interests, status, and future recruitment?