19 January 2024
If you are covering the news that Google is to invest in the UK with a new data centre in Hertfordshire, please find below a comment from Ben Barringer, technology analyst at Quilter Cheviot:
“Hot on the heels of Microsoft’s artificial intelligence investment late last year, the government looks to have scored another victory in luring big tech to the UK with the addition of a data centre in Hertfordshire. Relations between the government and big tech have been rocky in recent years with the protracted approval of Microsoft’s merger with Activision and Meta downsizing its UK footprint souring relations. However, it appears the tide has turned and Rishi Sunak’s ambition to make the UK a leading AI player is beginning to pay off.
“However, looking at the looking at the bigger picture for Google, this investment is somewhat a drop in the ocean and simply represents prudent business. The cost of this data centre is around a thirtieth of their annual capital expenditure and with approximately 30 data centres already constructed globally, it isn’t exactly going to move the needle for them by adding another. Furthermore, it is unlikely that post-construction many jobs will be created. Data centres do not require scores of employees to run them, and given Google is a very lean business, it will be looking to make its operation as efficient as possible.
“For the future, however, this puts the UK in a good position to seize the advantage in AI. Chancellor Jeremy Hunt is using Davos as an opportunity to talk the UK up to big tech, but a lot of work is still required. Global competition to become a big tech hub is rife with Germany and Asian countries making similar overtures. These markets are also potentially better set up with strong capital and IPO markets and a large pool of resources via the population. The UK is not the strongest in these regards and some big fixes are required which will take decades to achieve. Today’s announcement on the Google data centre is a good start, but lots more is required before the UK can start thinking in such grand terms as a future Silicon Valley.”
