Will Google regret the mega data center?

Don't forget Moore's law

Cloud providers also need to watch Moore's law. You've just invested megabucks in your new cloud-centre, but 18 months later someone can do it for half the price. "First mover" might easily become "first loser".

Cargo ships

When most if not all data centers are fleets of floating data ships in international waters (free cooling and wave power yay!) taxation from individual countries will become a moot point. Unless they tax the internet itself.

The state wants fuller employment

These States give these tax breaks to encourage local full employment, after the data centre is built, it requires few staff to keep it running, but consumes resources (power, land, investment-money and local amenity).

Microsoft are trying to 'blackmail' Washington into a tax break, not realising that Washington sees their employment purse is empty.

Obviously, Microsoft have damaged their own brand value, which might have been another reason to have their data-centre in your state.

Commercial use for BOINC?

Not really my area but could cloud thingumies be run from BOINC clients (a al SETI, etc.) or similar?

There would probably be some limitations here but the servers we host at work spend a lot of time not doing very much and if there was money to be made hosting cloud apps I am sure we could be talked into it...

Presumably BOINC (or even some of the peer-to-peer apps) could be used to monitor who is doing what and manage billing accordingly?

Off shore

One step further from Phil's suggestion then.

We now have data centres in a number of containers so what would be the issues of utilising an 'old' container ship moored off shore somewhere or even an old oil rig platform?

Just think of the cooling potential of all that water. Yes, I know you could not use sea water for cooling (directly) but you could dump heat into a tank of 'clean' water and then use sea water to cool the 'clean' supply. Lets face it, the temperature of the oceans below, lets say, a couple of hundred feet or so starts to get pretty chilly.

In the right location a wind turbine or two could be utilised for power.....

Moving the data centre itself

Sun did indeed, and apparently Google have been using this on a large scale, with exactly this result: if their pile of servers in California becomes a problem, whether due to taxes, energy costs or just shifting user patterns, they can stick some or all of those containers on the back of trucks and drive to Oregon, Nevada, Michigan - wherever it makes more sense to put them now.

I wonder if this is affecting Amazon too, and if WA will back down once their targets move out of town?

@Phill

Better yet, put them on a boat. Google surely has the cash to invest in a set of geostationary satellites with big fat data pipes on them, or perhaps they can just trail a cable to the nearest piece of coastline...

Actually that could work. Some sort of floating platform, like an oil rig only bigger. you could call it Fat Caroline. Where's the patent office?

Google doesn't have *one* mega data center

Seems to me Google is doing *exactly* that, by having 40 datacenters, and not 1. Their datacenter-in-a-box is probably another tool in their strategy.

Divide, and conquer.

Moving the Play on ....a Level or Three.

"The web-based development and hosting platform is currently in technology preview mode."

MeThinks the more accurate version of that thought is the web-based development and hosting platform is currently in technology peer review for prewoven view mode/BetaTested MODeRN Satellite. An Astute Senior Service Stealth Facility ......MODeRN Virtual Platform/AI Phormation for Advancing Nationals and InterNetionalists ..... Primed and Prime Led Non State Actors and Actresses on AIRole for the Time of Our Lives? :-)

Ca Ira.

"Data Centers should be immaterial components for the cloud providers. Nothing more than containers or folders in which to drop their operational code." .... I agree, Cade, and is that not what they actually now are?

Renting Space on Mars delivers no Earthly Problems so that would seem to be a Glorious Investment Locale for Cloudy Operations and MODified Programs/Penalised Projects. Beware of Pretenders and Fraudsters though , the Cowboys who would try to Steal the Thunder and Lightning from NINJAs, for they are the Dead Wood and Bush Meat for Razing Fires and Raised Vultures into Central Control/Core Source Maintenance and New Unit Build ...... AI Node Propagation. Avoid them like the Plague for they destroy themselves with unwarranted greed and tainted base feed.

Both ways

Umm . . . Aren't the folks that are responsible for siting these mega centers a bit addled in thinking that their services will not be assessed taxes at some point?

Site scouting consultant: "Let's site in (Yourtown, Yourcountry) because they don't charge x or y tax, or their rate is low, and we have secured x or y benefit from the community. They don't know what to make of us, so we'll stay under the radar and make money hand over fist. This is a great opportunity."

Smart VP of Cloud Seeding: Thanks for the in depth analysis, Mr. Consultant. The door is in Thisroom, this Thistown.

Oil rig?

"We now have data centres in a number of containers so what would be the issues of utilising an 'old' container ship moored off shore somewhere or even an old oil rig platform?"

Sealand did EXACTLY that. I don't know if they used containers, but they had an off shore data center on an oil rig. Problem? It burned to the ground.. well, water. I don't know if this was a machine fault, or just that it was like a 80 year old rig, but anyway.

bait & switch

While the idea of abstracting the software layer to make data center utilization more modular and protect against hardware failure is cool...the other comments about tax avoidance is classic BS.

Look at the big picture: new business, new company trying to establish business operations; community provides a tax-free incentive; company starts making $1 BILLION profit per month; community says, "Ahem, the little grocery store down the street is NOT enjoying tax-free profits, you are making obscene profits, which we're really happy about for you, but you really think it's cool that you shouldn't pay your fair share of business tax just like every other mom & pop store in the neighborhood...??

Take note that despite the continual bloviation of business taxes being too high, US corporations pay, on average, a real tax WAY BELOW 10% while hiding their foreign profits behind zero-tax schemes and moving their HQ off-shore to some island nation...! This would be called theft and fraud.

There's all sorts of other complicated discussions surrounding this issue, but the idea that billion-dollar companies should get tax-free incentives (ad infinitum) is BS. Nice free market, Adam Smith is rolling his eyes.

Hang On

Perhaps Microsoft needs to partner with someone who actually knows how to do this?

Hmmm...

The fundamental solution is simple:

Don't compete on the basis of tax discounts.

It's obscene that some companies are offered "incentives" while local businessmen can't enjoy those same low tax rates. Fundamental fairness says the tax rate should be equitable across the board.

One major retailer built a warehouse near me. Now the locations for a warehouse serving retail stores is relatively limited -- figure a four hour driving radius so your drivers can make the journey back and forth in a day. Yet in my case three states competed by offering tax discounts to the corporation -- despite the fact the corporation logically had to locate in one of those states.

Part of the deal keeps the town from collecting full taxes on the facility for 20 years. Of course in 20 years that depreciation on the facility and especially the automated handling equipment inside will be substantial -- and the corporation will simply be shopping around for somewhere to build a new facility instead of dealing with the interruption of overhauling an existing plant while maintaining productivity there. Complete with new tax discounts, of course. The existing building, just as it gets to be taxed at full value will see the major corporation pull out and be replaced by a bunch of small businesses looking for low rent and having a fraction of the taxable assets that a corporation installing all new, highly automated machinery does.

It's a completely crazy way to operate, soak the local businessmen with the highest taxes, and provide the national corporations who will come and go with the biggest discounts.

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>if their pile of servers in California becomes a problem, whether due to taxes, energy costs or

>just shifting user patterns, they can stick some or all of those containers on the back of trucks

>and drive

I'm not sure that's the really compelling cost argument for them.

I think the advantage, really, is along the lines of pre-fab houses: It's far cheaper to build them in one central facility, then on site. You can have specialists at the "data center factory" who just specialize in assembling them, and then they're shipped to be assembled on site.

With an obsolesence of what, 5 or 6 years, why bother moving existing containers as-is? Break down / ship / setup labor costs will exceed tax costs in most cases. Instead as modules reach their functional obsolence, pull it out, send to the factory for a refurb with new servers, ship the refurbed unit to the new location. Within a few years you've accomplished shutting down the old site without the headaches of coordinating one big move.

re: zero sum thinking

Wrong, lower taxes for company A means employees for company A that pay income taxes. These employees also pay sales taxes on items purchased with their wages. The industrial base of employees created by Company A then enables Company B to set up shop at substantially reduced cost. This leads to Company C, D, E, etc until your tiny little strip of what was once farmland (say south of San Fransisco) is so valuable that it pulls in 100k per hectare in property taxes and houses hundreds of thousands of high income residents.

There's a strip in New York state that's currently doing this with semiconductor fabrication. Soon enough you have six fabs so your supply vendors move into the same area to share the talent.

New investment opportunity!

I guess it's time to set up a company that specialises in shipping IT to tax havens ..

Actually, I already did that - I move hedge funds, but they have less data :-)

Re: bait & switch

Too true. The problem here though is that as long as *somewhere* is prepared to offer a bung, *everywhere* has to to stay in the game (the game in this case being to get something worth taxing in the first place - those "mom and pop" businesses exist for a reason and that reason is servicing the needs of those who work for someone else).

When on your high horse, remember that there are places in the world over which you have no jurisdiction (a difficult concept for many Americans to embrace, yet true all the same). A Federal ban on tempting businesses to locate with tax incentives would result only in a massive offshoring exercise as more businesses than ever found that the benefits of doing so now outweighed the disadvantages.

It's the same in the arms trade. Preventing Tornado aircraft from coming with a sizable backhander doesn't stop backhanders. It does sell a lot of Dassaults and MIGs though.

not about the location or the business model

The problem with this is NOT that planning large datacenters is a problem, it;s that they planned around TAX LOOPHOLES.

ANY business plan that counts of skirting the tax system is a BAD plan. Eventually the local or state system will catch up and change a law to get what they're do.

I don't mind so much tax breaks on temporary basis for businesses who move a large facility into an area with large unemployment, so long as the tax break is 10 years or less and the contract for minimum employment levels at minimum pay grades is for 2-3 times longer than the break lasts. However, placing a facility somewhere because a certain thing is simply not taxed where it is almost everywhere else is insanity. As soon as they figure out they're missing out on what everyone else tatxes you for, they will too...

Taxes should be a fact. A base rate across the board on all systems and services. Companies choosing where to locate because it costs less to run a certain business one place vs another because of proximity to a resource i understand, or for logistics reasons, but when it extends to looking at local laws to determine profitablity based on regional variations in tax code, they're only setting themselves up to fail.

I fought the Law, and The Law lost

Technology may be advancing faster than society can gauge it's impact, but why leap from that to the conclusion that society has to give way to the requirements of business - well, other than the fact that of course every business wants zero corporate tax.

(Ever wonder why the burden of personal and local taxation keeps rising? You don't want to live in a completely scummy area, and your employer accepts that, but they certainly don't want to pay directly for it. Although ironically the will pay for it through higher salaries).

What's hilarious is when the same businesses have a 'Corporate Responsibility' unit, while they have other arms obviously dedicated to 'Avoiding Responsibility'.

And personally I think governments and law-makers have actually erred very much on the side of caution when it came to regulating the internet (I would wager that a significant reason for this is that America - correctly - identified it as a means of expanding American business and political interests globally).

It's only now that we're seeing the actual social and political consequences of the Internet, that we're seeing the first serious attempts to regulate it - which of course are being resisted by technological types who want a permanent Wild West.