Digital Economy Weekly - September 22, 2024

Story of the Week

Cloud Computing's Global Imbalance

In an IDCA webinar this past week, it came to the audience's attention that 54% of the world's cloud computing is being done in the United States, according to a report from IDC. The US thus has more cloud computing than the rest of the world combined, in a nation with 26% of the world's economy and 4% of its people.

IDC noted that “Western Europe” (an admittedly imprecise term) commands 21% of the world's cloud, APAC (not including Japan and China) 6%, and the “Rest of World” 19% (with presumably more than half of that in China).

Worldwide spending on cloud will reach $800 billion this year, and double to $1.6 trillion by 2028, a CAGR of almost 20%. Several other industry reports fix cloud expenditures and growth rates in that general range. So, after more than 20 years of cloud computing (AWS was first loosed upon the world in 2002), the US remains far more dominant in the cloud than its world-leading, dominant economy implies – with a doubling of cloud expenditure projected in a mere four years, it can reasonably be expected that things won't change much anytime soon.

What is going on here? When will the rest of the world catch up, or is the notion of catching up a fanciful wish??

Even when one weeds out Silicon Valley's dystopic dreamers who want technology to let them live forever and travel among the stars, there's a consensus among economists and general populations that technology is today's key tool in addressing the world's big social problems and improving lives.?

Technology is assumed to be the key component, the essential piece, of addressing all Big Issues:

• Bridging the Digital Divide
• Increasing sustainability to fight climate change
• Cleaning up oceans and other water sources
• Improving government and corporate transparency
• Reaching the long-term goal or migrating from an extractive economy to a sustainable “circular” economy.

Yet embedded within these quests is the troubling reality that the United States still commands more than half of the key technology tool (ie, cloud computing) that will be used to accomplish all these grand, worthy goals.?

This statistic is not surprising. The Big Three cloud vendors are all US West Coast companies, and the region remains the world's unquestioned tech-development (often expressed as “innovation”) leader. The US is the world's biggest market so is always a coveted market to capture. It takes time for new, innovative products and services to permeate the globe, correct? So, is this situation a natural, benign occurrence, or a significant problem that must be addressed??

(This is the first of two articles on this topic. The second part, which dives into the detail of the world's technology imbalance, will appear next week. Meanwhile, let us know your thoughts.)

Links of the Week

Intel Benefits from $3B Biden-Harris Secure Enclave Program?

Intel may not be circling the drain just yet, as it has announced a new $3 billion award from the Chips and Science Act. The money goes to a "Secure Enclave" program, which "is designed to expand the trusted manufacturing of leading-edge semiconductors for the U.S. Government," according to Intel. Read here.

Justice Department Probe of Nvidia "A Gift to China"

The Manhattan Institute, a conservative think tank, is calling the U.S. Department of Justice investigation of Nvidia "a gift to China," in an article in its publication City Journal.

The investigation is escalating, according to recent reports. Noting that "regulators likely weren't even aware of Nvidia until recently," the article goes on to state, "Nvidia’s role in expanding America’s dominance in AI should win it praise and admiration from political leaders." The Justice Dept. probe comes at a time "when many are worried about China’s growing algorithmic and computational capabilities," the piece also states. Read here.

Microsoft and Blackrock Talk a $100B Data Center Commitment

Microsoft and Blackrock have created something called The Global Artificial Intelligence Infrastructure Investment Partnership, initially tasked with investing $30 billion for new and existing data centers, with an ultimate goal of investing $100 billion. (At current costs, the latter number could represent as much as 8 to 10GW of new data center footprint.) Read here.

Canadian Tech Exec Develops Digital Economy Strategy for the Country

Jeremy Wilmot, CEO of Interac Corp., a digital network that allows Canadians to send and receive secure payments and verify online credentials, recently outlined a plan to develop Canada's Digital Economy.?

“We’ve developed a three-year strategy that looks at the global marketplace, but more importantly, focuses on Canada,” he said. Keys to the plan include advancing real-time online payments, strengthening protection from fraud, and continuing to develop digital commerce overall. Read here.

Alibaba and GoTo Get To Building the Indonesian Digital Economy

Alibaba plans to work with locally based GoTo to develop Indonesia's Digital Economy. The companies' vision includes including the use of Alibaba Cloud in advancing the archipelago's digital ecosystem, as well as building out talent development initiatives that address the demand for digital and artificial intelligence (AI) skills, “which are essential for sustaining innovation and a competitive edge in a rapidly evolving digital landscape,” according to a report from China-based TechNode Global. Read here.

State of California Kickstarts Carbon-Negative Fuel Development Initiative

The California Department of Conservation is budgeting an initial $3 million to look at several new ways to create carbon-negative energy from forest biomass in its Sierra Nevada region, “to help offset the use of fossil fuel, improve forest and community resilience, and create regional economic opportunities,” according to the agency.

“This seed funding, which could treat up to 70,000 acres of Sierra Nevada forest, will yield impactful environmental benefits from materials that might otherwise be left in the forest to decompose or contribute to future wildfires,” a statement from the agency said. Read here.

Microsoft Buys All the Power from a Nuclear Plant in Pennsylvania

More than 800MW of power from a re-opened nuclear power plant named TMI2 in Three Mile Island, PA will feed one customer – Microsoft – as Redmond continues to develop its AI footprint. The plant was shut down in 2019 for economic reasons. It is adjacent to the infamous TMI1 plant that had an accident in 1979 that has stalled nuclear-power development in the US for decades.?

Three Mile Island is operated by Constellation Energy, and feeds into the largest transmission grid in the US, serving 65 million customers in the Northeast. Read here.

Malaysia Growing Fastest Within APAC

Johor, Malaysia, located immediately north of Singapore, is benefiting from the need for new data center capacity in the island nation, and is spurring Malaysia's overall data center development growth to the top of the APAC region. This Is according to a new report from Cushman & Wakefield.

Malaysia still ranks 8th in the region in overall capacity (China is the clear regional leader), but has moved up to 5th in overall development and the leader in percentage gain over the past year. Read here.

Princeton Digital Group Investing $1B in India AI-ready Hyperscale Centers

Singapore-based Princeton Digital Group will add 230MW of data center capacity in India, in a $1 billion investment in Mumbai and Chennai. The company said the new India activity is part of an overall $5 billion investment in APAC.?

The company describes its India and overall APAC efforts as hyperscale in nature, with an “AI-ready” focus on the new facilities construction and operation.?Read here.

Intel Delays $30B German Development

This week's news is bookended by Intel, which just received new funding from the US Chips and Science Act (see link above), but has also postponed a $30 billion investment plan to build fabs that would primarily serve the domestic automobile industry in Magdeburg, Germany (100 miles southwest of Berlin).?

The new chip plants were to be supported by billions of euro assistance from the German government. The news of indefinite postponement follow the emergence of an existential crisis at Intel in recent years, and a recent announcement by Volkswagen to close a factory or two in response to lagging demand. Read here.

Heard in the Industry

"What we're seeing (with respect to the Volkswagen and Intel announcements) currently is four years of de facto economic stagnation, and what ten years of deteriorating international competitiveness are doing to a country,.” – Carsten Brzeski, chief economist at Netherlands-based bank ING, speaking to German broadcaster Deutsche Welle.

Heard in the Aisle

“The business agility that comes with a public-cloud vendor allows faster deployments? reduces human error. (My research shows) a 43% reduction in time to market for new features and applications.” – Sally Vahaji, Cloud Economist and Member, IDCA Technical Standards Committee, speaking during an IDCA webinar on cloud computing.?Watch here.

Country Close-up: Uruguay

Is being a nice place enough to merit a serious look at a country with regard to business? “Nice” and “pleasant” are the two most common adjectives one hears and reads about Uruguay, for example, a small country of 3.4 million people sandwiched between much larger Argentina (46 million) to its south and gigantic Brazil (215 million to its north.?

Uruguay is under discussion here because it earns the highest rating in Latin America in the IDCA Digital Readiness Index, with an overall score of 69 that's on a par globally with Canada, Germany, and the UK. The country has the highest income in Latin America. Within the region, in the Digital Readiness Index, it trails only Chile in relative technology development, trails only Costa Rica in its environmental score, has the lowest corruption, and highest overall socio-governance ranking.?

Yet Uruguay is hemmed in by its small size, so can never be a major market by itself. Also, it has no non-stop flights from the United States (except for seasonal flights from Miami), and non-stop service from Europe is limited to Madrid. Better global access is critical for the country in order for its capital city of Montevideo to emerge as a regional financial and innovation center. There are 10 cities in Brazil alone with larger metro populations than Montevideo, too.

Yet Montevideo and Uruguay could hypothetically create a higher profile as a linchpin between the Spanish world of most of Latin America and the Portuguese colossus Brazil. It was actually dominated by the Empire of Brazil until achieving independence in 1830. Things have remained peaceful since that time, and a relative facility with the Portuguese language remains in the country.?

Companies looking to build data centers, make other investments, or seeking regional Latin American locations may wish to look into this nice, pleasant country, even if it lacks the higher profile of many other countries in the region.?

Inside IDCA

Sustainability Webinar, Wednesday, October 9

Sustainability is not just a matter of setting year 2030 or 2050 goals for emissions reduction. It involves comprehenive policies that are on the leading edge and address all levels (Scopes 1, 2, and 3) of emissions. With the global data center footprint projected to more than double by 2028, there has never been a more important time to make Sustainability a top priority. Register here.