The race to become the biggest cloud provider in the UK stepped up a gear today after Amazon-owned AWS vowed to invest as much as £8 billion into British data centres over the next five years.
AWS, which already accounts for around a third of the UK’s public cloud infrastructure market, said it would deploy the cash over the next five years in building, operating, and maintaining data centres as part of its commitment to the UK economy.
The firm said the investment would contribute as much as £14 billion to UK GDP through to 2028, supporting an average of more than 14,000 full-time jobs on an annual basis in local UK businesses.
Tanuja Randery, Vice President and Managing Director, EMEA at AWS, said: “The next few years could be among the most pivotal for the UK’s digital and economic future, as organisations of all sizes across the country increasingly embrace technologies like cloud computing and AI to help them accelerate innovation, increase productivity, and compete on the global stage. ”
An AWS spokesperson told UKTN the £8 billion figure was made up of capital expenditure including data centre construction, purchase of servers and server racks, and networking infrastructure; and operational expenditure including things like rent, power and network utilities.
The move makes AWS the latest US tech giant to unveil plans to build more data centres in the UK. In January, Google began construction of data centres at a 33-acre site in Waltham Cross, Hertfordshire, while in November last year, Microsoft laid out plans to invest £2.5 billion into building data centres for AI in the UK.
The AWS commitment comes amid a period of increasing regulatory scrutiny of the world’s biggest cloud providers. In October 2023, the UK’s Competition and Markets Authority said Britain’s £7.5 billion cloud services market is to be the subject of a full investigation over concerns that dominant players like Amazon and Microsoft unfairly disincentivise customers from using smaller providers, while media regulator Ofcom said it was concerned about high exit fees charged by cloud providers as well as interoperability barriers that have been artificially raised to make it hard to switch providers.
According to an Ofcom study published last year, the UK cloud market is dominated by three main players, with Amazon and Microsoft each accounting for around 30-40% of total revenues and Google representing around 10%.
However, the UK government has signalled its openness to proposals to build more data centres in the UK as it eyes opportunities to accelerate growth in the British economy. In July, Levelling Up secretary Angela Rayner unveiled a review into two proposals to build data centres in London’s commuter belt which had been blocked by local authorities in signs the government is prepared to overrule local planning decisions to support public infrastructure development.
The total economic impact of cloud computing in the UK accounted for over £42 billion in 2023, according to an analysis by Telecom Advisory Services. That is equivalent to 1.6% of GDP, larger than the UK’s automotive manufacturing sector.
While AWS is Amazon’s smallest operating segment by revenue, representing about 16% of Amazon’s revenue in the year to December 2022, it was Amazon’s only profitable segment in that year and it remains Amazon’s most profitable segment as of the quarter to June 2023.
