“How do you increase the consumption of computation above and beyond what actually is required or what organizations and individual people are asking for? And this is what they're trying to do by cramming so-called AI into every nook and cranny because it does require such an incredible buildout.” Dwayne Monroe · Tech Won't Save Us

What I came to conclude is that they are doing it to escape from uncertainty. They prefer to depend on big tech, because if they depend on their cloud, they are not investing all this themselves, and they can always change and update the technologies faster. Which, for companies that are also operating as intellecto monopolies in their own fields, getting access to the method for innovation, the method that is becoming the primary one, the one that in a way is being imposed as the mainstream for keep developing intangible assets for these companies ends up being a sort of like best alternative available. And in the end, why it's the best alternative available for them is that it enables them to keep on extracting value from those that participate in their global value chains.

Even if we debate how much cloud services benefit users, it is clear this shift has been a boon for cloud providers, none more than Amazon. The company's e-commerce business isn't a particularly high-margin one, and Bezos long kept profit margins low to reinvest in growth and expansion. But once AWS came along, it changed the game. For years, the bulk of Amazon's profits have come from its cloud division. That's not only kept shareholders happy, but it's fueled the company's expansion into new areas, including everything from film and television to pharmaceuticals. Amazon could lose money dominating other industries because the cloud business was there to support its ambitions. In the first quarter of 2024, AWS accounted for just 17% of Amazon's total revenue, but a full 62% of its profits. It's no wonder Amazon and its competitors want to keep the cloud profits coming. There are plenty of data centers throughout the world, but remember the distinction we made earlier in this episode between hyperscale data centers and everything else. It's the massive hyperscalers, the kind being built to power the cloud businesses of companies like Amazon, Microsoft, and Google, that we're really concerned about. They not only have massive resource demands, but they signal a further consolidation and centralization of the infrastructure that powers the web in the hands of a small number of powerful, and in this case, American companies. Let's look at the numbers. In 2018, Synergy Research Group estimated there were 430 hyperscale data centers worldwide. 40% of those facilities were in the United States, with China, Japan, the United Kingdom, Australia, and Germany collectively accounting for another 30%. At the end of 2020, Synergy counted 597 hyperscale data centers worldwide, a number that had more than doubled in five years. Amazon, Microsoft, and Google were responsible for more than half of them, with Oracle, Alibaba, and Meta or Facebook adding quite a number of their own. But they were just getting started. Between the increasing internet dependence created by the pandemic, the continual growth of the vast data collection by these tech companies, and their efforts to get more people using more computationally intensive AI products, culminating in the generative AI hype of the past couple years, the major cloud companies have been making major investments to more rapidly expand their networks. At the end of 2023, Synergy counted 992 hyperscale data centers, and that number ticked over 1,000 at the beginning of 2024. Synergy expected the number to double again within four years, but more importantly, it noted that the scale of those facilities was increasing. They were continually getting larger, covering more space, holding more servers, and making greater demands on local electricity grids and water resources to serve the bottom lines of major tech companies. It counted 440 new facilities underway. But through 2024, the major tech companies and cloud providers have been throwing around money in every corner of the world to start building the foundations for new data center projects. I want to highlight those numbers for you one more time. At the end of 2018, there were 430 hyperscale data centers. By 2020, that had increased to 597. At the end of 2023, it was 992, and now it's over 1,000, with hundreds more in the pipeline. Earlier this year, Microsoft announced it spent $50 billion on data centers between July 2023 and June 2024 alone, and was planning to add new server capacity much faster than in the past. Amazon committed $150 billion to data center expansion, with $50 billion alone dedicated to projects in the United States in the first half of 2024. These companies are serious, not just about expanding their businesses, but increasing the amount of computation our societies require, regardless of whether there are corresponding social benefits. At the end of the day, the bottom line comes before everything else.

To close off this episode, let's go back to the Dahls, the city in Oregon that became the site of Google's first company-owned data center. Fast forward 15 years, and residents were starting to ask questions about how much they were really benefiting from the arrangement and the effects of all the water needed to supply Google's growing data center footprint as it continued to add new facilities to augment the original one from 2006. Oregon might be thought of as a wet state with plenty of water, but the Dahls is in a county that's regularly subject to drought and that has naturally made residents concerned about all the water going to Google. The tax break on its initial data center is over, so the company is paying significant sums into city coffers. But even still, Adam Cecil, a journalist at Fortune, reported that residents used to refer to it as Voldemort Industries, in part because of the secrecy and the Harry Potter villain's nickname being he who must not be named. In 2021, Google was negotiating a new water deal when residents' concerns finally came to a head. The Oregonian, a statewide newspaper, requested the figures for Google's water use from the city. And instead of providing them, the paper in the city ended up in court with Google paying the city's legal bills to keep the information private. It was the legacy of the agreement 15 years earlier to keep all of Google's operations a secret. Here's how Oregonian journalist Mike Rogaway described it to the Berkeley Technology Law Journal podcast.

Well, so if we go back to 2021, we got, you know, our readers out in the Dallas said, oh, Google is seeking a lot more water from the city, and they want a new water deal to help finance that. And I thought, well, we should understand that. So I called the water utility manager for the city, a fellow named Dave Anderson, and asked him about the deal that Google was seeking. And he walked me through it. And that was great. But in a poor example of reporting, I forgot to ask him how much water Google was using at the time. And as soon as I hung up, I'm like, oh, I forgot to ask the most basic question. So I hopped on the email and sent Dave a note and said, oh, I forgot to ask. So stupid. How much water is Google using now? Well, that email set off a chain of events then that Google asserted that its water use was a trade secret and instructed the city not to tell us. Oregon has a sort of unusual public records process that the city said, oh, it's a trade secret. We can't tell you. So we appealed to the county district attorney and said that they have no case here. They have to give us this information. They're a public utility and this is public information. And the district attorney agreed and ordered the city to hand over data about Google's water use. Well, Google then instructed the city to sue us to prevent us from getting access to that data, which is what Oregon public records law requires if a city wants to block the records. And so Google said it was contractually bound to do what Google ordered and did in fact sue us. Well, we fought the suit and a nonprofit organization called Reporters Committee for the Freedom of the Press stepped in and provided legal representation for us, limit our legal exposure. We felt strongly from the beginning, as did the RCFP, that the law was on our side. And it took about a year, but Google gave up and they agreed to give us everything we wanted, as well as pay for the city's legal costs and our legal costs.

As Google fought to keep its water use figure secret, it found itself facing a growing public relations nightmare and finally relented. When it shared its water use figures for the Dahls, people were shocked at what it showed. In just five years, Google's water use in the city had tripled. Its facilities used 355 million gallons of water in 2021, which was the equivalent of 29% of all the water used in the city that year. And it still wanted more to cool additional facilities. As one resident told the Oregonian, quote, Google's become a water vampire. But it's not just the Dahls asking those questions about the massive data centers being. built and planned for their communities. Around the world, groups of concerned citizens are asking questions about these infrastructures and pushing back on plans they feel aren't in their interests. Those fights could become central to a wider campaign to reassert collective power and sovereignty over technology. And that's what we'll be exploring in next week's episode. Data Vampires is a special four-part series from Tech Won't Save Us, hosted by me, Paris Marks. This original series was produced by Eric Wickham, and updates were made by our producer, Kylie Hewson. This series was made possible through the support from our listeners at patreon.com slash techwon's save us. We've already uploaded the uncut interviews of some of the guests I spoke to for this series exclusively for Patreon supporters. So make sure to go to patreon.com slash techwon'save us to support the show and make sure to order your copy of Hyperscale, the ambition and access of big tech's data empires. You can find more information about that at hyperscalebook.com.