Google says it will review its spending on data center infrastructure as part of a broader cost management initiative related to the COVID-19 pandemic, the company said yesterday.
Chief Executive Officer Sundar Pichai disclosed the moves in an email to staff, which was first reported by Bloomberg.
Pichai said that Google would be slowing the pace of its hiring, and “recalibrating the focus and pace of our investments in areas like data centers and machines.” The news underscored the complex economic impact of the COVID-19 outbreak, even for the hyperscale operators who have been the largest users of cloud computing infrastructure.
Pichai didn’t specify the details or extent of any reassessment of its capital spending. But Google has been one of the largest investors in data center construction and operations, spending $13 billion on digital infrastructure in 2019.
The pandemic has boosted demand for many of Google’s online services – like its Hangouts tool for video collaboration – but appears likely to prompt sharply lower spending on online advertising, which is the primary revenue source for Google. The retail and travel sectors, which have slashed operations during Coronavirus-related business lockdowns, are major users of Google’s ad platforms.
In his memo to staff, Pichai noted Google’s many initiatives focused on the COVID-19 crisis, including charitable donations, working with Apple to develop contact tracing technology, and “supporting products and infrastructure to keep our and others’ services running.”
“Just like the 2008 financial crisis, the entire global economy is hurting, and Google and Alphabet are not immune to the effects of this global pandemic,” said Pichai. “We exist in an ecosystem of partnerships and interconnected businesses, many of whom are feeling significant pain.”
“We are reevaluating the pace of our investment plans for the remainder of 2020,” he added. “Beyond hiring, we continue to invest, but will be recalibrating the focus and pace of our investments in areas like data centers and machines, and non business essential marketing and travel.”
A Leading Investor in Data Centers
Google is on the bleeding edge of data center technology, customizing nearly every element of its operations, from processors to building design. It operates one of the world’s largest digital infrastructure platforms, with 19 data center campuses around the globe, including 11 in the United States, 5 in Europe, two in Asia/Pacific and one in South America.
These cloud campuses house multiple buildings, each approximately twice the size of a Wal-Mart and filled with servers and storage to manage data. Google typically spends more than $1 billion to complete an entire campus, with some sites exceeding $2 billion in investment.
Google spent about $13 billion deploying new data center capacity in 2019, opening new data centers in Northern Virginia and Tennessee, and breaking ground for future campuses in Texas, Ohio and Nevada. In September announced plans to invest 3 billion Euros ($3.3 billion US) over the next two years to expand its data center footprint in Europe, along with 10 new projects to generate renewable energy for its servers.