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Google Is Investing $670 in Cloud Capacity Expansion in Finland

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May. 30 2019, Published 11:41 a.m. ET

Google is setting up another data center in Hamina

Alphabet’s (GOOGL) Google will spend 600 million euros (~$670 million) to set up a new data center facility in Hamina, Finland. Since Google already operates a data center in Hamina, which it developed at the cost of more than $890 million several years ago, the new facility will help expand its computing and storage capacity there. Google currently operates 58 data centers around the world, according to a Bloomberg report.

Data centers are the infrastructure that underpins Google’s cloud computing business. Therefore, Google’s building more data centers means that it’s expanding its cloud computing capacity, which should allow it to feed the growing demand for cloud services.

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Sights on $331 billion in cloud revenue

According to data from Gartner, some $182.4 billion was spent on public cloud services in 2018, and the spending is projected to reach $214.3 billion this year and to grow to $331.2 billion by 2022. This is the revenue opportunity Google is pursuing—and it’s not alone. Amazon (AMZN), Microsoft (MSFT), IBM (IBM), and Alibaba (BABA) are also pursuing cloud computing dollars.

Amazon is planning to open its first data center in Africa next year to further expand its cloud capacity. Africa is rapidly adopting technology, making it an attractive region for cloud vendors. Microsoft, for instance, already operates a data center in Africa and plans to invest $100 million in the next five years to set up its first African technology development hub, which will initially have sites in Kenya and Nigeria.

In its pursuit of cloud dollars, IBM is in the process of acquiring Red Hat (RHT) to help strengthen its position in this market. On its part, Alibaba is opening data centers around the world as it looks to sell cloud services to Chinese companies operating overseas. Last year, the company opened two data centers in London.

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