Microsoft to invest €3.3b in expanding German data centres

Microsoft plans to invest almost €3.3 billion ($3.5 billion) in Germany over the next two years to massively expand its data centre capacities for artificial intelligence (AI) and cloud computing applications, Microsoft executive Brad Smith announced.

The largest single investment in Microsoft's 40-year history in Germany also includes an AI training programme that aims to reach up to 1.2 million people, Smith said during talks with Chancellor Olaf Scholz in Berlin on Thursday.

The funds will primarily be channelled into the western German state of North Rhine Westphalia, where Microsoft plans to set up a new cloud region, dpa learned.

The company is seeking to be close to major customers such as pharmaceutical company Bayer and energy giant RWE in order to keep the data latency between the data centres and the applications as low as possible.

The bordering state of Hesse will also benefit from Microsoft's investments.

The metropolitan region around the confluence of the rivers Rhine and Main is Germany's leading location for data centres due to the large DE-CIX internet node in Frankfurt. The existing Microsoft cloud region in the Rhine-Main area will be further expanded, Smith announced.

North Rhine Westphalia Premier Hendrik Wüst described Microsoft's investment as "a strong signal for Germany and a great contribution to structural change in the Rhine region."

With this multibillion-euro decision, Microsoft is making a significant contribution to sustainably driving forward the transformation of the economy in North Rhine Westphalia, he added.

"The fact that a global player is making such an investment in North Rhine Westphalia is a sign of trust and the result of concrete location policy."

With investments totalling $3.5 billion, Germany tops the list of investment announcements by the world's leading software company.

Last November, Smith pledged to invest £2.5 billion ($3.14 billion) in the UK by 2026 to drive the growth of AI applications. Just over a month earlier, during a visit to Australia, he had promised an investment of AUS$5 billion (US$3.25 billion) in the AI sector.

Microsoft is a leading player in the international AI market, partly because the software company invested several billion dollars early on to acquire a stake in the Californian AI start-up OpenAI.

The San Francisco-based company presented its ChatGPT text robot to the wider public in November 2022, triggering an AI wave.

Meanwhile, Microsoft has invested billions more to build up large computing capacities for AI training. The company uses AI technology in its search engine Bing and as a "copilot" in its Office programmes.

The Redmond-based software giant's main competitor is Google with its Gemini AI programme.