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Microsoft’s European Tech Push: $2.1 Billion Slated for AI and Cloud Development in Spain

Last Updated February 20, 2024 12:02 PM
Giuseppe Ciccomascolo
Last Updated February 20, 2024 12:02 PM
Key Takeaways
  • Microsoft is making significant investments in artificial intelligence (AI) infrastructure across Europe.
  • The Spanish investment will see the creation of a cloud data center and an AI data center campus. 
  • But why is Microsoft building a leadership in AI in the Old Continent?

Microsoft is making substantial investments in Europe, with recent multi-billion-dollar announcements in the UK  and Germany . Now, the company is also planning significant spending in Spain to bolster its position in the European artificial intelligence (AI) landscape.

But what’s driving Microsoft to focus more on the AI leadership race in Europe? Is it simply a matter of tax considerations, or are there broader strategic motivations at play?

Microsoft Will Invest $2.1 Billion In Spain

Microsoft revealed  plans to allocate billions towards constructing data centers dedicated to artificial intelligence in Spain, just a few days after its substantial investment initiatives slated for Germany.

Spanish Prime Minister Pedro Sanchez and Microsoft executive Brad Smith disclosed that a total of €1.95 billion will be injected into the project over two years. The funds are earmarked for expanding the AI and cloud infrastructure, as stated  by Smith on the online platform X.

Smith, who serves as Microsoft’s Vice Chair and President, said: “Our investment is beyond just building data centers, it’s a testament to our 37-year commitment to Spain, its security, and development and digital transformation of its government, businesses, and people.”

The company has outlined its intention to establish a cloud data center in the Community of Madrid. Not only that, it will also develop a data center campus in Aragon, aiming to offer services to European companies and government organizations.

As noted by the company’s president, these two infrastructures “will enable the accessibility of the company’s comprehensive range of artificial intelligence solutions to Spanish and European companies, as well as public administrations.

Not Microsoft’s Initial Investment in the EU

As said, it’s not the first investment in AI for the company created by Bill Gates. On February 15, Microsoft announced  its plan to invest €3.2 billion – equal to $3.4 billion – in Germany by 2025. A significant portion will be allocated to bolstering the tech giant’s endeavors in artificial intelligence. Brad Smith said that the investment will primarily focus on doubling the capacity of Microsoft’s “AI and data center infrastructure.”

Highlighting Germany’s prominent role in technological advancement, Smith noted that the country ranks second in Europe in terms of developing AI-based applications. However, he also pointed out a relative shortage of AI skills across various sectors in Germany.

In response to this challenge, Smith stated that Microsoft aims to “assist in expanding infrastructure to support the continued utilization of AI in the German economy and to develop the skill base necessary to fill related job positions.” Microsoft, among the leading tech companies at the forefront of AI, has made significant investments in the sector. These also include backing ChatGPT-maker OpenAI and integrating AI across its product portfolio.

It All Started In The UK

The tech giant approved a plan to invest £2.5 billion – $3.2 billion – in the UK over the next three years. This marks its largest single investment in the country to date. And it will serve as a cornerstone for future growth in artificial intelligence, according to the UK government.

With Britain’s economy forecasted to face sluggish growth in the coming years, the government is actively seeking private investment to support the development of new infrastructure. This is particularly evident in burgeoning sectors like AI.

This substantial funding will significantly expand Microsoft‘s data center presence in Britain. It will provide the essential infrastructure necessary for the advancement of new AI models.

The UK became interesting to tech giants like Microsoft after the government unveiled its official response to a consultation on AI regulation, initiated in March 2023 with the publication of a whitepaper. Outlined in the document is a strategy that primarily relies on leveraging existing laws and regulatory bodies, supplemented by “context-specific” guidance, to offer measured oversight of the swiftly evolving AI industry.

Allocating £90 million, the UK government is spearheading the establishment of advanced AI research hubs nationwide. These hubs will encompass crucial domains such as healthcare, chemistry, and mathematics.

Why Does Microsoft Invest Massively In Europe?

UK, Germany, Spain. Why is Microsoft investing so much in the Old Continent? It’s not a tax affair, for sure, as European countries – Ireland and Cyprus apart – are not famous for being fiscal advantageous. So why?

“There are enormous opportunities to harness the power of AI to contribute to European growth and values,” Brad Smith said  in 2023.

“But another dimension is equally clear. It’s not enough to focus only on the many opportunities to use AI to improve people’s lives. We need to focus with equal determination on the challenges and risks that AI can create. And we need to manage them effectively.”

The fact that the EU is the first big institution to have regulated AI so far may be a boost for AI investments. In fact, in December last year, the Council and the European Parliament finalized an agreement. EU law will now regulate AI systems through a risk-based approach, encompassing foundational models and generative AI. While this introduces potentially multiplied obligations for companies, the inclusion of regulatory sandboxes offers flexibility for experimentation.

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