When you think of data centers, you probably imagine a giant server farm in a rural area where electricity is cheap and tax breaks abound. Major tech companies like Google, Amazon Web Services, Microsoft and Meta have placed millions of square feet of server space in places like Northern Virginia or Hillsboro, Oregon. But now, to reduce delays, companies are weaving more and more nodes in their network into the fabric of cities. For example, the One Wilshire building in Los Angeles, formerly home to a network of law firms, now oversees a third of all internet traffic between the US and Asia.
To the uninitiated, these urban physical internet nodes probably don’t look like much at all. And it’s designed that way. Equinix, the largest owner of colocation data centers with 10.9% of the global market, operates data centers that are generally not intended to draw attention to themselves. In Dallas, the company owns a sprawling industrial building just outside the city center that doubles as a data center and the headquarters of a for-profit college. In Tokyo, the operation is largely being run on several floors in the city’s sea of skyscrapers, “so you wouldn’t even know it’s there,” said Jim Poole, the company’s vice president for business development. In Sydney, Australia, Equinix is building a new data center in an expressionist style that resembles that of the city’s famous opera house. And around one of its facilities in Amsterdam, Equinix built a canal — not for safety, Poole says, then to make the building fit in with its surroundings, since Amsterdam is a city of canals. “For the most part, people are really trying to make their buildings fit into the environment,” he says, adding that sometimes local regulators even require it.
Demand for such facilities, especially in urban centers, is growing rapidly, with spending on colocation data centers increasing by 11.7% last year. The largest cloud companies are not far behind. Amazon Web Services is pushing scaled-down data centers, which it calls Local Zones, close to large population areas; so far it has placed them in 32 cities about the US. The trend has even sparked the interest of Walmart, which may start soon rent parts of its superstores to host data centers for outside companies.
One explanation for the surge in demand, Poole says, is that consumers themselves have changed. As more of our lives have gone online, “people’s tolerance for latency has gotten smaller and smaller,” he says. The main drivers are those applications where a millisecond delay can be critical: you may not notice a quarter-second delay on Netflix, but you certainly will if you use an online sports betting app, trade stocks, or participate in a multiplayer. game like Fortnite.
For example, companies like Google, Amazon and Microsoft are betting on cloud gaming, where games are streamed over the internet without a console or a phone to provide processing power. But many popular games, such as first-person shooters, “require a lot of fast reaction times and therefore really fast connectivity,” said Jabez Tan, head of research at the firm Structure Research. And such games will not work on a streaming service without the help of large numbers of data centers.