When you think of data centers, you probably imagine a giant server farm in a rural area where electricity is cheap and tax exemptions abound. Big tech companies like Google, Amazon Web Services, Microsoft, and Meta have put millions of square feet of server space in places like Northern Virginia or Hillsboro, Oregon. But now, to reduce downtime, companies are weaving more and more nodes from their network into the fabric of cities. The One Wilshire building in Los Angeles, for example, formerly home to a network of law firms, now oversees one-third of all Internet traffic between the U.S. and Asia.
For the uninitiated, these urban physical Internet nodes probably don’t look like much. And this is by design. Equinix, the largest owner of placement data centers with 10.9% of the global market, operates data centers that, in general, should not attract attention. In Dallas, the company has an extensive industrial building on the outskirts of downtown that serves as a data center and the headquarters of a for-profit university. In Tokyo, the operation is largely carried out on several floors within the city’s sea of skyscrapers, “so you wouldn’t even know it’s there,” says Jim Poole, the company’s vice president of business development. In Sydney, Australia, Equinix is building a new data center with an expressionist style similar to that of the city’s famous opera house. And around one of its facilities in Amsterdam, Equinix built a moat, less for safety, says Poole, than to make the building match its surroundings, since Amsterdam is a city of canals. “Mostly, people are really trying to get their buildings to adapt to the environment,” he says, adding that sometimes local regulators even require it.
Demand for these facilities, especially in urban centers, is growing rapidly: last year, spending on placement data centers increased by 11.7%. Bigger cloud companies are not far behind. Amazon Web Services has been pushing small data centers, which it calls local areas, close to major population areas; so far, it has located them in 32 U.S. cities. The trend has even sparked interest from Walmart, which could soon begin renting sections of its department stores to host data centers for third-party businesses.
Poole says one explanation for the rise in demand is that consumers themselves have changed. As more of our lives have gone online, “people’s tolerance for latency has continued to decline,” he says. The main drivers are those apps where a delay in milliseconds can be critical: You may not notice a quarter-second delay on Netflix, but I’m sure you will if you use an online sports betting app, negotiate actions or participate in a multiplayer. game like Fortnite.
Companies like Google, Amazon, and Microsoft, for example, are betting on cloud games, which consist of streaming games over the Internet without a console or phone to provide processing power. But many popular games, such as first-person shooters, “require a lot of fast reaction time and therefore very fast connectivity,” says Jabez Tan, head of research at Structure Research. And games like this will not work on a streaming service without the help of a large number of data centers.