Data centres provide the required computing power to allow businesses to run vital applications and deliver important user services. The data centre industry is in a constant state of change and has experienced some major technology and business shifts that will shape its future development.
Listed below are the key regulatory trends impacting the data centre theme, as identified by GlobalData.
Regulators in the US, China, Europe, and the UK are considering whether to allow Nvidia’s $40bn bid for Arm to proceed. The likelihood is that one of them will block it. Opposition to the bid is growing and crystallising. The main concern is whether Nvidia’s Arm acquisition would disrupt the current unique model Arm uses to openly license its architecture to over 500 companies, which use it to make their own chips. Arm’s architectures are currently used in about 95% of the world’s smartphones and 95% of chips designed in China.
Qualcomm has told the US Federal Trade Commission (FTC), the European Commission, the UK’s Competition and Markets Authority (CMA), and China’s State Administration for Market Regulation antitrust regulator that it has issues with Nvidia’s Arm bid. Qualcomm believes that the acquisition risks Nvidia acting as a gatekeeper for Arm’s technology and could prevent other chipmakers from using it.
In addition to Qualcomm, AI chip start-up Graphcore has raised concerns with the CMA, saying that the deal is anticompetitive, while in China, Huawei is similarly calling for the deal to be blocked. Microsoft and Google are also believed to have raised concerns with regulators. Both are reportedly working on their own Arm-based chips, and Qualcomm’s processors are also based on the architecture. Nvidia’s CEO Jensen Huang has said he could “unequivocally state that Nvidia will maintain Arm’s open licensing model.”
The massive energy footprint of cloud computing requires the data centre industry to accelerate the adoption of sustainable practices and help reduce climate damage. Regulators will in future demand operators of digital infrastructure provide detailed evidence of carbon reductions, water savings, and significant power savings. In January 2021, more than 40 companies and trade organisations tied to the cloud and data centre industry, including Amazon, Google, Equinix, Interxion (Digital Realty), and NTT, formed the European-based Climate Neutral Data Center Pact in a self-regulatory move to make data centres across Europe climate-neutral by 2030.
The European Commission is weighing up introducing curbs on the energy consumption of Europe’s data centre sector. A similar drive may come in the US, with the Biden administration rejoining the Paris Climate Agreement and using the first 100 days of its term to jump-start a new climate-change agenda.
Data centre processing, especially for artificial intelligence (AI) workloads, comes at a huge environmental cost. Using AI for deep learning has a terrible carbon footprint. Researchers at the University of Massachusetts performed a lifecycle assessment for training several common large AI models and found that training a single AI model can emit as much as 626,000 pounds of carbon dioxide equivalent. That’s nearly five times the lifetime emissions of the average American car.
Governments’ greater recognition of data centres’ value will bring unwanted local red tape. The likelihood is that more countries will acknowledge the data centre sector to be part of the Critical National Infrastructure (CNI). Germany already does so but that formal recognition means the sector will become subject to more scrutiny and control, notably of the sector’s ability to deliver on environmental issues. That has already been the case in the Netherlands.
In 2019, the two administrations which make up the Amsterdam metropolitan area announced that no new data centres would be approved until 2020 because the sector’s demands for power and space were out of control. The Amsterdam region is home to 70% of data centres in the Netherlands and a third of all European data centres.
This is an edited extract from the Data Centers – Thematic Research report produced by GlobalData Thematic Research.