Facebook to invest $1Bn in Singapore

Facebook to invest $1Bn in Singapore
The social media company said it will invest more than $1 billion to build its first data center in Asia in Singapore, slated to open in 2022. The new data center will come up near rival Google’s existing regional data center. Facebook, a social media and social networking site, was launched by Mark...

The social media company said it will invest more than $1 billion to build its first data center in Asia in Singapore, slated to open in 2022.

The new data center will come up near rival Google’s existing regional data center.

Background

Facebook, a social media and social networking site, was launched by Mark Zuckerberg in 2004 along with some of his Harvard roommates. Almost instantly the site was a hit among its users and grew exponentially across the world. As of August 2018, Facebook has more than two billion users monthly.

Facebook’s large user base has prompted them to expand operations and facilities across the world. South Asia’s young and technology-savvy population has encouraged Silicon Valley tech giants like Google and Facebook to invest in the region.

The recent scandal with Cambridge Analytica has unveiled Facebook’s unethical practices of user data storage outside of the host country. Their expansion into Singapore will be a way to mend their tarnished reputation as the world’s largest social media platform.

Analysis

Facebook has started a new expansion strategy which focuses on establishing a data center in South and South-East Asia. The new Singapore Data Center will span 170,00sqm m and will “support hundreds of jobs”, the company said in its press release, adding it will form part of its growing presence in Singapore and across the region.

Mr Thomas Furlong, vice president for Infrastructure Data Canters at Facebook, told reporters at the launch event that the new project will create "thousands of construction jobs", while the facility will require "hundreds of operators" ranging from network maintenance to logistics staff. He added that given it is a long-term project, the company is still working out its staffing needs.

Facebook said it chose Singapore for several reasons, including the quality of the city-state's infrastructure and workforce, and its business-friendly environment. The tiny nation has also taken a more relaxed stance on the storage and transfer of data than some other countries in the region such as China and India.

Facebook also touted how the facility will be “hyper-efficient” in terms of the use of water, energy and land. For instance, it will incorporate a liquid cooling technology that will minimise water and power consumption and, according to its testing, can reduce the amount of groundwater used by 20 per cent in climates like Singapore’s.

Facebook’s facility will be located in the west of the island, near where Google is expanding its Singapore data centers in an $850 million investment as mobile growth, e-commerce and cloud computing demand rise across the region.

The facility is expected to open in 2022, depending on the speed of construction. Facebook said in a statement the facility will represent an investment of more than S$1.4 billion ($1 billion).

Facebook already has a number of data centers in the United States as well as Ireland and Sweden, and it is building a facility in Denmark.

Assessment

Our assessment is that Facebook is trying to expand into more diverse markets to cater to its large, growing userbase. With over 2 billion actively monthly users, most of them from Asia, it is prudent to expect Facebook to have a presence in the region. We believe that because of Singapore’s tax regulations on data storage, Facebook will be able to continue its operations without meeting administrative hurdles.

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