Google, Amazon and Other Internet Giants Spend $33B per Year on Infrastructure

By

Content and application providers like Google, Spotify and Amazon are investing billions of dollars annually in a combination of facilities (such as data centers), fiber networks, servers and routers—to the tune of $33 billion annually on average.

According to a report from Analysys Mason, the level of investment has grown from $28 billion to $36 billion annually in the last three years, a spike of 13 percent between 2011 and 2013. This includes investment from pure online players such as those mentioned above, as well as the online element of multi-platform content providers such as the BBC or the New York Times.

The spending represents a material proportion of the annual revenues of content and application providers, researchers said. On average, the “largest three content and applications providers” have invested 9 percent of their 2011-2013 revenues in networks, facilities and equipment.

“This is perhaps less visible to end users than other investment in R&D, content development, software development and engineering, but forms an essential part of the physical fabric of the Internet,” the firm said in the report. “To address the ‘cloud’ analogy, the content and software they develop may be accessible anywhere and anytime, but it needs to be hosted and transported by physical networks, facilities and equipment.”

Investment made directly by content and application providers is the largest part of this, at around $25 billion (76 percent of the total).

The investment is dominated by hosting, which is driven by the growing volume of Internet content that must be hosted and processed – much of it user-generated (e.g. Facebook photos or YouTube videos). Facilities like Google’s Hamina data center are a prime example of direct investment put into hosting. Internet giants are also increasingly investing in physical cable networks, Analysys Mason noted, such as Facebook’s funding of the Asia Pacific Gateway, and Google’s spending on UNITY, the South-East Asia Japan Cable and most recently the FASTER cable system.

The report noted that transport investment is also significant, which reflects the scale of global terrestrial and submarine networks and the increasing demand for Internet bandwidth to support apps.

North America, Europe and Asia are all significant contributors to Internet investment, with Latin America, the Middle East and Africa contributing less.

“This is unsurprising given the existing concentration of Internet infrastructure in North America and Europe, and the large populations and growth in Internet usage in Asia,” Analysys Mason said.

Europe appears to be the largest destination for investment. Europe is a hub for Internet traffic as it is the meeting point of many international cables, home to the world’s largest IXPs, and has a large population of end users.

“This is attracting investment by U.S. companies, especially in data center facilities, as well as by local content and application providers such as Spotify and the BBC,” researchers said.




Edited by Maurice Nagle

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More