Google Taps Video Growth With $608 Million Finnish Investment

Google Inc. (GOOG), owner of the world’s most popular search engine, plans to spend 450 million euros ($608 million) to expand its Finnish data center as mobile video demand increases.

“Google is in Finland for the long term,” Dieter Kern, manager of the data center, told reporters in Hamina, about 150 kilometers east of Helsinki. “We’re digging deep roots, both figuratively and in a concrete way.”

Google, based in Mountain View, California, is stepping up investments to cope with increasing volume from wireless devices as it chases advertising revenue. Its third-quarter capital expenditure, mainly on equipment, data centers and real estate, rose to $2.29 billion from $1.6 billion in previous quarter.

Companies in need of more capacity as data demand grows are increasingly looking toward the Nordic region, attracted by a stable electricity grid as well as the chilly climate which helps save on equipment cooling costs.

Microsoft Corp. said on Sept. 3 it will invest 250 million euros in a new data center in Finland. Facebook Inc. opened its first data center outside the U.S. in Luleaa, Sweden, in June. London-based Telecity Group Plc, which hosts Spotify Ltd.’s music services, last year bought Helsinki-based data-center operators Academica Oy and Tenue Oy with plans to expand capacity.

Creating Jobs

Google bought the former newsprint mill in Hamina in 2009 for 40 million euros with an initial investment of 160 million euros to convert it into a data center. It added further 150 million euros to expand the site last year. Construction of more data center space has already started, Kern said.

The construction will provide jobs to 800 engineers and builders and the data center’s staff count will increase from the current 125, according to a statement.

Finland’s government is seeking to fuel the data-center boom by reducing the energy tax collected from companies investing in data storage starting next year. That would reduce their energy tax rate to a similar level as other industrial companies, Prime Minister Jyrki Katainen said today. The proposal needs approval from the European Commission, the executive arm of the 28-member European Union, he said.

“This is one of the biggest foreign direct investments into Finland,” Katainen told reporters. “These extensive investments also say something about Finland. We’re able to offer a competitive environment to international companies.”

To contact the reporter on this story: Kasper Viita in Helsinki at kviita1@bloomberg.net

To contact the editor responsible for this story: Christian Wienberg at cwienberg@bloomberg.net

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