The rise of AI, with the attendant apocalyptic claims of doomsayers, has focused popular attention on datacentres and their profligate use of energy and water. While AI is driving their growth, it is far from the only cause of a problem that predates the maturity of large language models.
There’s no such thing as “the cloud”
At the root of the issue is an unacknowledged truth: the cloud is just other people’s computers. Cloud services run on hardware in datacentres owned and managed by large corporations. Sometimes smaller companies build cloud applications that they sell, and you may have no idea that they are running on servers operated by Amazon or Google, potentially outside the UK (unless you read the small print).
Many of the apps on your phone rely on cloud-based services running in datacentres.
Not everything runs on the cloud, though, and not all datacentres are cloud or AI. Some of the most important in the UK are primarily communications hubs, requiring extremely reliable operation and fault-tolerant infrastructure, sometimes built to the highest classification, Tier 4. These sites have long leased space to companies wanting highly reliable infrastructure, a process often termed “co-location” or “colo”.
When I started my career, companies typically had server rooms on their own premises, with perhaps a disaster recovery datacentre rented under colo. Now, the default is for everything to be hosted elsewhere. Some of this is pragmatism: redundant power and cooling are expensive and difficult to set up in rented or leased offices. Some of it is dogma-driven. But the result is the same: instead of running a server in your office, you pay someone a subscription.
But how big a problem is that?
“You’ll own nothing and be happy”
The phrase “you’ll own nothing and be happy” originated with a 2016 essay by Danish politician Ida Auken, imagining a future in which citizens rely on the ‘sharing economy’ for many of their needs, but it has become the rallying cry of people like Louis Rossmann, who criticise the rise of everything as a subscription, part of the global process described by Cory Doctorow as “enshittification”.
Over the decades, companies and government bodies have quietly moved from owning servers as capital assets to renting them. On-premise leasing, off-premise managed operation, cloud platform as a service. Increasingly, they don’t own their servers, their software, their infrastructure. It’s a form of outsourcing by stealth, largely unnoticed.
Moving out was easy. Moving back, not so much. Repatriating your systems from a third party incurs significant costs, and even moving from one provider to another is expensive and requires detailed planning. Which means, of course, that the providers have you over a barrel. You are the frog in the pot, and they can turn up the heat. One project I worked on saved over 60% of the cost of running some systems by bringing them back in house onto computers we owned. It took three years.
This is even more true for consumers. Where is your photo library? Increasingly, photos are stored or backed up in cloud services such as iCloud, OneDrive and Google Drive, even when they appear to be on your device. In some cases, the full-resolution originals may be stored only in the cloud, with smaller versions kept on your phone to save space.
And what about your music and films? Increasingly, these are not physical things but access to content held in cloud services such as Prime and Netflix. Even when you have paid for supposedly perpetual access, it can still be revoked. You can buy a film on Amazon Prime Video, but you can’t sell it to someone else. You don’t own it in the way you owned a DVD. And if the vendor changes its licensing arrangements? Too bad.
And all of that requires datacentres.
The usual suspects
Many of us eschew Amazon, blaming them, with some justification, for accelerating the death of independent retail. Fewer are aware that retail is just a side-hustle for Amazon these days. In 2024, before the pedal really hit the metal on AI, well over half of Amazon’s operating income came from Amazon Web Services (AWS), its datacentre arm. AWS has 28% of the worldwide cloud infrastructure market, the largest of the “big three” (the other two are Microsoft and Google). Between them, these three account for almost two thirds of the cloud infrastructure market.
In many cases you won’t know whose datacentres underpin the service you use. Microsoft, for example, resells its Azure services through multiple third parties: you may think you are dealing with a UK-based company, but you may find that their systems run on Azure. Vast swathes of public sector IT run on Azure, thanks in no small part to government “cloud-first” strategies and consulting firms like Accenture, who operate major NHS cloud services.
You’ll notice that the big three have something in common: they are US-owned. In fact, most of the major providers are, including Oracle, IBM and Salesforce. Alibaba and Huawei have some presence, too, but the cloud infrastructure on which British government and business increasingly relies is dominated by foreign-owned companies. That has profound effects on the flow of tax revenue. Although we have the Digital Services Tax, this levies 2% on certain revenues derived from UK users of large digital businesses. Most of the profit goes to the foreign parent. And your health data? It may run on hardware controlled by comic-book villains Jeff Bezos and Larry Ellison.
The AI-specific problem
All that is not to say that AI doesn’t present a very specific problem. It does. Computationally, AI is incredibly expensive. Demand for Graphics Processing Units (GPUs) for AI outstrips even the height of the crypto mining bubble. Makers of memory chips are switching to high-margin server and high-bandwidth memory chips. Prices of servers are up by a third or more year-on-year.
For businesses locked into cloud services, this is driving prices up. And there’s no way out: servers for on-premise use are subject to the same pressures. The price of all the tech you use is rising, and AI is the dominant factor in that increase.
There’s also a change in the mindset about datacentres. For years, datacentre operators were trying to reduce their environmental footprint, with parallel sustainability initiatives from AWS, Azure and Google, among others. AI bros, by contrast, do not appear to give a damn. They are riding a bubble – few AI company seem to be making a profit – and speed of building is more important to them than societal cost.
If it sounds like old-school crypto bro nonsense, it’s because it’s largely the same guys; OpenAI’s Sam Altman and FTX’s now-jailed Sam Bankman-Fried have both been closely associated with the Effective Altruism movement. The AI bros don’t believe in democracy, as my Wikipedia colleague David Gerard has been saying for years, and they think their moment has come. Right-wing populists like Donald Trump worship money above all else, and leaving a scorched earth behind them is of a piece with their promotion of climate change denialism and disdain for regulation or any other legal impediment to corporate profit.
The bigger picture
Datacentres are not inherently evil, and the growth of datacentres is part of a long-term trend in how businesses and governments provide computer resources. This has significant economic effects that directly impact tax revenues and even sovereignty.
While this is a long-term trend, it is currently substantially worsened by AI, which is computationally expensive, expanding at a rate that is described by many experts as a bubble, and is characterised by a disregard for societal and environmental impact, because the people in charge are the worst people in the world.
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