Google lifts post-Nokia hopes with Finnish data centre investment


* 450mln euro commitment follows earlier 350mln stake

* Data centre facility is ex-Stora Enso paper mill

* Government plans electricity tax cuts for data centres

By Ritsuko Ando

HAMINA, Finland, Nov 4 (Reuters) - Google willinvest another 450 million euros ($607 million) over the nextfew years in a data centre in Finland, boosting a countrystruggling with Nokia's decline and weakness in itspaper and steel industries.

Prime Minister Jyrki Katainen welcomed the move, one of thebiggest foreign direct investments in Finland, and said thegovernment planned to reduce electricity taxes for data centresto encourage more such stakes.

The new pledge by the world's No. 1 Internet search companyis in addition to 350 million euros it has already spent on thedata centre, built on the site of paper company Stora Enso's former mill in Hamina, southeastern Finland.

Google bought the mill in 2009, turning it into one of itsmost efficient data centres by taking advantage of the Bay ofFinland's chilly seawater to cool its servers.

Katainen said Google's move showed that Finland, with itshighly skilled work force, remained competitive.

"Finland's strength is in finding creative solutions toglobal challenges," he said on Monday during a visit to thesite. He said the government would do its part by loweringelectricity taxes for such sites starting in 2014, although themove still needs approval from the European Commission.

"Our job from the government side is to create and enablegood infrastructure for various fields of business."

Finland has been trying to shore up business confidencehard-hit in September when Nokia, struggling for years to catchup with Apple and Samsung in smartphones, announced it wasselling the handset business to Microsoft.

Finland has one of the few remaining triple-A ratedeconomies in the euro zone, but Europe's prolonged downturn hasrestrained exports and accelerated a decline in industries suchas forestry, tipping the current account into deficit.

The government has forecast GDP to contract 0.5 percent thisyear. But there have been some positive signs, especially inFinland's gaming industry led by Rovio of Angry Birds fame.

Japanese tech and telecoms group SoftBank Corp announced in October that it was paying 150 billionyen ($1.53 billion) for a 51 percent stake in Finnish mobilegame maker Supercell, valuing the small maker of hit games"Clash of Clans" and "Hay Day" at $3 billion.


Data centres have also been rare bright spots.

Microsoft has said it will invest more than $250million in a new data centre in Finland. Yandex,Russia's biggest search engine, started building a data centrein Mantsala, southern Finland, in July.

The increasing use of cloud computing, which allows softwareand services including email and online music libraries to beoffered over the Internet, is seen driving up the use of datacentre usage in the coming years.

Technology companies such as Google have been looking forcheaper ways to run them, and Finland and other northernEuropean countries have been popular sites due to coolerclimates that help to reduce cooling costs.

At the Hamina facility, one of some 13 Google data centresin the world, seawater is pumped through the facility todissipate heat from the data centre's servers. The water is thencooled down before being returned to the sea.

There are also environmental considerations. Around 2percent of global greenhouse gas emissions come from thetechnology sector. Of that, data centres account for around 17percent, according to the Global e-Sustainability Initiative, anindustry-sponsored research group specialising in topics such asclimate change.

Mika Perttunen, a director of regional development companyCursor that has been trying to lure businesses to the area, saidGoogle's announcement showed Finland was recovering not onlyfrom Nokia's downfall but also from a decline in papermanufacturing.

Stora Enso's 60-year-old mill, before shutting down in early2008, employed around 450 people. The data centre currently onlyemploys around 125 people but Google said it planned to increasestaff over the coming years.

"We used to read newspapers, and nowadays we use tablets forthe same information. This is a good symbol of change,"Perttunen said.

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