Google Data Center Spending Continues to Soar

Google continues to invest heavily in its Internet infrastructure, recording a whopping $2.29 billion in capital expenditures in the third quarter of 2013, the company said Thursday. The spending is driven by a massive expansion of Google’s global data center network, which represents perhaps the largest construction effort in the history of the data center industry.

The $2.29 billion spent in the third quarter was the company’s second-largest quarterly CapEx investment ever, trailing only the
$2.5 billion total for the fourth quarter of 2010, when it spent $2 billion to purchase 111 8th Avenue in New York. Google has been steadily ramping up its spending in each of the last seven quarters, crossing the $1 billion per quarter mark late last year.

This quarter’s huge number reflects the breadth of Google’s server farm construction program. Here’s a look at the data center expansions announced thus far in 2013:

• A $600 million expansion of its complex in The Dalles, Oregon.
• An additional $400 million expand its campus in Council Bluffs, Iowa, where Google has now committed $1.5 billion to its infrastructure.
• Fresh investment of $600 million in an additional phase for its data center campus in Lenoir, North Carolina.
• Another $600 million of investment to support new construction at Google’s South Carolina data center campus in Berkeley County.
• An additional $390 million of new construction at the Google data center in Belgium.
• Google also purchased a 1 million square foot former Gatorade factory in Pryor, Oklahoma that could support future expansion of the company’s data center campus in town.

But don’t think Google is spending with abandon. The company remains focused on capital efficiency as well as energy efficiency. Each of the 2013 expansion projects has represented an additional phase at an existing campus where Google has already built at least one data center. Building multiple facilities at a single site can be cheaper than building in a new site, as basic infrastructure for power and connectivity is typically installed during the buildout of the first facility, leaving less work and expense in subsequent phases.

The third quarter spending pushes Google’s total investment in its infrastructure past $23 billion.

A capital expenditure is an investment in a long-term asset, typically physical assets such as buildings or machinery. Google says the majority of its capital investments are for IT infrastructure, including data enters, servers, and networking equipment. In the past the company’s CapEx spending has closely tracked its data center construction projects, each of which requires between $200 million and $600 million in investment.