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Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

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Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

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To say that Big Tech controls the internet might sound like an overstatement. More and more, in at least one sense, this is literally true.

The internet can seem like an intangible, post-physical environment where things like viral posts, virtual goods, and metaverse gigs kind of happen. But creating that illusion requires a truly gargantuan and rapidly growing network of physical connections.

Fiber optic cable, which carries 95% of the world’s international internet traffic, connects just about every data center in the world, those vast warehouses of servers where the computing happens that turns all those 1s and 0s into our experience of ‘Internet.

Where these fiber optic connections connect countries across oceans, they consist almost entirely of undersea cables – some 1.3 million kilometers (or more than 800,000 miles) of bundled glass threads that make up the Real physical international internet. And until recently, the overwhelming majority of undersea fiber optic cables being installed were controlled and operated by telecommunications companies and governments. Today, this is no longer the case.

In less than a decade, four tech giants—Microsoft,

Alphabet, Google’s parent company, Meta (formerly Facebook) and Amazon have become by far the biggest users of undersea cable capacity. Prior to 2012, the share of global submarine optical fiber capacity used by these companies was less than 10%. Today, that figure is around 66%.

And those four are just getting started, say analysts, undersea cable engineers and the companies themselves. Over the next three years, they are on track to become the major financiers and owners of the undersea Internet cable network linking the wealthiest and most bandwidth-hungry countries on the shores of the Atlantic and the Pacific, according to undersea cable analysis firm TeleGeography. .

By 2024, the four are expected to collectively own a stake in more than 30 long-distance submarine cables, each up to thousands of miles long, connecting every continent on the globe except Antarctica. In 2010, these companies had a stake in only one of these cables: the Unity cable, partly owned by Google, linking Japan and the United States.

Traditional telecommunications companies have responded with suspicion and even hostility to tech companies’ rapidly escalating demand for global bandwidth. Industry analysts have expressed concern about whether we want the world’s most powerful internet service providers and marketplaces to also own the infrastructure they are all supplied on. This concern is understandable. Imagine if Amazon owned the routes on which it delivers packages.

But the involvement of these companies in the cable laying industry has also lowered the cost of data transmission across oceans for everyone, even their competitors, and helped the world increase transmission capacity. international data by 41% in 2020 alone, according to TeleGeography. annual report on submarine cable infrastructure.

Active and planned submarine cable systems

Cables Amazon, Google, Meta or Microsoft have a stake in

Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

 | News Today

Cables Amazon, Google, Meta or

Microsoft holds an interest in

Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

 | News Today

Cables Amazon, Google, Meta or

Microsoft holds an interest in

Undersea cables can cost hundreds of millions of dollars each. Installing and maintaining them requires a small fleet of vessels, ranging from survey vessels to specialized cable-laying vessels that deploy all kinds of rugged underwater technology to bury cables under the seabed. Sometimes they have to lay the relatively fragile cable – in places as thin as a garden hose – at depths of up to 4 miles.

All of this must be done while maintaining the correct tension in the cables and avoiding hazards as varied as seamounts, oil and gas pipelines, high voltage transmission lines for offshore wind farms, and even shipwrecks. and unexploded bombs, says Howard Kidorf, managing partner at Pioneer Consulting, which helps companies design and build undersea fiber optic cable systems.

In the past, laying transoceanic cables often required the resources of governments and their national telecommunications companies. It’s anything but pocket change for today’s tech titans. Together, Microsoft, Alphabet, Meta, and Amazon invested more than $90 billion in capital expenditures in 2020 alone.

The four say they are laying all this cable in order to increase bandwidth in more developed parts of the world and bring better connectivity to underserved areas like Africa and Southeast Asia.

That’s not the whole story. Their entry into the undersea fiberlaying business was inspired by the rising cost of buying capacity on cables owned by others, but is now driven by their own insatiable demand for ever more terabytes of bandwidth, says Timothy Stronge, vice president of research at TeleGeography. . This has dented the profits of traditional players in the cable-laying industry, such as NEC, ASN and SubCom, he adds. (It did the same for the profits of capacity wholesalers on submarine cables, such as Tata and Lumen.)

By building their own cables, the tech giants save money over time that they would have to pay other cable companies. This means that tech companies don’t need to mine their cables for profit for the investment to make financial sense.

Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

 | News Today

A worker carries a buoy along a fiber optic cable from a ship laying the Marea cable on Arrietara beach near Bilbao, Spain, in 2017.


Photo:

Vincent West/REUTERS

Indeed, most of these cables funded by Big Tech are collaborations between rivals. The Marea cable, for example, which runs about 4,100 miles between Virginia Beach in the United States and Bilbao, Spain, was completed in 2017 and is partly owned by Microsoft, Meta and Telxius, a subsidiary of Telefónica.,

Spanish telecoms. In 2019, Telxius announced that Amazon had signed an agreement with the company to use one of the cable’s eight fiber strand pairs. In theory, that’s one-eighth of its 200 terabits per second capacity, enough to stream millions of HD movies simultaneously.

Meta works with global and local partners on all of its undersea cables, as well as other major technology companies such as Microsoft, says Kevin Salvadori, the company’s vice president of network infrastructure.

Sharing bandwidth between competitors helps ensure that each company has capacity across more cables, redundancy that is essential to keep the Internet buzzing around the world when a cable is cut or damaged. This happens about 200 times a year, according to the International Cable Protection Committee, a nonprofit group. (Repairing damaged cables can be a huge effort requiring the same ships that laid the cable and can take weeks.)

Sharing cables with apparent competitors, as Microsoft does with its Marea cable, is essential to ensuring that its cloud services are available almost all the time, which Microsoft and other cloud providers explicitly promise in their agreements. with customers, says Frank Rey, Senior Director. Azure network infrastructure at Microsoft.

Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

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Works on the Marea Cable at Arrietara Beach in 2017.


Photo:

Ander Gillenea/Agence France-Presse/Getty Images

But the structure of these transactions also serves another purpose. Reserving some capacity for telecoms like Telxius is also a way to prevent regulators from getting the idea that these U.S. tech companies are themselves telecoms, Stronge says. Tech companies have spent decades arguing in the press and in court that they’re not ‘common carriers’ like telecoms – if they were, it would expose them to thousands of pages of regulations specific to this status.

“We’re not an operator, we don’t sell any of our bandwidth to make money,” says Salvadori. “We are and continue to be a major buyer of subsea capacity where it is available, but in some places it is not available and we need it, we are quite pragmatic, and if we have to invest to get there, we’ll go do it,” he adds.

There is an exception for large tech companies collaborating with rivals on the internet’s underwater infrastructure. Google, alone among the big tech companies, is already the sole owner of three different undersea cables, and that total is expected to grow to six according to TeleGeography by 2023.

Google declined to disclose whether or not it shares the capacity of any of these cables with another company.

Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

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Google’s Curie Undersea Cables land in Valparaíso, Chile.


Photo:

google

Google built and built these exclusively owned-and-operated cables for two reasons, says Vijay Vusirikala, Google’s senior director responsible for all of the company’s undersea and terrestrial fiber infrastructure. The first is that the company needs it to make its own services, such as Google Search and YouTube streaming, fast and responsive. The second is to gain an advantage in the battle for customers for its cloud services.

All of these changes in ownership of the internet’s infrastructure reflect what we already know about big tech’s dominance of internet platforms, says Joshua Meltzer, a senior fellow at the Brookings Institution who specializes in digital commerce and flows. of data.

The ability of these companies to vertically integrate down to the level of the physical infrastructure of the Internet itself reduces their delivery costs, from Google search and Facebook’s social networking services to Amazon’s cloud services and from Microsoft. It also widens the gap between them and any potential competitors.

“You have to imagine that this investment will ultimately make them more dominant in their industries because they can provide services at ever lower costs,” Meltzer says.

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Write to Christopher Mims at christopher.mims@wsj.com

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Google, Amazon, Meta and Microsoft are weaving a fiber optic power network

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