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November 30, 2023updated 01 Dec 2023 9:20am

Microsoft invests £2.5bn in new UK AI infrastructure

The software giant will add 20,000 new GPUs to its UK-based data centres over the next three years.

By Greg Noone

Microsoft has announced it will invest £2.5bn in AI infrastructure in the UK over the next three years. The Redmond-based software company has outlined plans to enlarge its data centre presence by adding more than 20,000 Graphics Processing Units (GPUs).

Chancellor Jeremy Hunt hailed Microsoft’s announcement as “critical for future growth and innovation, boosting the country as a science and technology superpower”.

The Microsoft logo in front of a line chart.
Microsoft has announced £2.5bn in new funding for UK-based AI infrastructure. (Photo by Below the Sky/Shutterstock)

Microsoft’s largest-ever investment in the UK

The investment will be the largest Microsoft has ever made in the UK, according to the company. The firm also announced extending its Accelerated Foundation Models Research (AFMR) programme to afford the UK’s science and research community access to its store of GPUs. When asked what type of GPUs these were, a spokesperson for Microsoft told Tech Monitor that they had “nothing to share at this time”.

“This infrastructure investment will help meet the exploding demand for efficient, scalable and sustainable AI-specific compute power and needs of the private and public sector waiting to take advantage of the latest cloud and AI breakthroughs,” Microsoft said. The main beneficiaries would be Microsoft’s data centre sites in London and Cardiff, the government confirmed in a separate statement

Redmond’s investment was initially confirmed by Prime Minister Rishi Sunak at Sunday’s Global Investment Summit in London, as part of a $36.8bn haul of private sector investment for the UK secured ahead of the event. “Your decision to choose to invest in Britain is a huge vote of confidence in our country’s future,” said Sunak at the conference held at Hampton Court. 

Microsoft in the UK: AI breakthroughs and regulatory strife

Microsoft has enjoyed a close relationship with the UK government in recent years, helping to organise national IT training schemes and bidding for public sector cloud contracts. It has a long-standing presence in the UK with a headquarters in Reading and offices in Edinburgh, London and Manchester. Alongside this, its research lab in Cambridge has been central to the development of much of the company’s AI technology.

However, the company has been accused by UK regulators twice this year of anti-competitive behaviour: in April by the Competition and Markets Authority for its proposal to buy Activision and cement its hold over the cloud gaming market (a deal that was eventually approved after changes were made) and in November by Ofcom for anti-competitive practices in the cloud computing sector, alongside Google Cloud and AWS.

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“We have received submissions that say Microsoft engages in several practices that make it less attractive for customers to use Microsoft’s licensed software products on the cloud infrastructure of rival providers compared to Microsoft Azure,” said Ofcom in its market study of the UK’s cloud market. “The submissions allege that this limits their ability to compete for customers. Microsoft disputes the veracity of the concerns.”

Ex-UK Cloud chief executive Simon Hansford believes that Microsoft’s announcement could be a prelude to capturing the UK’s nascent AI market. “How this helps the UK to develop its own independent AI engines, platforms and AI capability is unclear,” Hansford told Tech Monitor. “We should not forget that this AI will be powered by Microsoft Azure, currently the subject of a CMA inquiry. The issues identified by the CMA will be equally applicable within this AI investment.”

Read more: Have the hyperscalers broken the UK cloud market?

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