Are Social Media Companies Getting into the Data Center Business?

Billion-dollar hyperscale projects get all the press, but edge infrastructure and interconnection are equally important

Wellington Lordelo
Jeff Bender
Are Social Media Companies Getting into the Data Center Business?

In the 2021 Data Center Real Estate Review from North American Data Centers[1], some interesting patterns emerged. Three social media companies—Meta, TikTok and Twitter—account for the 11 largest wholesale multitenant data center leases signed in 2021. This is particularly noteworthy when you consider social media companies have also been building private hyperscale data centers at a remarkable rate: Meta is currently constructing more than 7 million square feet of data center space in the U.S. alone. Similar growth is happening in other parts of the world: TikTok’s first data center in Europe is scheduled to go live in late 2022[2], while Meta recently announced a $1.1 billion project in Spain to complement existing facilities in Sweden and Ireland.[3]

Social media companies are building these hyperscale data center hubs because they need massive amounts of compute capacity, which in turn requires massive amounts of power and cooling. These facilities are designed to keep power and real estate costs as low as possible, which is why they’re often built far away from major urban areas. While these private data center construction projects get a lot of attention in the press, they only tell one part of the story.

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To drive monetization and impact across today’s digital world, social media companies must be able to connect with end users and partners, quickly and easily. The hyperscale data center hubs don’t support these types of connections because they’re too far away from the places with the highest concentrations of network service providers, internet service providers, peering platforms, and partners. This is why social media companies are taking a two-pronged approach:

  • Deploying hyperscale data centers in rural areas to process massive amounts of data as cost-effectively as possible.
  • Deploying distributed digital infrastructure in and around urban areas to support more interconnection opportunities with end users and partners.

The Global Interconnection Index (GXI) Volume 5 defines the three components of digital infrastructure as the digital core, edge and ecosystem. In this blog, we’ll take a “behind the scenes” look at how each of these components fits into the overall strategy of social media companies.

Digital core locations help connect with service providers

The GXI defines digital core locations as the metro areas with the largest concentration of network service providers, public cloud providers, and XaaS providers. In contrast to the hyperscale data centers discussed previously, digital core locations are ideal for deploying cloud-adjacent on-premises data centers. These data centers tend to be deployed on prime real estate in major urban areas. The relative costs of deploying in those locations may be higher, but the value of the interconnections they enable more than makes up the difference.

Social media companies can deploy in these data centers to access a wide variety of cloud providers, allowing them to select the ideal provider for each specific workload. Their physical proximity to multiple cloud on-ramps allows them to burst data back and forth to the cloud whenever they require exponential scalability. In addition, the on-premises component of the digital core allows social media companies to store massive amounts of user-created data securely, in line with local data privacy and sovereignty regulations. In short, deploying at the digital core is essential to unlocking the true value of a hybrid multicloud strategy.

How social media companies are interconnecting at the digital edge

Digital edge locations are about getting as close to end users as possible to reduce latency and support the best possible customer experience. The revenue model for social media is all about eyeballs on screens. When companies make it quicker and easier for audiences to consume content, that leads to more total content consumed.

social media companies are taking a two-pronged approach…”

This fact is essential to understanding why social media companies are emphasizing digital edge locations. Infrastructure at the edge makes it possible for social media companies to offer users optimized multiplatform content delivery: this means users are able to access the content they want where they want to access it, with consistent content quality across all devices. This could mean a smartphone on the go, a computer at home, or even a VR headset in the metaverse. Providing this level of freedom of choice will increase user satisfaction and overall engagement.

Edge infrastructure also enables social media companies to take advantage of cutting-edge technologies like 5G wireless. To make content available to users via 5G, social media companies must ensure latency of 10 ms or less between cellular towers and their edge infrastructure. For levels of latency this low, there’s simply no substitute for physical proximity that keeps connections as short as possible. To achieve that, social media companies must deploy more edge infrastructure in more places.

Digital ecosystems unlock a world of new possibilities

Social media companies depend on a wide array of ecosystem partners, including cloud service providers that offer greater scalability and performance when and where they need it. In addition, network service providers are key to getting content to users with as few “hops” and as little delay as possible.

These companies have also traditionally relied on content delivery networks (CDNs) to distribute massive amounts of content with improved performance over geographically distributed areas. In a sign of how distributed digital infrastructure allows enterprises to adapt quickly as business conditions change, social media companies have begun to replace some of these legacy CDNs with their own private CDNs, allowing them to maximize security and control over data.

Finally, social media companies also interconnect with a number of partners from other value chains, such as payment providers and fraud prevention companies to support a better online shopping experience. These types of partnerships are key to unlocking new and unexpected revenue streams.

Regardless of which providers they choose to partner with, they no longer have to risk connecting to those partners over the public internet. Instead, they can take advantage of secure, private interconnection, which allows user-generated data to pass back and forth throughout the partner ecosystem without ever being placed at risk.

Learn the Equinix approach to digital infrastructure for the CDM industry

As the world’s digital infrastructure company™, Equinix understands how to help content and digital media (CDM) providers deploy the right infrastructure in the right places. Platform Equinix®, our platform of colocation facilities in more than 65 metros worldwide, can help CDM companies get closer to audiences at the digital edge to optimize the content consumption experience. In fact, 80% of the U.S. metropolitan population is within 10 ms round-trip latency of an Equinix IBX® data center, making us uniquely positioned to help CDM companies take advantage of 5G and other “far-edge” technologies.

Equinix Fabric™, our software-defined interconnection solution, makes it quick and easy for CDM companies to set, change or remove virtual connections with key partners on the fly, across our global footprint. Whether it’s cloud service providers, network service providers, or any other variety of partner that supports their business operations, Equinix Fabric gives CDM companies everything they need to make sure the right data is flowing to the right places, privately and securely.

CDM providers are one useful example, but the lessons learned from this discussion can be applied across industries. All different types of organizations across the world are leveraging interconnection to handle massive amounts of data while also getting closer to end users and partners in all the right places. For more details about how you can apply interconnection to create the ideal digital infrastructure for your business, read the GXI today.

 

[1] North American Data Centers, “Data Center Real Estate Review: 2021”. Jim Kerrigan. January 2022.

[2] Data Center Dynamics, “TikTok’s €420m Irish data center delayed due to Covid-19 construction shutdowns”. Sebastian Moss. December 2021.

[3] Data Center Dynamics, “Meta plans €1bn data center in Toledo, Spain”. Peter Judge. March 2022.

 

When companies make it quicker and easier for audiences to consume content, that leads to more total content consumed.”
Wellington Lordelo
Wellington Lordelo Senior Manager, Segment Marketing
Jeff Bender
Jeff Bender Senior Director of Global Sales, Americas