US and Chinese tech juggernauts battle over ASEAN clouds

SINGAPORE — Amid the great U.S.-China tech divide, Southeast Asia and its fast-growing digital markets have become a main battleground for the digital behemoths of both superpowers.

There, Amazon.com, Microsoft, Google, Alibaba Group Holding and other players are investing heavily in cloud computing — services that provide processing power and data storage to all sizes of corporations and government institutions.

A massive 170,000-sq.-meter structure is going up in Tanjong Kling, about a 20-minute drive from Singapore’s city center. The 11-story building is taking on the appearance of a vast logistics center or warehouse. However, strict security teams and surveillance cameras around the site betray a much more critical piece of infrastructure. As a reporter pulled out his smartphone to take a photograph of the construction site, a security guard rushed up and warned, “This is private property. No photos allowed.”

Once completed, the “private property” facility will be filled by rows and rows of servers hosting hundreds of millions of internet users’ sensitive personal information. It will be Facebook’s first custom-built data center in Asia. The company has announced it will invest 1.4 billion Singapore dollars (US$1 billion) in the project.

It is one of many data centers that global tech giants are building in Southeast Asia. With a stable political system, an abundance of skilled tech workers and its connection to an undersea communications cable that links to the rest of the world, Singapore has become a prime spot for the big players of tech vying for slices of Southeast Asia’s swelling need for cloud services.

According to real estate service company Cushman & Wakefield, Singapore data centers have 410 megawatts of capacity, with another 170 megawatts on the way, making the city-state a global hub for data, matching the likes of Frankfurt and Chicago.

But Singapore stands out in that it is also a strategic foothold for Chinese tech companies such as Alibaba and Tencent, who are competing for the same clients.

Amazon is the global leader among cloud service providers. Its Amazon Web Services (AWS) controlled more than 30% of the worldwide market in the second quarter of 2021, according to research company Canalys. It is currently adding infrastructure in Jakarta, Indonesia, which is expected to be operational by the end of 2021 or early 2022.

The data centers will be AWS’ second location in Southeast Asia. AWS centers have been operating in Singapore since 2010.

“AWS sees tremendous potential in Southeast Asia,” Conor McNamara, AWS’ managing director for ASEAN operations, said via email. “Across the board, we see all segments, including startups, enterprises, and small and medium-sized businesses, continuing to drive cloud adoption.”

Microsoft, the world’s second-largest cloud service provider, early this year announced it would establish data centers in Indonesia and Malaysia. It is bullish on the region’s growth potential.

“If you look at Southeast Asia, [there are] 650 million people, that makes it [almost] 50% bigger than in the European Union [446 million],” Microsoft Asia President Ahmed Mazhari said. And the region’s “mobile…