“The cloud market will be very resistant to inflation,” says the Equinix boss

Internet users don’t always know it, but they can’t do without Equinix and its competitors. Invited to the Choose France summit at the Elysée Palace in early July, the CEO of the world’s number one data center rental company is leading the company’s worldwide deployment to serve its customers, i.e. major online computing platforms (“cloud computing”), software publishers and multinational corporations from sectors other than tech. “Companies have realized that they need to invest in digital technology,” says Charles Meyers, to justify their own investment.

Equinix plans to invest $1 billion in France over five years, but this is not known. What does your company do?

Charles Meyers: Equinix is ​​home to the infrastructure (servers and connection points, editor’s note) that makes our increasingly digital lives possible. Digital players from all over the world meet in our data centers. For example, Netflix connects to its Amazon Web Services provider’s servers in our buildings to broadcast its content in all countries.

Equinix is ​​important to all cloud platforms. We are a place where their customers host data in private clouds and then compare it to what they store in shared cloud platforms, which the latter also sometimes physically install on our premises. All companies are opting for multi-cloud, but it requires an interconnected infrastructure. Here’s what Equinix offers.

Why invest in France?

Given President Emmanuel Macron’s business address, it’s clear that France is positioning itself to capture a share of the $100 trillion in digital opportunities worldwide. Many of our clients see France as the regional center of Europe, it’s a matter of geography. With a billion dollars, we will basically open four or five data centers in Paris and Bordeaux, and then probably others. In this way, we will create highly qualified jobs. This is just the beginning.

In Europe, data sovereignty and localization have become an important part of any digital strategy. How do you assign these items?

Like our customers, we increasingly pay attention to this topic. Because of the country-by-country market fragmentation, Europe is a textbook case of these issues. Because they need to maintain control over their data, our customers want to establish their infrastructure across every state border. For Equinix, this is both a challenge and an opportunity. But this is probably more of an opportunity than a challenge because we are present in more countries than our competitors.

The cloud is one of the few technology markets where demand seems immune to inflation and the looming recession. Why?

Companies have realized – and Covid highlighted this – that they are likely to fall behind their competitors if they do not have a strategy to digitize their production tools. Companies understood that they needed to invest in digital because those who were ready to go 100% digital took advantage during the lockdown. However, the cloud is central to the digital strategy. I think the cloud market will be very resilient to inflation, which could affect the investment opportunities of its customers.

Unlike digital advertising, the cloud won’t be the first market to suffer from the effects of consumer inflation. That’s why our business is very strong. In 2022, we said in late April that we expect more than $7.2 billion in revenue, or about 10% growth in constant currency.

The cloud market is largely dominated by three players. Could this cause you problems?

Looking at the results of AWS, Microsoft Azure, Google Cloud and others, there is no doubt that the cloud is a very dynamic market. But people forget that the cloud is only part of the IT market, a market more than ten times over!

I don’t see a problem with three players dominating the cloud market. They are large and influential clients. But keep in mind that our largest customer is no more than 3% of our revenue. We have many other customers, from companies in all sectors who host their own servers with us, to online software publishers. The latter are increasingly partly relying on their own infrastructures rather than cloud platforms.

While cloud players will continue to innovate and gain IT market share, a very diverse ecosystem will remain around them. This is what happened at the beginning of the Internet, Yahoo! and Netscape didn’t swallow it all. And look at the wealth that is being born in Web3.

Do you think the intensity of data center M&A activity will continue with inflation and rising interest rates?

Yes, I think acquisitions in our sector will continue. Investment funds are still active. Compared to other technology markets, digital infrastructure remains attractive. For our part, we will maintain discipline. France is probably one of the markets where we can grow organically, but acquisitions are not excluded.

A growing number of voices are highlighting the role of digital technologies in climate change. What do you answer?

Our sector is one of the main consumers of energy in the world. Therefore, we are obliged to do everything possible. Our business is to optimize the consumption of electricity, and we prefer renewable energy sources. But sustainable development is not free.