Aug
25
2018
--

Amazon isn’t the only tech company getting tax breaks

Amazon has a big target on its back these days, and because of its size, scope and impact on local business, critics are right to look closely at tax breaks and other subsidies they receive. There is nothing wrong with digging into these breaks to see if they reach the goals governments set in terms of net new jobs. But Amazon isn’t alone here by any means. Many states have a big tech subsidy story to tell, and it isn’t always a tale that ends well for the subsidizing government.

In fact, a recent study by the watchdog group, Good Jobs First, found states are willing to throw millions at high tech companies to lure them into building in their communities. They cited three examples in the report including Tesla’s $1.25 billion 20-year deal to build a battery factory in Nevada, Foxconn’s $3 billion break to build a display factory in Wisconsin and the Apple data center deal in Iowa, which resulted in a $214 million tax break.

Good Jobs First executive director Greg LeRoy doesn’t think these subsidies are justifiable and they take away business development dollars from smaller businesses that tend to build more sustainable jobs in a community.

“The “lots of eggs in one basket” strategy is especially ill-suited. But many public leaders haven’t switched gears yet, often putting taxpayers at great risk, especially because some tech companies have become very aggressive about demanding big tax breaks. Companies with famous names are even more irresistible to politicians who want to look active on jobs,” LeRoy and his colleague Maryann Feldman wrote in a Guardian commentary last month.

It doesn’t always work the way you hope

While these deals are designed to attract the company to an area and generate jobs, that doesn’t always happen. The Apple-Iowa deal, for example, involved 550 construction jobs to build the $1.3 billion state-of-the-art facility, but will ultimately generate only 50 full-time jobs. It’s worth noting that in this case, Apple further sweetened the pot by contributing “up to $100 million” to a local public improvement fund, according to information supplied by the company.

One thing many lay people don’t realize, however, is that in spite of the size, cost and amount of real estate of these mega data centers, they are highly automated and don’t require a whole lot of people to run. While Apple is giving back to the community around the data center, in the end, if the goal of the subsidy is permanent high-paying jobs, there aren’t very many involved in running a data center.

It’s not hard to find projects that didn’t work out. A $2 million tax subsidy deal between Massachusetts and Nortel Networks in 2008 to keep 2200 jobs in place and add 800 more failed miserably. By 2010 there were just 145 jobs left at the facility and the tax incentive lasted another 4 years, according to a Boston.com report.

More recent deals come at a much higher price. The $3 billion Foxconn deal in Wisconsin was expected to generate 3000 direct jobs (and another 22,000 related ones). That comes out to an estimated cost of between $15,000 and $19,000 per job annually, much higher than the typical cost of $2457 per job, according to data in the New York Times.

Be careful what you wish for

Meanwhile states are falling all over themselves with billions in subsidies to give Amazon whatever its little heart desires to build HQ2, which could generate up to 50,000 jobs over a decade if all goes according to plan. The question, as with the Foxconn deal, is whether the states can truly justify the cost per job and the impact on infrastructure and housing to make it worth it?

What’s more, how do you ensure that you get a least a modest return on that investment? In the case of the Nortel example in Massachusetts, shouldn’t the Commonwealth have protected itself against a catastrophic failure instead of continuing to give the tax break for years after it was clear Nortel wasn’t able to live up to its side of the agreement?

Not every deal needs to be a home run, but you want to at least ensure you get a decent number of net new jobs out of it, and that there is some fairness in the end, regardless of the outcome. States also need to figure out the impact of any subsidy on other economic development plans, and not simply fall for name recognition over common sense.

These are questions every state needs to be considering as they pour money into these companies. It’s understandable in post-industrial America, where many factory jobs have been automated away that states want to lure high-paying high tech jobs to their communities, but it’s still incumbent upon officials to make sure they are doing due diligence on the total impact of the deal to be certain the cost is justified in the end.

Mar
30
2018
--

Azure’s availability zones are now generally available

No matter what cloud you build on, if you want to build something that’s highly available, you’re always going to opt to put your applications and data in at least two physically separated regions. Otherwise, if a region goes down, your app goes down, too. All of the big clouds also offer a concept called ‘availability zones’ in their regions to offer developers the option to host their applications in two separate data centers in the same zone for a bit of extra resilience. All big clouds, that is, except for Azure, which is only launching its availability zones feature into general availability today after first announcing a beta last September.

Ahead of today’s launch, Julia White, Microsoft’s corporate VP for Azure, told me that the company’s design philosophy behind its data center network was always about servicing commercial customers with the widest possible range of regions to allow them to be close to their customers and to comply with local data sovereignty and privacy laws. That’s one of the reasons why Azure today offers more regions than any of its competitors, with 38 generally available regions and 12 announced ones.

“Microsoft started its infrastructure approach focused on enterprise organizations and built lots of regions because of that,” White said. “We didn’t pick this regional approach because it’s easy or because it’s simple, but because we believe this is what our customers really want.”

Every availability zone has its own network connection and power backup, so if one zone in a region goes down, the others should remain unaffected. A regional disaster could shut down all of the zones in a single region, though, so most business will surely want to keep their data in at least one additional region.

Dec
11
2017
--

Iron Mountain acquires IO Data Centers’ US operations for $1.3 billion

 Iron Mountain announced today that it’s acquiring the U.S. data center assets of IO Data Centers for a cool $1.3 billion — and the price tag could potentially go higher. With today’s purchase, Iron Mountain gets some serious assets, including four state-of-the-art data centers in Phoenix and Scottsdale, Arizona; Edison, New Jersey; and Columbus, Ohio. Read More

Sep
15
2017
--

Why Dropbox decided to drop AWS and build its own infrastructure and network

 There is always a tension inside companies about whether to build or to buy, whatever the need. A few years ago Dropbox decided it was going to move the majority of its infrastructure requirements from AWS into its own data centers. As you can imagine, it took a monumental effort, but the company believed that the advantages of controlling its own destiny would be worth all of the challenges… Read More

Jul
18
2017
--

IBM expands its cloud footprint with new data centers in London, Sydney and San Jose

 IBM reported its quarterly earnings this week and, while the company’s overall results were once again disappointing, cloud revenue was up 15 percent year-over-year and accounted for $3.9 billion in revenue. It’s no surprise, then, that IBM is doubling down on its cloud strategy; to keep its momentum going, the company today announced the launch of four new data centers for its… Read More

May
01
2017
--

Equinix completes $3.6 billion deal to buy 29 data centers from Verizon

Data center Equinix, an international data center company based in Redwood City, California, announced today that it has completed the purchase of 29 data centers from Verizon for $3.6 billion. The acquisition greatly expands Equinix’s footprint, including giving it access to Latin America through a data center in Bogota, Colombia, along with a new presence in Houston, Texas and Culpeper, Virginia. Read More

Feb
07
2017
--

SnapRoute secures $25 million Series A investment for open source network OS

Server room in data center SnapRoute, a startup that builds open source software that enables network engineers to customize commodity networking switches and routers to meet their exact requirements, announced a $25 million A round today, led by Norwest Venture partners.
Lightspeed, AT&T and Microsoft Ventures also participated in the round and Norwest’s Rama Sekhar will join the SnapRoute board of… Read More

Nov
21
2016
--

IBM expands its UK presence with 4 new data centers

BRUSSELS - JANUARY 12:  IBM headquarters stands January 12, 2003 in Brussels, Belgium. IBM developes and manufactures information technologies including computer systems, software, networking systems, storage devices and microelectronics.  (Picture by Mark Renders/Getty Images) IBM today announced that it is launching four new data centers in the U.K. This brings IBM’s total data center footprint in the U.K. to six, in addition to 16 other locations across Europe. This is yet another example of the company’s increasing infrastructure investment. The first of these new U.K. locations in Fareham will go online in December, with the other three U.K.… Read More

Oct
31
2016
--

Microsoft open sources its next-gen cloud hardware design

80527689-6b4f-4ac8-bb93-25556376560c Microsoft today open sourced its next-gen hyperscale cloud hardware design and contributed it to the Open Compute Project (OCP). Microsoft joined the OCP, which also includes Facebook, Google, Intel, IBM, Rackspace and many other cloud vendors, back in 2014. Over the last two years, it already contributed a number of server, networking and data center designs. With this new contribution,… Read More

Jun
01
2016
--

CoreOS launches Torus, a new open source distributed storage system

containers CoreOS today announced the launch of Torus, its latest open source project. Just like CoreOS’s other projects, Torus is all about giving startups and enterprises access to the same kind of technologies that web-scale companies like Google already use internally. In the case of Torus, that’s distributed storage.
The idea behind Torus is to give developers access to a reliable and… Read More

Powered by WordPress | Theme: Aeros 2.0 by TheBuckmaker.com