Data center developer pauses Middle East projects after war damage

In a significant shift, a prominent data center developer has halted its investment projects across the Middle East following damage sustained from an Iranian missile or drone strike. This development comes as the ongoing conflict in Iran compels tech giants and Silicon Valley investors to reassess their ambitious trillion-dollar strategy for expanding AI and cloud data centers in the Gulf region. The facility affected is operated by Pure Data Centres Group, a London-headquartered company that manages over 1 gigawatt of data center capacity spanning Europe, the Middle East, and Asia. CEO Gary Wojtaszek emphasized the cautious approach companies are adopting in light of the current situation, stating, “No one’s going to run into a burning building, so to speak. No one’s going to put in new additional capital at scale to do anything until everything settles down.” The conflict, which escalated following a US-Israeli attack on Iran on February 28, has left data center developers grappling with the financial repercussions of uninsurable war damages. Iran's retaliation primarily involved targeting maritime shipping routes to disrupt the Strait of Hormuz trade corridor, alongside assaults on US military facilities and energy infrastructure in the region. Notably, Iranian strikes have directly impacted two Amazon Web Services (AWS) data centers located in the United Arab Emirates. Additionally, a close call from an Iranian drone attack resulted in damage to a third AWS facility in Bahrain. These attacks not only caused structural harm but also disrupted power supply and triggered fire suppression systems, leading to water damage, as reported by AWS on March 1. Consequently, this turmoil has led to significant disruptions in cloud services for major clients, including banks, payment platforms, the Dubai-based ride-hailing service Careem, and the data cloud provider Snowflake.