Microsoft says regulations are cramping its Euro expansion • The Register

Microsoft intends to more than double its European datacenter capacity by 2027, but suspects this won’t be easy because of all the red tape and environmental safeguards it faces.

As one of the big three cloud operators, Microsoft recognizes the revenue generating importance of Europe to its business, and vowed greater support earlier this year, including protection for user data and to uphold the region’s “digital resilience.” This was a response to mounting “geopolitical and trade volatility” between the US administration and governments in Europe and elsewhere.

Making up part of these commitments, company President Brad Smith promised Microsoft would expand its datacenter operations in 16 European countries, growing its capacity by 40 percent over the next two years and more than doubling the size compared with 2023 by operating more than 200 bit barns across the continent.

That goal, however, is easier said than done because of all the regulations, according to VP of Lease and Land Global, Val Walsh, the Microsoft executive charged with securing new datacenter capacity.

“The reason we haven’t grown as much in Europe as we have in the US – and everybody is in the same boat – is because of complexity, regulation, environmental impact assessments,” Walsh told the keynote audience at the recent Datacloud Global Congress in Cannes.   

“You know, all these different things that just make Europe a little bit harder, a little bit more expensive,” she added, “That’s something we have to solve, because we have to grow in Europe. And it’s really hard. It’s really hard. So any ideas, save money, I’m all ears.”

The huge growth in demand because of AI is real, Walsh said, such that “I don’t think there’s a spare megawatt sitting anywhere idle in all of Europe, or the US, as a matter of fact. So, I mean, from our perspective, growing in Europe is not optional, like we’ve got to do it. Got to get all our zones up. We’re at capacity in many places, as everybody knows. We’re building multiple new regions, but we’re still we’re still scrambling.”

One of the things that everyone needs to consider is how datacenter development in Europe is being enabled or impeded, Walsh said. “Because we have moratoriums coming at us. We have communities that don’t want us there,” she claimed, referring particularly to Ireland where local opposition to bit barns has been hardening because of the amount of electricity they consume and their environmental impact.

Another area of discussion at the Datacloud keynote was the commercial models for acquiring datacenter capacity, which it was felt had become unfit for the new environment where large amounts are needed quickly.

“From our perspective, time to market is essential. We’ve done a lot of leasing in the last two years, and that is all time for market pressure,” Walsh said.

“I also manage land acquisition and land development, which includes permitting. So the joy of doing that is that when my permits are late, I can lease so I can actually solve my own problems, which is amazing, but the way things are going, it’s going to be very difficult to continue to lease the infrastructure using co-location style funding. It’s just getting too big, and it’s going to get harder and harder to get up the chain, for sure,” she explained.

At a separate event, Walsh pointed the finger at access to power for bit barns and their IT infrastructure.

“European regulations and planning are very slow, and things take 18 months longer than anywhere else,” she told attendees at <>Bisnow’s Datacenter Investment Conference and Expo (DICE) in Ireland.

“The people who own the grids haven’t been able to keep up,” she added, claiming that Ireland is now losing out to Scandinavian countries for bit barn projects, because of the inability to get a grid connection in a timely manner.

Building all of these new datacenter facilities is still hobbling Microsoft’s efforts to become carbon-negative by 2030. In its 2025 Environmental Sustainability Report [PDF], Microsoft revealed that its total greenhouse gas emissions (Scope 1, 2, and 3) have increased by 23.4 percent compared to the company’s 2020 baseline.

This isn’t as bad a picture as in its previous report, where the figure was up by nearly 30 percent since 2020, but the ultimate culprit remains the same: growth-related factors because of AI and cloud expansion.

Still, it was enough for the firm’s Chief Sustainability Officer Melanie Nakagawa to note in a blog earlier this year that: “In 2020, Microsoft leaders referred to our sustainability goals as a ‘moonshot,’ and nearly five years later, we have had to acknowledge that the moon has gotten further away.”

However, Microsoft says it is encouraged by the fact this increase is modest compared to its 168 percent increase in energy use and 71 percent revenue growth that has taken place over the same period.

Microsoft also points to efforts such as signing contracts for 19 GW of new renewable energy across 16 countries through power purchase agreements (PPAs), and datacenters constructed with timber, which it says reduces the embodied carbon footprint by up to 65 percent. ®