Amazon Plans $800M Data Center in Argentina | Hacker News Reader

Amazon Plans $800M Data Center in Argentina

bloomberg.com

91 pointshhs49 comments

As investors in YPF and Argentine soybean farming found out, the Argentine government is happy to let you invest your money into Argentine business and lose money in some years, but if the business becomes profitable, they will find a way to fix that, whether that's by adding import tariffs, last-minute export tariffs (!!), or simply confiscating the company, as they did with YPF. Amazon might be savvy enough to cheat the Argentine government instead of being cheated, but many high-rolling gamblers have tried their luck in that casino, to their sorrow.

There's a key cultural concept in Buenos Aires: el vivo, the guy who knows what's up and knows how to take advantage of others instead of being taken advantage of. Sometimes it's used sarcastically, like "wise guy". One antonym is gato, "cat", the guy who sells out his cellmates to the prison guards. Macri, the current president (until December, most likely) is reviled as Macri gato in graffiti all over the city, if not the country. Argentines have a pretty zero-sum mentality—if someone is doing well, it must be because someone else is doing poorly. Macri talks a big line of hooey about how he believes in win–win deals but then he uses that rhetoric to justify government giveaways to him and his friends, in a classic zero-sum style.

This means that whatever actions a future government takes to claw back this deal will have a lot of public support.

As a symptom of its economic woes, Argentina has had power outages and other utility failures. I wonder if Amazon is really confident in the national grid. Maybe it can invest in the nation's infrastructure, or has a fleshed out contingency plan.

Yes, they'd go to Chile.

Isn't earthquakes big thing in Chile?

To Uruguay, then!

An amazon datacenter would most likely have it's own power plant imho.

Given their stated goal of having 100% renewable energy for AWS by 2020, you might see some wind or solar projects popping up near their datacenters. They have a bunch near their existing facilities already (https://aws.amazon.com/about-aws/sustainability/#progress).

Between nearby renewable energy that they have control over, and backup generators they could be OK even if the national grid has issues.

They won't pay for any energy costs[1]. That's a pretty tall incentive for a data center.

> Además, al ubicarse en la zona de libre comercio, Amazon no pagará impuestos nacionales o provinciales sobre el consumo de energía, un beneficio generoso para un centro de datos.

Translated:

> In addition, when located in the free trade zone, Amazon will not pay national or provincial taxes on energy consumption, a generous benefit for a data center.

[1]: https://www.clarin.com/tecnologia/confirman-amazon-abrira-ce...

It says they won't pay Taxes on Energy, does that means they will not pay anything for Energy?

Why? It says clearly no tax on energy, why should because of that someone give them power for free?

Energy is usually the way local government raise revenue in argentina. Like exempting Salesforce employees from paying sales taxes. Usually about half the energy cost is taxes.

Amazon should invest in Colombia or Panama instead.

These two countries (which ironically were originally the same a century ago) have the best geographical position in the continent to reach both North and South, lower amount of earthquakes than Argentina and Chile, more opportunities to benefit from clean sources of energy (solar, wind and sea waves), and the internal politics are better than the neighboring countries.

Colombia, specifically, would benefit a lot from more investment from the tech industry. It will also allow the country to reduce the number brains escaping to the United States, Canada and Europe where companies pay more than the local ones for doing the exact same things.

Cloudflare has already invested in a data center in Bogotá [1] and Medellín [2]. Both cities have some of the best business executives and software engineers in Latin America, so this would be a win-win situation for all parties and a good excuse to continue making business there.

Reuters reported back in March 2019 that Amazon will open a Latin America infrastructure location in Colombia and help train 2,000 students in cloud technology [3]. The news came after the first-ever Latin America AWS Public Sector Summit in Bogota on March 28th, 2019 [4]. This edge location will become the sixth in Latin America, but first outside of Brazil [5].

[1] https://blog.cloudflare.com/bogota/

[2] https://blog.cloudflare.com/listo-medellin-colombia-cloudfla...

[3] https://www.reuters.com/article/us-amazon-com-colombia/amazo...

[4] https://aws.amazon.com/blogs/publicsector/president-of-colom...

[5] https://www.datacenterdynamics.com/news/aws-plans-edge-locat...

They should also consider Brazil. Then they can have Amazon's Amazon Data Center.

That would be amazing

Colombia also has an Amazon region.

source?

https://www.reuters.com/article/us-amazon-com-colombia/amazo... not yet completed

AWS has a region in Brazil, sa-east-1

> Both cities have some of the best business executives and software engineers in Latin America, so this would be a win-win situation for all parties and a good excuse to continue making business there.

With all due respect to Colombians, Argentina has a top entrepreneurship track record in Latin America even against all the political turmoil. Mercado Libre, Globant, Despegar are some examples of public companies but we can also find smaller and prominent companies in the security space (e.g. Core Security), blockchain/crypto, and many YC startups (e.g. Auth0).

Rappi, a Colombian company, is in the top Y Combinator top companies list [1] but Rappi follows the path of companies with great funding but not profits.

[1] https://www.ycombinator.com/topcompanies/

AWS has Cloudfront Edge servers in more locations than they publicly claim. That doesn't mean that they operate full data centers though.

They have 2x100G dedicated upstream at the Internet Exchange in Santiago, Chile for Cloudfront. Servers are local, I have 3ms ping to them. They don't appear in this list: https://aws.amazon.com/cloudfront/features/

Presidential elections are coming up in Argentina on October 27. I wonder if this news will play any part in that.

It already has, after the primaries. $ARGT lost 30% over one day, ergo things got cheaper. But this must have been in talks for longer.

For what it's worth, someone just pointed out an article from March 2018 saying that Amazon is "very close" to opening a $300M data center in Argentina (Spanish):

https://www.lapoliticaonline.com/nota/111920/

Argentinian prices are taking a serious beating due to the crisis. I'm myself looking to get an apartment there (but the prices of apartments haven't tanked enough yet, in my opinion) or at least some more of Argentinian REITs ($IRS, $IRCP). Smart move by Amazon to buy things cheap and keep it potentially for decades.

Real estate prices are unlikely to drop too much since they're one of the few ways locals can maintain a store of value (if a relatively non-liquid one).

Liquidity is absolutely terrible at the moment and all real estate deals are priced in US dollars (and have been for some time). I'm speculating on that the low liquidity will eventually push the real estate asks down, I mean after all what good is your asking price if no one will ever match it. If not - there will be other buying opportunities.

Sometimes you have to be very patient. The US real estate bubble took ~5 years to fully bottom out, although already in 2009 the prices were very good: https://fred.stlouisfed.org/series/CSUSHPINSA

Liquid assets already took a serious beating (see the REITs that I pointed out).

You haven't seen anything yet. Argentina will have another hyperinflation in the next 12 months.

http://archive.is/0cXZp

Woah, this is huge for gaming in latinamerica!

I remember in Bolivia, I would play league of legends with 500ms ping times.

Are league of legends servers commonly run on AWS?

i dont know

quick google shows me that it does BUT the article is from 2014. https://aws.amazon.com/gaming/reinvent-2014-slides/ (ctrl-f league)

not sure today

I don't think their actual game servers run in the cloud, but a lot of their internal/external websites and a bunch of business stuff does.

Nope.

But AWS has been in Brasil for years.

I ping 150ms from Chile to us-east-1 so your latency issue must be some other problem.

Amazon is crazy. As soon as they drop the cash they will get ripped off.

Also crazy they give huge tax-breaks and legal loopholes to foreign companies. Nothing worse to an Argentinian than another Argentinian.

Honestly, Amazon, you don't need tax breaks from Argentina.

It's hard to see that as anything but exploitation of a desperate economy. (Argentine peso has lost more or less 90% of its value against the dollar in 5 years)

I heard a similar argument recently, paraphrasing: "One should not travel to Argentina right now just because it's cheaper, it's exploitation".

I think the argument is not merely that it's cheaper, but that the agreement amounts to an unfair sale of future tax revenues (presumably to win support for the current president, who is on his way to losing the runoffs and being replaced in two months). That is, not only are the tax concessions a bad deal for Argentina, but the people who get stuck with that bad deal aren't even the ones making it.

That's not the case if you come buy some empanadas and ice cream and have your cellphone stolen (the standard Argentine vacation).

I mean, generating well paying jobs and improving electricity infrastructure in an otherwise economically unattractive country that is Argentina is itself a massive public good.

Look at this from the perspective of Argentina: without the tax breaks, Amazon would have probably located elsewhere. That's a net loss. I'm sure someone in the Argentinian government did the math and they probably feel good about the deal they were able to get.

And for those of you who suspect that Amazon paid bribes or delivered favors here, rest assured that not a soul at Amazon would wish to risk prison time for violating the Foreign Corrupt Practices Act.

Do you genuinely believe that no american souls risk prison been corrupt outside of America? I have some people and companies to introduce you. Lots of them in Latin America.

Certainly nobody who would survive within Amazon at the level required to make a deal this big. Amazon would retain expensive counsel at all times to ensure complains with FCPA. All major corporations do so.

You are oddly certain, I'm not making accusations but blind faith that corporate compliance programs exist, are substantial, and work is just ridiculous. The recent Volkswagen diesel emissions fraud comes to mind, the CEO and four unnamed executives were charged in Germany recently. (obviously not a bribery issue, but still the same sort of obvious regulations fraud that went all the way up)

Why would Amazon or any company be immune to this kind of behavior?

Here's a list of FCPA enforcement actions in the last quarter, you can go back years. Several billion dollars total in penalties in the last few years.

https://www.fcpablog.com/blog/2019/7/1/fcpa-enforcement-repo...

I should have disclosed that a close friend is an experienced FCPA lawyer and has briefed me.

> Honestly, Amazon, you don't need tax breaks from Argentina.

They don't need tax breaks from Argentina sure, but they do need one to justify building a data center there. Do you expect them to just hold off building one there because they believe they could get a tax breaks later on?

> (Argentine peso has lost more or less 90% of its value against the dollar in 5 years)

Which is exactly why this move is great for Argentina, attracting big contract in your country is how you increase its value.

I doubt they need the tax breaks to justify building data centers in Argentina. It's already ridiculously cheap to do anything there because of their currency teetering on the edge of failure for such a long time.

Amazon is also running out of places to build new regions[1]

https://aws.amazon.com/about-aws/global-infrastructure/

Tax breaks serve to minimize the benefits to Argentina which is already going to be a very inexpensive place to operate.

> I doubt they need the tax breaks to justify building data centers in Argentina. I

If it was, then they would already have done it.

> It's already ridiculously cheap to do anything there because of their currency teetering on the edge of failure for such a long time.

If you bring a big infrastructure like that, for sure it will be quite good for the currency, which break the purpose of being there because it's cheaper, doesn't it?

Being cheaper isn't much of a benefits either, what makes it costly to operate the datacenter won't make it cheaper down there, if anything, it's going to be more expensive to import the expertise and resource required and to compensate any issue that may arise from the country in itself (power grid instability seems to be a big issue people mentions here).

> Amazon is also running out of places to build new regions

Yeah... I don't see how they are running out of places at all from that source.

> Tax breaks serve to minimize the benefits to Argentina

Tax breaks serve to bring companies there. It doesn't "serve to minimize the benefits", Amazon isn't going there to minimize the benefits to Argentina, but to maximize their benefits to themselves. It will certainly minimize the benefits though to Argentina, but it doesn't serve that purpose.

What you refuse to accept is that most likely Amazon wouldn't be there if it wasn't from that tax breaks, thus even if the benefits is lower than it could be, it's higher than it would be. I'm pretty sure Amazon didn't only contact Argentina to plan this datacenter, there's many other countries that could fit the bill in South America.

Investing 800 mil is exploitation? I would like to be exploited like that.

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