October 21, 2020
The antitrust lawsuit filed yesterday against Google GOOG +2.4% by the U.S. Justice Department and 11 states, is a landmark in the effort to restrain the power of the world’s biggest technology companies. The government’s complaint says it wants to stop Google from “unlawfully maintaining monopolies in the markets for” search services, advertising, and general search text.
Complex algorithms, software, and custom-built servers helped make Google into one of the world’s richest and most-powerful corporations. But Google’s business is wholly dependent on something more prosaic: electricity. Indeed, the Internet giant’s kudzu-like growth has been fueled by massive quantities of juice. Last year, Google used about 12.4 terawatt-hours of electricity, which means it uses more electric power than entire countries, including ones like Sri Lanka and Zambia. If Google were an independent nation, its electricity use would rank among the top 90 countries in the world. Furthermore, Google’s electricity use is doubling every three years or so.
In short, Google has become a vertically integrated information-electric utility. It gained near-total market dominance in search and advertising by controlling nearly every aspect of its business, including the ownership of its own fleet of electricity generators.
There are some parallels between Google’s position today and that of the most-famous monopoly in American history: Standard Oil. More than a century ago, John D. Rockefeller controlled large swaths of the oil sector, including refineries, pipelines, and distributors. He even purchased rail tanker cars to assure timely delivery of Standard Oil’s products to customers. Today, Google and the other technology giants are building their own electric grids so their data centers and fiber-optic networks never experience even a second of downtime due to brownouts or blackouts. And as the amount of online information soars, their electricity consumption – and need for ever-more generation capacity (both conventional and renewable) – will continue soaring, too. As shown in the graphic below, since 2011, Google’s electricity use has nearly quintupled.
Electricity is the world’s most important and fastest-growing form of energy. It is also fueling nearly every aspect of the Information Age. Google represents the most obvious manifestation of this merger of bits and electrons.
I began tracking Google’s electricity use and that of the other big companies that dominate the Internet – Apple AAPL -0.5%, Amazo AMZN -1%n, Facebook, and Microsoft MSFT +0.1% – a few years ago while researching my latest book, A Question of Power: Electricity and the Wealth of Nations. These companies — which I call the Giant Five — all own, or contract for, massive amounts of electric generation capacity. The Giant Five have deployed their own electric grids so that their data centers won’t be affected if – or rather, when – the local electric grid experiences a blackout. Every data center operated by Google and the other members of the Giant Five has its own electric grid, with huge diesel-fired generators, banks of batteries, and tanks filled with fuel that can allow the onsite generators to fuel the data centers for hours, or even days.
The Giant Five have built these grids because the rule of the New Economy is simple: the bigger your network, the more valuable it is to those who own it and use it. Scale is everything. Google handles over 75,000 queries per second. It must have enough computing power – and electric power – ready at all times, no matter the number of customers, and no matter the state of the local electric grid. Even short outages, due to the loss of electricity, hardware problems, or software snags, can cost millions. On July 16, 2018, Amazon’s web site crashed on Prime Day, one of the company’s biggest sales days of the year. Analysts calculated that the 63-minute outage cost the company about $100 million in sales.
In A Question of Power, I estimated that at the end of 2018, the Giant Five owned or had contracted for, more than 10,000 megawatts of conventional and renewable generation capacity. That means that the five companies own more electric generation capacity than the Los Angeles Department of Water and Power. To burnish their “green” credentials, the Giant Five are also making significant renewable-energy purchases. Google alone has contracted for more than 3,700 megawatts of renewable-energy generation capacity. And the company claims that it “matches” all of its electricity use with equivalent amounts of renewables.
To see how this works in practice, consider the company’s huge data center in Pryor, Oklahoma. Back in 2011, Google announced it was going to buy electricity from a wind-energy project near the town of Minco, Oklahoma so it could, “power our operations with clean electricity.” But the electricity that powers Google’s data center in Pryor is delivered by wires owned by the Grand River Dam Authority. The GRDA generates about 16 percent of the electricity it sells from wind and another eight percent from hydropower. The majority of its electricity comes from hydrocarbons: 49 percent from natural gas and another five percent from coal. Therefore, Google may be able to match its use with the renewable electricity it buys or generates, but in practice, the company’s Pryor data center can’t run solely on wind. Instead, it uses whatever electricity is being generated at any given time by the GRDA.
With the notable exception of Amazon, the Giant Five publish their energy-consumption data. Google’s latest environmental report runs more than 60 pages. Between 2015 and 2018, Google’s electricity use grew by an average of about 23 percent per year. At that rate, its consumption will double in a little more than three years. The company hasn’t published its electricity use figures for last year, but given its average growth of 23 percent per year, I estimate that the company used about 12.4 terawatt-hours of juice in 2019.
Thus, by itself, Google uses more electricity than what’s consumed in more than 100 countries, including Sri Lanka and Zambia, and nearly as much as what’s used in places like Burma and the Dominican Republic. It also uses more juice than seven states—Alaska, Delaware, Hawaii, New Hampshire, Rhode Island, Vermont, and Maine—as well as the District of Columbia. Of those places, Maine (population 1.3 million) comes closest to Google’s hunger for electricity. (In 2018, Maine used about 12.3 terawatt-hours of electricity.)
While Google uses a lot of electricity now, there’s little doubt that it will use even more in the years ahead. Last year, the company announced some $13 billion in new investments in the United States, including several new data centers. It also plans to spend more than $3 billion on new data centers in Europe over the next two years.
It’s too early to tell what will happen with the antitrust lawsuit against Google. The complaint doesn’t mention any specific remedies as to how the government will knock Google from its perch atop the search and advertising business.
So far, the stock market seems to think it won’t matter. Yesterday, Google’s stock traded higher after the suit was announced. But as the cloud-computing business continues its torrid growth, companies like Google and the other members of the Giant Five will continue growing, too. In the digital economy, information is power. And electric power – some of it renewable – will continue to be the irreplaceable driver of Google’s growth.
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