Commentary: Microsoft hyperscale data center need not be the last in Wisconsin

There are many reasons why it makes sense for Microsoft to build a $1 billion data center in Racine County, not the least of them being geology, weather and shovel-ready land in Mount Pleasant. Similar growth opportunities could pop up elsewhere in Wisconsin – with a little help from the state.

The U.S. Geological Survey places almost all of Wisconsin in its lowest “risk zone” for damage from earthquakes. Generally moderate temperatures can help regulate power demands inside such centers; cold winters can even help. Adequate water, also needed to cool computing equipment, is available in Racine County as in most of Wisconsin. The 315 acres of land Microsoft plans to buy are already primed for development due to infrastructure, such as roads and access to power, put in place for a larger Foxconn footprint that has yet to materialize.

Data centers are already vital for processing information that flows across the internet, and more will be built with additional “cloud computing” – use of a network of protected, powerful and co-located remote servers instead of local servers – and the rise of artificial intelligence demands. Wisconsin could logically host more data centers, but it needs to keep up with the neighborhood “Jones” to do so.

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Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, North Dakota and Ohio all offer a mix of sales and use tax incentives data center equipment and software, some extending for decades and none offering fewer than 15 years of benefits. In fact, Wisconsin is one of relatively few states that don’t offer such incentives, even having the physical attributes that could get potential data center clients in the door.

In Illinois, for example, the enactment of incentives in 2019 has led to proposals to build data centers totaling about $4 billion in investment. Iowa and Ohio are seeing similar growth. The big players in those states and elsewhere include Apple, Meta, Google and Amazon, among others.

Racine County residents can be forgiven if they’re skeptical about Microsoft following through on its plans to build there, but this is not a Taiwan-based company with no history of involvement in Wisconsin.

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Microsoft is one of the leading partners in TitletownTech in Green Bay, it recently announced an extension of its long-term relationship with Verona’s Epic Systems, it has operated a research center in Madison for years, and it has deep ties into the state’s leading computer sciences schools. And have I mentioned that Microsoft president Brad Smith hails from Appleton and chief executive officer Satya Nadella holds a degree from UW-Milwaukee?

While none of that guarantees all will go as planned, it does mean Microsoft will likely be careful to under-promise and over-deliver. Plus, if dirt isn’t turned on the site by 2026, local government can repurchase the land at the same $50 million price that Microsoft will pay to buy it.

Among the possible deliverables: Lots of construction jobs once the project gets rolling and a smaller number of well-paid operating jobs once it’s completed. Because data centers tend to run themselves to a certain degree, operations jobs are more likely to number in the few hundreds than the thousands.

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Indirectly, it will accelerate other development on the I-94 corridor in southeast Wisconsin, where companies such as Amazon, Haribo and Uline already have a strong presence. Even without a major Foxconn investment so far, the region is humming.

National trends and Microsoft’s plans have spurred some action in the Wisconsin Legislature, where bipartisan legislation is circulating to give the state incentives similar to what is available in other states. Wisconsin already has some natural advantages. Building on that competitive edge makes sense.

Tom Still is president of the Wisconsin Technology Council

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