Amazon is promising its data centre investment will bring billions in benefits and hundreds of jobs. But sceptics say the tech giant’s claims don’t completely hold up, writes Catherine McGregor in today’s extract from The Bulletin.

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Amazon’s $7.5b promise finally goes live

After years of delays, Amazon Web Services (AWS) has officially declared its New Zealand data centres open. The tech giant says the three sites – their locations undisclosed for “security reasons” – mark the start of a $7.5 billion, 15-year investment that will support an average of 1000 full-time equivalent jobs and add $10.8b to GDP. AWS insists the centres are critical to the country’s digital future, particularly as businesses adopt artificial intelligence tools. Prime minister Christopher Luxon was quick to celebrate the announcement, calling it “a really great day” and pointing to the “really high-paying jobs” on offer. Tech industry body NZTech was similarly effusive, reports The Post (paywalled), with chief executive Graeme Muller describing the launch of AWS’s local “region” as “an exciting moment” that would accelerate the growth of NZ technology firms.

‘A pinch of salt’

But scepticism abounds about the real size and impact of the project. In The Post (paywalled), business reporter Dita de Boni wrote that Amazon had essentially re-packaged its 2021 announcement on the same topic, with the most notable “investment” being the enormous power bills the centres will generate. “Amazon Web Services is somehow classing its own paying of its power bill as an investment in New Zealand,” she observed.

Speaking to RNZ’s Russell Palmer, tech commentator Peter Griffin offered a similar warning, advising that AWS’s claims should be taken “with a pinch of salt”. He noted the GDP estimates rely on speculative multipliers and suggested the job creation figures have been exaggerated by counting indirect roles in areas like electricity supply and plant maintenance. Griffin also pointed out that AWS doesn’t actually own the facilities – it is simply installing racks of its technology inside other companies’ data centres – and said the benefits of on-shore hosting for local users of AWS were potentially being overplayed.

The West Auckland debacle

In Newsroom, Jonathan Milne was even less impressed, reporting that Amazon has abandoned its planned data centre at Fred Taylor Drive in West Auckland – a site that has been left “an empty, featureless site” after work was abruptly halted six months ago. “They’ve drained a lake, they’ve destroyed all that environment, and now they’re walking away,” said Don Christie of New Zealand competitor Catalyst IT, a longtime Amazon critic.

Christie also argued that AWS’s local “availability zones” are not genuinely independent sites, but simply leased space in pre-existing data centres, making them less resilient to natural disasters than Amazon claims. Meanwhile, the power to run the equipment has been locked in through a 15-year supply deal with Mercury, potentially exporting New Zealand’s scarce renewable energy to service Amazon’s overseas clients, says Christie.

Luxon’s déjà vu moment

Criticism has also landed on the prime minister himself, after Luxon presented Tuesday’s announcement as if it were fresh news. In fact, the same $7.5b figure, the same job projections, and the same promise of three data centres were unveiled in 2021 under Jacinda Ardern’s government. Labour accused him of claiming credit for old news, while The Spinoff’s Joel MacManus imagined other headlines Luxon might re-announce from that year: the government allowing quarantine-free travel with Australia, the average house price passing $1m for the first time, or even Lisa Carrington’s three gold medals at the Tokyo Olympics.

Luckily for the government, that “plague-ridden nightmare year” has been “collectively memory-holed”, allowing the government to reannounce just about any good news story from back then “and sell it as a brand-new reason to celebrate”, Joel writes. “As a political strategy, reannouncing things from 2021 might be the win Luxon needs.”