The reason Microsoft is cancelling so many data centre projects
Because it no longer needs them.
Why is Microsoft abandoning so many of its data centre builds? The short answer - because it no longer needs them.
This UnfilteredFriday, let's talk about a topic that more than a few of you have pinged me about. What exactly is happening over at Microsoft?
Microsoft's data centres
Since the start of 2025, it seems that not another month will pass without a new report about how Microsoft is cancelling data centre projects somewhere.
According to a report on Reuters yesterday, Microsoft has scrapped data centre projects to the tune of 2GW of electricity in the US and Europe over the last 6 months.
Is it due to an oversupply of data centres? Or is Microsoft quitting AI? No, not really. First, some context.
The separation
You might recall the Stargate project from January, a fantastical plan to spend up to half a trillion dollars on a massive network of AI data centres.
Anyway, the main partners for Stargate are OpenAI, Oracle, and Softbank. Wait, what about Microsoft? Aren't Microsoft and OpenAI the best of friends in AI?
Well, Microsoft and OpenAI has "evolved" their partnership - their words, not mine.
On the same day that Stargate was announced with much aplomb, Microsoft quietly published a press release titled "Microsoft and OpenAI evolve partnership to drive the next phase of AI".
Among others, Microsoft noted how it is "thrilled to continue our strategic partnership with OpenAI and to partner on Stargate."
But read through it carefully, and you will notice that it announces no new developments but outlines how existing agreements will be honoured.
In fact, it sounds like a... separation announcement.
Things just aren't the way they used to be
And this explains everything that is happening over at Microsoft.
- Microsoft's unveiling of its quantum chips.
- The backpaddling from new data centres.
- Talk of creating its own "high-end" AI.
Oh, I actually wrote about this in my January newsletter commentary. You can read it here.
In the meantime, AI is getting better with multiple announcements this week, including GPT-4o image generation.
I personally find the pace of advancements a tad disconcerting - I'll share about it in my newsletter this weekend.