Facebook parent Meta is evaluating its first data centre in India to cater to the growing demand for its short video feature Reels in its largest market, people aware of the development told Moneycontrol.
The social networking giant is expected to start a feasibility study in the first quarter of 2024, they said.
"Meta is evaluating deploying a small data centre. It could be a cache-focussed 10-20 megawatt data centre," a person familiar with the matter told Moneycontrol.
Moneycontrol has not been able to determine either the amount Meta plans to invest in this initiative or the location of the data centre, should the company proceed with its plans after the feasibility study.
According to industry experts, the average cost of setting up a Tier-4 data centre in India is around Rs 50-60 crore. Tier 4 data centres are the highest quality ones with more than 99.99 percent uptime.
This suggests that if Meta goes ahead with setting up its first data centre in India with a capacity of 10-20 MW, its investment in the project could be in the range of Rs 500-1,200 crore.
Moneycontrol has reached out to Meta with queries on the matter.
Rise of Reels
India was the first market where Instagram Reels had its first broad rollout in July 2020, at a time when consumers were scrambling for alternatives to fill the void left by the suspension of ByteDance-owned short video app TikTok in the country. The feature was eventually rolled out globally in subsequent months.
India, which is the world’s second largest internet market, has turned out to be a crucial market for Instagram in recent years to compete with rival TikTok to be the global leader in the short video space.
According to app intelligence firm Sensor Tower, TikTok and Instagram have intensely competed for the top spot in terms of total global downloads in 2023, each securing the spot for two quarters during the year.
"A pivotal factor contributing to Instagram's popularity in India has been TikTok's ban in the country in 2020. Instagram Reels has effectively filled the void left by the ban of TikTok, offering users a comparable platform for creating and sharing short-form videos," Sensor Tower said in a report released in December 2023.
Instagram topped the list of most downloaded Android apps in 2023 with 270.3 million app installs, benefiting from growing user consumption of short videos in the country, Moneycontrol reported in January 2024.
Meta also rolled out reels on Facebook in 2022, allowing users to create and watch videos clips from creators. One could also view public reels from Instagram, if the creator chooses to recommend it on Facebook.
Improving user experience
Having a local data centre could help Meta deliver an improved user experience to consumers in India at a time when the social networking giant is looking to introduce a series of generative artificial intelligence features on its suite of products, according to experts.
Meta currently has 22 data centres spread across the United States, Europe and Asia. However, the company’s only data centre in the Asia Pacific region is situated in Singapore.
In February, Meta had earmarked a capital expenditure of $30-37 billion for the full year 2024, driven by investments in servers, including both AI and non-AI hardware, and data centres.
India's data centre industry is expected to attract $10 billion in investment within the next three years, registering a 40 percent growth from the last three years, as per a Confederation of Indian Industry (CII)-Colliers report released in October 2023.
This growth is driven by exponential increase in data consumption and improving regulatory framework, it said.
About half of the upcoming supply during 2023-26 to be located in Mumbai, followed by Chennai and Hyderabad, the report added.
Meta is also planning to expand its points of presence (PoPs) and terrestrial fiber footprint within India, apart from looking to build more subsea cables to the country starting 2024, a person familiar with the matter told Moneycontrol.
Over the years, the company has built out a global network of PoPs, each connected to tens or hundreds of network operators.
In December 2022, Meta partnered with telecom operator Airtel to extend the company-backed subsea cable system 2Africa Pearls to India.
The two firms, along with Saudi Telecommunication Company, were expected to bring the world’s longest subsea cable system to Airtel’s landing station in Mumbai apart from picking up dedicated capacity to further strengthen its submarine network portfolio, the companies said at the time of announcement.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
