Analysys Mason: Google investments adds $430 billion to APAC

30 November 2020 Consultancy.asia
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Google has invested more than $2 billion in network infrastructure across Asia Pacific (APAC) since 2010, indirectly contributing $430 billion to the region’s GDP. This is according to a new Analysys Mason report, which predicts more investment in the future. 

In its report, Analysys Mason defines network infrastructure as “a critical link in the delivery of the internet to consumers and businesses around the world.” Simple enough in its purpose, this infrastructure is a complex web of cables, submarine cables – laid under the sea to carry signals across oceans – and artificial interface points.

With unprecedented smartphone penetration in a vast and young population, APAC is a hotbed for Internet usage, although many areas continue to lack key infrastructure. Google has seen this as an opportunity – one that it has grabbed with both hands. In the last decade, the tech giant has channeled $2 billion into network infrastructure in APAC.

Google network infrastructure investments in APAC

This spans all types of infrastructure: submarine cables, connection points, and nearly 280 Google Global Cache points – which allow internet service providers (ISPs) to offer Google content from within their own networks. The result: Google services currently accounts for 12% of all APAC Internet traffic according to the researchers.

And there are myriad other benefits from such heavy investment. Most directly, connectivity in the region has been given a sizeable leg up, which is a boost for ISPs. At the same time, “these connectivity improvements have a remarkable economic impact, both directly in the telecoms sector and as a ‘spill-over’ in other sectors of the economy,” explained co-author of the report and partner at Analysys Mason David Abecassis.

“Simply put, they help create more jobs, and increase GDP and economic growth,” he added. Analysys Mason used econometric modeling to estimate the total impact that Google’s investments have had on the APAC economy as a whole. Between 2010 and 2019, this figure came out to be $430 billion in aggregate GDP and just over a million extra jobs in the region.

Benefits for connectivity and digital transformation

Staggering as these numbers are, the researchers also go on to highlight the value these investments could bring to another key trend unfolding across APAC – digital transformation. Many position cloud technology as a gateway to comprehensive digital transformation. In turn, solid network infrastructure is a crucial link to building cloud capabilities.

Cloud technology has certainly taken hold across APAC. In fact, a Boston Consulting Group report from May revealed APAC to be the global growth leader in the public cloud segment, signaling the scale at while the new tech is being deployed. Abecassis explained how this growth is being driven by businesses from all industries.

“Enterprises outside the digital space are moving their IT to the cloud, saving costs and improving operational efficiency in the process,” he explained. Meanwhile, businesses in the digital space “are now increasingly ‘cloud-native’, gaining access to a highly scalable infrastructure with networking capabilities that enable global reach with optimal quality.”

Economic impact of Google investments

As APAC businesses digitalise, cloud investments are only expected to spike further, as will Google’s investments in APAC network infrastructure. In the lead up to 2024, Analysys Mason expects cloud investments in APAC to grow at a compound annual growth rate (CAGR) of 15% to surpass $80 billion.

In tandem, the researchers report that Google is planning to up its investments in submarine cables and other network infrastructure across the region in years to come. “Such continued networking investments from Google are expected to support 1.8 million additional jobs and drive additional economic benefits of approximately $415 billion in GDP term over the next five years (2020-2024),” concluded Abecassis.