Amazon Plans $800 Million Data Center in Argentina

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Amazon.com Inc.s cloud division plans to build a regional data center in a free-trade zone in Argentina, according to people familiar with the matter.

The Seattle-based company is preparing to invest about $800 million in the project over 10 years and will reap considerable tax benefits by locating the data center in the Bahia Blanca-Coronel Rosales districts of the province of Buenos Aires, said the people, who asked not to be identified because theyre not authorized to speak publicly.

Amazons decision to put part of its cloud infrastructure in South Americas second-largest economy is a big win for the Argentine government, which is keen to diversify the economy into digital services, nanotechnology, aerospace and more. Earlier this year, the national congress unanimously passed a law creating incentives for tech companies to set up shop there -- a major achievement in an election year that has polarized society.

Amazon, like any company benefiting from the new Knowledge Economy Law, will receive export tax breaks, an income tax reduction from 35% to 15% and will effectively pay lower labor costs. Moreover, by locating in the free-trade zone, Amazon will pay no national or provincial taxes on energy consumption, a generous benefit for a data center.

Amazon, through a spokeswoman, declined to comment. The Argentina project isnt final and could still be changed, one of the people said.

Amazon Web Services, the companys most profitable business, has been expanding its infrastructure around the globe to maintain an edge on rivals like Microsoft Corp. and Alphabet Inc.s Google. Sales of cloud-computing services and software are expected to total $214.3 billion in 2019, up 17.5% from a year earlier, according to Gartner.

Proximity to an Amazon data center helps companies reduce costs and improve data speeds compared with having to rely on sites outside the country. Argentina is home to several online outfits, including its largest company, e-commerce retailer MercadoLibre Inc., which uses AWS to host its platforms.

--With assistance from Matt Day.

To contact the reporters on this story: Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net;Spencer Soper in Seattle at ssoper@bloomberg.net

To contact the editors responsible for this story: Carolina Millan at cmillanronch@bloomberg.net, Robin Ajello

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