Asian Nations Battle for Google Data Center

Reports that Google (GOOG) is considering building a data center in Malaysia are the latest sign that the search giant is pitting Asian governments against one another in a battle for a major data center project.

The Prime Minister of Malaysia has announced that Google (GOOG) is interested in building a data center in Malaysia. The announcement comes just days after the economic minister in Taiwan said Google is "leaning toward" developing a major data center in Taiwan. Various other reports suggest Google has also scouted locations in Japan, South Korea, India and even Vietnam (which just announced its first data center).

What's going on here? It's clear that Google wants to expand its data center network into Asia. Its site location process is engaging heads of state and finance ministers in high-profile jawboning that is bound to heighten the competition for the Google project(s). We've seen many examples of companies using the multi-site search as a tool to coax incentives out of local governments, which sweeten their best offers to outbid rivals from other regions. Google's Asian initiative appears to be wielding this tactic and succeeding spectacularly.

Google doesn't talk about overseas data center site location, saying only that the company "invests heavily in technical facilities and has dozens of facilities around the world with many computers."

Malaysian prime minister Datuk Seri Abdullah Ahmad Badawi met with Google CEO Eric Schmidt at the Davos conference in Switzerland Friday. Afterward he told Malaysian media that Google is "interested" in a data center in Malaysia. "They want to make their presence felt in Malaysia," Badawi said. "I was told that Malaysians formed the highest group of Google users in South-East Asia. The report said it "is believed the world's top Internet search engine company was eyeing Malaysia, India or Vietnam to set up its data centre facilities."

The acknowledgement that other countries are in the mix is a pretty clear indicator that no decision has been made. The earlier reports from Taiwan's economic ministry said Google was "considering 18 locations outside the US for data centers, including Taiwan, Japan and South Korea."

Will these countries follow through with economic incentive packages that will help Google get more bang for its buck? When prime ministers and economic ministers make public statements that invest political capital in a Google data center, real-world incentives seem sure to follow. These countries are eager to sprinkle Googledust on their economic development efforts.

Will Taiwan outbid Malaysia? Or will another country emerge to snare the project? There's another possibility: that the 18-country site selection project is for multiple data centers, and is designed to leverage Google's prestige and negotiating power to identify several sites at once for a rapid deployment of facilities across Asia.