Winnipeg Free Press - PRINT EDITION
Posted: 05/6/2013 1:00 AM | Comments: 0
They really liked us but in the end, Facebook and Manitoba were never destined to friend.
Now that the deal is officially dead, details are starting to leak out about just how close Manitoba was to landing an enormous Facebook "data farm" on land in Headingley west of Winnipeg. The social-media giant spent months on in-depth site evaluation, only to withdraw from the project at the last moment because of concerns about Canadian privacy laws, sources confirmed.
Facebook came to Manitoba, the sources continued, because of low land costs and the availability of cheap, renewable energy. Data farms -- expansive warehouses full of high-powered servers necessary to store information from billions of users worldwide -- consume enormous amounts of electricity. As a social-media icon, Facebook reportedly puts a high price on accessing relatively clean energy for any of its large-scale developments, the type Manitoba Hydro can provide.
Ultimately, Facebook cited concerns about Canadian privacy laws in making its decision to pull out of Manitoba. Facebook has sparred with Canada's privacy commissioner in the past, and although privacy laws in the United States do differ significantly, sources close to the efforts to land the data farm said there was no hint of legal concerns until the very last moment.
Facebook Canada confirmed its interest in Manitoba, but would not comment directly on the reasons for its decision to pull out. "Often the decision comes down to a small pool of very good options," a Facebook spokeswoman said. "The site in Manitoba scored very highly on the various criteria that we take into consideration, but we ultimately made a decision to locate our next data centre elsewhere."
How big a loss is the Facebook development? Facebook estimated its investment at about $1.2 billion over the next decade. The data farm would not have created an enormous number of jobs, although the jobs it would have created would have been well-paying.
Even with those factors taken into account, the biggest loss here is likely the Facebook brand. Government, third-party and private-sector players that, together, try to market the province as a good place to do business were salivating at the opportunity to boast about hosting a Facebook project.
To this day, Facebook's concerns are not entirely understood by the government and non-governmental officials working to land the project. The company was apparently concerned about the privacy of U.S.-client data stored in Canada. Sources suggested the province had examined the legislative context of the project and was of the opinion Facebook could have confidence data from its U.S. customers was secure. Facebook, apparently, could not be convinced.
However, there is always the possibility Facebook was using the privacy concerns as an excuse to abandon Manitoba. Although Facebook never said it out loud, the fact remains the company could not access its preferred site for the development: CentrePort lands in the Rural Municipality of Rosser.
It was believed the Facebook data farm would finally put CentrePort -- the federal-provincial transportation and commerce hub on land surrounding Richardson International Airport -- on the map as a true going concern. Development at CentrePort has been hampered primarily by the City of Winnipeg's refusal to extend water and sewer services to the Rosser lands.
Despite Mayor Sam Katz's assurances to the contrary, the city remains skeptical about CentrePort, concerned it is drawing interest away from undeveloped land within city limits. The skepticism was further complicated when two northwestern Ontario First Nations threatened legal action if the city started drawing water from Shoal Lake -- the source of the city's water supply -- to facilitate servicing agreements with surrounding municipalities.
Sources confirmed that in direct meetings with Facebook and its agents, the city made it clear there was no immediate possibility of having water and sewer extended to Rosser. This was a major concern because the data farm needed a reliable source of water for fire suppression.
When it was clear CentrePort was not an option, sources confirmed Facebook looked at Pine Falls, northeast of Winnipeg, and land in Headingley just west of the city. The company took the longest look at Headingley, long enough that a plan was in place to put shovels in the ground this summer. That's when the privacy concerns arose and the deal fell through.
In the end, there is a distinct possibility that Facebook was simply not destined to come to Manitoba. Other provinces that have tried to land data farms with big U.S. technology companies have run into similar problems, with those deals falling through.
However, there is something curious about the timing of the privacy concerns. One has to think Facebook would have satisfied itself on all legal and regulatory issues before taking the time and money to investigate a site in Canada. In that context, it seems quite possible privacy law was the convenient excuse that allowed Facebook to withdraw and (pun intended) save some face.
If that was the case, this should be a wake-up call for all those with a finger in the CentrePort pie. The inability to reach a servicing agreement for the Rosser lands remains a niggling but significant hurdle in helping CentrePort reach its full potential. The province and Ottawa have nearly $240 million invested in infrastructure at CentrePort; the city needs to get off the pot and do its part.
A servicing agreement is now essential. The next time a potential anchor tenant comes to look at CentrePort, it would be nice to know we are ready and willing to friend them.
Republished from the Winnipeg Free Press print edition May 6, 2013 0
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