2 weeks Ago By Kamya Pandey
Meta plans to invest over $10 billion in a 40,000 km subsea fiber optic cable project, sources close to the company told TechCrunch . The company will be the sole owner and user of this subsea cable, and will use it as a dedicated channel for its data traffic. Sources told TechCrunch that the company plans to set up this cable from the East Coast of the U.
S. to India via South Africa, and then to the West Coast of the U.S.
from India via Australia — making a “W” shape around the globe. This isn’t the first time that Meta is investing in sub-sea cables. In December 2022 , the company partnered with Bharti Airtel to help extend the 2Africa Pearls subsea cable system— the world’s longest subsea cable— to India.
Besides this, the company is also part owner in a range of other subsea cables including the Asia Pacific Gateway, Bifrost, and Echo. Other big tech companies like Google also have part ownership in subsea cables, however, with this new project Meta would become the first company that has complete ownership over a sub-sea cable. The many reasons why Meta may want to own subsea cables: According to Meta’s latest earnings report, the company had a total revenue of $40,589 million for the quarter ending on September 30, 2024 (Q3FY24).
Of this, the company earned the bulk of its money—$39,885 million— from advertising. As such, ensuring that people stay on Meta platforms and keep viewing advertiser content is essential for the company’s profitability. Naturally, companies don’t have complete control over service quality given that they rely on telecom companies’ networks to provide their services, however, as pointed out by Stanford Law Professor Barbara van Schewick, larger platforms, cloud services, and content delivery networks (CDNs) construct or lease subsea cables and in doing so bring data right to telecom companies’ doorstep .
These investments (as well as the fact that online platforms cache content in CDNs) make it easier and faster for telcos to “get online services and website data to their customers as the last step in a long chain of data transportation” she says . In February this year , the Houthi rebel group in Yemen reportedly cut underwater communication cable between India and Europe in the Red Sea managed by Seacom as well as other sub-sea cables in the area such as Asia-Africa-Europe-1 (AAE-1), Europe India Gateway (EIG), and Tata Global Network (TGN). More recently, Russia allegedly cut undersea internet cables in the Baltic Sea, according to a report by CNN.
Sources told TechCrunch that the W-shaped route that Meta has envisioned for its cable will allow it to avoid areas of geopolitical tension including the Red Sea, and South China Sea. Founder of the Fiber-Optic Link Around the Globe (FLAG) Telecom Sunil Tagare theorises that both this cable and Meta’s data center investments are a step to ensure that it can support AI applications for its Indian user base. Breaking down the over $10 billion planned investment, Tagare suggests that the company will probably allocate at least over $6 billion of it in leasing or building AI Data Center capacity in India.
Tagare’s assumption might have some truth to it when we consider that during the company’s earnings call, Mark Zuckerberg pointed out that Meta’s AI investments “continue to require serious infrastructure,” adding that the company plans to invest significantly in that area. In Q3FY24 Meta had a capex of $9.20 billion, it expects the capex for the financial year to be around $38-40 billion with Q4 seeing increased capex from an increase in server spend and to a lesser extent, expenditure on data centers.
Meta’s future investment plans: While Meta has not confirmed that it is investing in its own subsea cable, in its latest earnings report the company mentioned that it expects “significant capital expenditure [capex] growth” in 2025. The company’s chief financial officer Susan Li mentioned during its latest earnings call that the company is growing its infrastructure investments significantly. “We’re still working through our 2025 infrastructure plan, but at this point, we expect total infrastructure spend within each of non-Gen AI, Gen AI, and core AI to increase in 2025,” Chad Heaton, VP of Finance for Meta Platforms, said in a call with investors .
He mentioned that while the company expects servers to be a large part of its capex in 2025, it also expects to increase investment in data centers and network equipment. “We’re building higher capacity networks to accommodate the growth in Gen AI and Core AI-related traffic in 2025, along with investing in fiber to handle future cross-region training traffic,” he added. Also read: Support our journalism: For You.
