insights! #94: hyperscalers are yesterday's news – OVHcloud is rocking the European cloud scene

Joubin Rahimi:

Great to have you along for a new episode of insights! My name's Joubin Rahimi and today joining us is Falk Weinreich from OVHcloud. Hello Falk.

Falk Weinreich:

Good morning. Hello Joubin. Thanks for the invitation.

Joubin Rahimi:

Totally welcome. Glad you're here, in Dortmund.

From Düsseldorf it's always a long way, isn't it.

Falk Weinreich:

A traffic jam.

Joubin Rahimi:

A traffic jam, exactly. A traffic jam.

And yes, you do quite a lot and are, in our view, a major player in the data centre space, data centre operations, and I always mention you right after the hyperscalers as the first port of call. But not everyone knows you. Maybe you'd like to say a few words about OVHcloud and yourself.

Falk Weinreich:

With pleasure. And I'm glad to hear that in your view we're already right at the top of the radar among the alternative hyperscaler players, so to speak.

[00:01:05.440]

You're not alone there either. The IDC report, I think, is only about two months old now. That study also found that worldwide we're actually also,

And IDC is one of the big global analysts in the market who also position us there. So yes, quite clearly, number one, two, three, those are our well-known American friends. But after that there's already a small gap, and Europe, of all European providers, and then I come to our DNA and to what we are, among these European alternatives to these big American hyperscalers, we're actually, we're also seen this way, as number one in terms of product variety, availability, the portfolio that can address both the smaller mid-sized company and up to the Dax company or the public sector, the government area, this breadth across a customer spectrum, and not just in one country but worldwide with worldwide availability. That's pretty much unique, apart of course from the American hyperscalers, but that's exactly why it's unique, because almost the same portfolio, the same global reach, but with a few differences, to

Sovereignty example, we'll come back to that later, no doubt. We don't feel bound to the Patriot Act or anything like that – we're purely within data protection regulation, GDPR compliance topics, we're genuinely compliant. And on top of that, we claim, and I think we can demonstrate this too, we're also the most sustainable when it comes to cloud topics. Small aside here. We're actually the only ones in the market who can genuinely deliver everything from a single source, from the server through to running the data centres, right through to providing the cloud service itself. We build our own servers, we operate our own data centre, we even own the land the data centres sit on. It's water cooling, which is very, very unique, and these are the highest, best efficiency ratings for power, water consumption and all these things. That makes us unique, and that's how you can categorise us. Cloud service provider, global, sovereign and a bit special, because everything's in-house.

Joubin Rahimi:

And we also became aware of it, regarding data sovereignty, because we had been considering which alternative provider we could still use, since customers had sent us looking. Data sovereignty was one topic, and the second topic was water cooling. At first, Porsche fans who say air cooling is the right thing, not water cooling, but today no longer either. So the new Porsches,

-you wouldn't need that much performance any more …

Falk Weinreich:

That's a good comparison you're making there. You really can't cool that much power with air any more.

Joubin Rahimi:

Exactly, you need something that can absorb much more energy.

Falk Weinreich:

Exactly. And you can see it now, we're actually no longer the only ones, perhaps we're the pioneers. In large-scale water cooling operations, it's actually the case that everyone

Our over 30 data centres worldwide build our own water cooling. Briefly, how it works: on the CPU, the GPU, sits a small copper block with an internal spiral, where water can circulate. The water travels in a closed loop up to the roof, is passively cooled down, no active cooling elements, then returns into the closed loop. Water loss drop by drop, practically none at all. And that's, liquids simply can, water is of course perhaps even better than any petroleum-based solutions. It's environmentally friendly and it's efficient.

Joubin Rahimi:

I have a question about that. At another talk we had at "Be Insight", we had Pip Klöckner, who also talks a lot about AI, and he had a figure that really made me think, although it does need to be framed properly. He said 0.5 litres of water is needed for cooling per ChatGPT query on average.

Falk Weinreich:

Yes, in general that's true too. An enormous amount of water, with us very little, about a tenth of that. Why is that? Because almost all traditional data centres, so 99%, no, I'd say apart from us, almost all in Germany and worldwide still cool traditionally in the data centres. What does that mean? Traditional mostly means adiabatic cooling. Specifically, you use evaporative cooling in the cooling towers, in the chiller units. You spray water. And this evaporation effect ultimately means an enormous water consumption, and the AI topic is a driver of the whole thing. The kilowatt power demand of a single traditional rack, which you find across all German data centres, was around three kilowatts per rack ten years ago. In the meantime, with cloud services, it's already gone up to as much as ten kilowatts per rack. The GPUs that we provide for AI applications to our customers go up to 60 kilowatts per rack. And this multiplication of power demand simply can't be cooled with air any more. There are a great many people in the market now realising: we can't manage it with air any more, we somehow have to research and and. So we have a huge head start there, but not everyone is at 60 kilowatts. So part of it is still cooled with air, and they spray water, really without end. And that's this enormous, not just power demand, but also water consumption. If we take the heat away directly where the power, where the heat is generated, namely usually GPUs, on the NVIDIAs of this world, if the heat is removed directly there, that's simply the most efficient thing you can do.

Joubin Rahimi:

And that's also something valuable for customers. A: you have cheaper prices, we noticed that too. Compared to other hyperscalers, you're just consistently significantly lower. I'm gradually understanding the system too. The hyperscalers also say: "Here you get a lot of money so you move to our platform, but then you pay our long-term." That's why I find this a smart solution too. But even if you say you want a low CO₂ footprint, then something also...

Falk Weinreich:

Yes, indeed it is win-win, and I think our water cooling is now almost 20 years old since the first patents were filed. And I honestly don't know whether the origin of the water cooling idea was ecology or the wallet, increasing margin and providing sustainably affordable services. But they go together. It's not a contradiction. That's the nice thing about it, which is why we kept researching further and optimising. And a side effect that we were recently allowed to present to politicians at our data centre in Limburg – politicians from basically all parties come to us quite often to take a look and also to learn how we do it. It's set out in the new Energy Efficiency Act that, once the local municipalities where our data centre, where the data centres are, once they're ready – I believe that starts from 25 – the data centre also has to make the waste heat that's of course still generated available to the municipalities, to the infrastructure. Now, the thing is that most of the infrastructure locally isn't ready for that yet, meaning the piping and so on hasn't yet reached the data centre. We could already today, if it were requested, connect directly to the city network with the hot-water infrastructure. And why is this so great with hot water? In air, air-cooled data centres are such that – it's already 23, 24 degrees – most tenders then state "not heat as" in the classic air cooling. And that's then the heat you have available, 24 degrees, maybe 25 degrees, but that's roughly the range. And then I have to first turn this heat, or it's not even that warm, this air, into water, because the city wants warm water and not warm air. And that involves a huge energy loss again. We have water temperatures of 60, 65 degrees.

Joubin Rahimi:

Great, you can actually use that directly, can't you?

Falk Weinreich:

And this warm water, we don't need to treat it somehow first or anything, it can be fed directly into the city's circuit as soon as the city's infrastructure is ready. And that's so much more efficient and better than having the transformation again from air into water and then another energy loss. So it simply has only advantages. We see no disadvantages at all to water cooling.

Joubin Rahimi:

Great, then I'd like to move on to a topic: data sovereignty. How did that come about? You're a Gaia-X member, aren't you?

Falk Weinreich:

We're a founding member. That was, I think, almost four years ago now, if not five, that Gaia-X was launched, back then by German economics minister Altmaier and his French counterpart. That means the two countries, the two ministries, agreed to say "we have to". So it was politically motivated at the time - we have to make sure Europe becomes more sovereign. We know, we've understood, we're dependent on American, and perhaps soon Chinese, players too. They have their own laws - Cloud Act, Patriot Act, just as keywords - which interlock with each other in part and allow the legislator in America - China has the equivalent, but America is of course the bigger market for us here - which allow the legislator to ultimately evaluate the data if they want to. And no matter where in the world the data is located, as soon as the customer chooses an American supplier - Azure, Google, AWS and so on - you're essentially caught up in American legislation then, so to speak. And there's no way out of that. And there are indeed many constructs that get built nowadays, you could really say, where then, okay, that's allowed, but then in the data centre in Frankfurt there are only Germans. The interesting thing is with AWS, they say they have to be German residents. You can be an American citizen but live in Germany, and then it's okay. Just because you therefore work in the data centre doesn't make it sovereign because of that. That's rather far-fetched. Sovereignty has nothing to do with who looks after the cooling in the data centre or the power circuit, but of course it's about the updates, the information systems, how you access the data.

[00:13:46.520]

Yes, and that's where we come from, hence sovereign, not US-based. We have no links to the Cloud Act or similar. We are GDPR compliant, end to end. With Gaia-X, a bit more came into play. There's not just data sovereignty, we also talk about technical sovereignty through to operational sovereignty. And those are parts of Gaia-X that have perhaps been somewhat diluted by now. We all know that once politics handed it over to the association structure, suddenly anyone could join – suddenly 300 players could join, from China to America. And then, of course, a first conflict of interest arose, which can't be denied. That's why we still don't know where the journey ultimately leads. We're still active. But, coming back to these sovereignty topics: sovereignty in the legal sense is clear, that's GDPR, CloudAct and similar, but technical sovereignty is also: are these proprietary systems? Are they open-source models? Can I, for example in the AI space, take my model, my training models, and deploy them in the next cloud in exactly the same way, or does that suddenly no longer work technically?

Joubin Rahimi:

And I'd like to dig deeper into that with you in the next episode.

Falk Weinreich:

Yes, happy to.

Joubin Rahimi:

Because we simply need the whole time for that.

Falk Weinreich:

That's very...

Joubin Rahimi:

Thanks first of all for the insight into what OVHcloud stands for and what you do. And I'd be pleased if you'd bring in episodes two and three as well, because then we'll go even deeper into what else you do and into the use cases. Thanks, thank you, Frank.

Falk Weinreich:

Happy to help.