Amazon’s Estonian subsidiary veiled in secret

Photo: Alexander Pohl / imago images / Scanpix

The US retail giant Amazon established approximately a month ago its Estonian subsidiary Amazon Data Services Estonia OÜ, which leads to a conclusion that the concern plans to set up a data center here or offer cloud services. But the world’s largest online department store keeps its activities under a veil of secrecy.

The main activities of the Estonian subsidiary established on July 11 are designated as data processing and web hosting. The platform Amazon Web Services is the world’s leading cloud data processing firm with a turnover of 25.6 billion dollars last year and profit of 7.2 billion dollars. A comparison: Estonian gross domestic product last year was 26 billion euros.

Amazon’s communications department had not answered to the inquiries of Postimees within a week. The law office Eversheds Sutherland Ots & Co, which is entered in the business register as a contact firm of Amazon’s Estonian subsidiary, has not revealed anything either.

The Latvian news agency LETA announced on Monday that a company of an analogous name had been formed in Latvia on August 2 and the founder, just as in Estonia, is the US-registered enterprise A100 Row Inc. The sole board member of either enterprise is the Irish citizen Malachy Martin Casey.

The Data Economy portal speculated, hinting at the Latvian news, that Amazon might be building a data center in Latvia, which would offer cloud services in the Baltic states.

As far as Postimees knows, the construction of a new data center is not on the agenda right now. “It is logical; looking at their plans reveals some interest in the Baltic region. The Amazon webpage is including an Estonian-language version and it is clear that they will need a local infrastructure to process the orders. Estonia’s market volume is so small that there is no sense in building something – most likely Amazon is looking for a local partner,” an anonymous source told the daily.

“We have heard the rumors – that there has been a non-public tender [for a partner] – but that is all we know,” the source added.

Amazon has currently five data centers in Europe, the latest of which was opened in Sweden last year. The others are located in Ireland, the UK, Germany and France. A data center is planned to be opened soon in Milan.

According to Raido Lember, head of foreign investments center of Enterprise Estonia, the representatives of Amazon have been repeatedly hosted over the years and presented opportunities for investment in Estonia, for example for ma services center, a development center or a data center.

“At present, as far as we know, none of these activities are related to the legal entity recently established in Estonia. It was in all likelihood created in connection with the European digital tax and we do not rate such activities as investing in Estonia,” Lember said. The European Union has been seeking for opportunities to tax the technology giants (mainly Google, Facebook, Amazon and Apple) in the countries where they operate. The plan is opposed by Ireland, where the head offices of several US technology forms are located.

Amazon has been looking around in Lithuania as well as in Estonia and Latvia. The business newspaper Verslo Žinios wrote four years ago that the US retail giant might open a data center in the Kruonis industrial park near Kaunas.

Kruonis is the place of a pumped storage plant which could provide the data center with reliable energy supply, while the Kaunas reservoir could ensure cooling. Amazon, which has more than 66 renewable energy projects all over the world, could also value the availability of green energy from the Kruonis plant.

Google’s interest has also been mentioned in relation with the Kruonis industrial plant, but neither technology giant has so far established its data center there.

The construction of the largest data center in Estonia and the Baltic countries, its investment amounting to 100 million euros, will begin in Saue this autumn. The first stage of MCF group Estonia OÜ project will cost roughly 25 million euros. Negotiations with the first anchor clients of the data center to contain 1,000 computer racks and 40,000 servers are in progress and preliminary agreements are being handled. According to the project leader Kert Evert, mainly foreign enterprises will be viewed as clients.

Amazon has previously approached the Cleveron package handling equipment manufacturer in Viljandi, which rejected the offer. Amazon wanted to have the whole production and all the rights, but Cleveron prefers to keep the intellectual property rights and patents and to supply products under its own trade mark.