Microsoft withdraws from the project with Nscale in the UK

A Microsoft confirmed today that it withdrew from an agreement with the British Nscale startup concerning a data center dedicated to artificial intelligence (IA) in the UK, delaying British ambitions in the sector.

The North American technology had agreed last year to rent computing capacity to Nscale, an AI infrastructure supplier supported by ‘chips’ Nvidia, in a data center scheduled for Loughton, northeast London.

A Microsoft spokesman indicated in a statement sent to AFP that the decision concerned a single location and that the company “continued to engage in its partnership with Nscale”.

The agreement had been announced at the same time with an investment of several billion dollars by US technological giants during President Donald Trump's state visit last year, which should contribute to making the United Kingdom a superpower in the field of AI.

Former Prime Minister Keir Starmer had described the site of Loughton as “the UK’s largest sovereign AI data center.”.

However, some data centre projects have difficulty in advancing due to concerns related to the high cost of electricity and the long waiting times for connection to the British power grid.

“ We are still engaged in both the Loughton project and the UK, and we are exploring alternative power sources for the site as well as other expansion sites in the UK,” said a Nscale spokesman today.

“ Our relationship with Microsoft remains solid and long-term, and this unfortunate problem in the London network has no impact on our other contracts,” added the same source.

The British media reported that the British electricity distributor responsible for the region, UK Power Networks, had informed Nscale that the Loughton site would not have access to electricity before the 2030s.

This evolution arises at a time when Nscale is preparing for an Initial Public Offer (IPO) in New York, with a valuation that could reach 35 billion dollars, according to various media.

In its IPO dossier, Nscale stressed that “a substantial part of [its] contractual revenues came from a limited number of clients with large contracts”, namely Microsoft and Anthropic.

The Loughton agreement represented only a small part of the contracts concluded between Microsoft and Nscale, and AFP specified a source close to the case.

Earlier this year, OpenAI, creator of ChatGPT, withdrew from a partnership with Nscale and Nvidia which aimed to establish a British version of the Stargate initiative, predicting major investments in AI infrastructure.