Facebook will on Thursday begin a significant expansion outside its home base with the announcement of its first non-US data warehouse in Lule, in Swedish Lapland.
The social network will spend some SKr1bn ($153m) on the initial construction phase, rising to between SKr3bn and SKr5bn for three buildings at one site.
Speaking exclusively to the Financial Times, Tom Furlong, Facebooks director of site operations, said: This is a recognition that Facebook will continue to grow and that most of our users are now outside the US.
The facility would handle all data processing from Europe, the Middle East and Africa, he said. It will cover 30,000 square metres - about the size of 11 football pitches - jammed floor to ceiling with data servers.
Lule, a small town of 74,000 inhabitants just below the Arctic circle, has Europes cheapest electricity prices because of its abundant hydroelectric power resources.
Mr Furlong said no decision had yet been made on which manufacturer would provide the servers - a choice that has crucial implications for power consumption. Facebook is known for reducing power usage by tweaking servers to strip out superfluous elements such as video cards and this process will be accelerated for the new site.
Although Facebook declined to spell out the sums involved, the warehouse will also pare down its operational costs. It will use 32 per cent less energy than traditional industry standards. It will also be the worlds first to be powered entirely by renewable energy.
Data warehouses run by companies such as Facebook, Google and Amazon are a prized catch for inward investment agencies worldwide both because of the jobs they provide and the prestige of playing host to global brands.
Facebook chose Lule because the town offered the best package in terms of land and energy resources, a talented workforce and a supportive business environment, Mr Furlong said.
Swedish inward investment sources said that Facebook had looked at more than 100 sites in Europe, including 40 in Sweden. Lules selection is a coup for the towns mayor, Karl Petersen, who said: Its a milestone in the history of Lule.
The town now has traditional industries including companies such as Svenskt Stl, the stock market listed steel producer, and LKAB, the state-owned iron ore miner.
Matz Engman, chief executive of the local business confederation, Lule Nringsliv, said the contract was the result of two years of lobbying.
Both Mr Petersen and Mr Engman said they were confident Facebooks investment would inspire other IT companies to follow the trail north to Lule. Mr Furlong echoed this view: I believe theres an ecosystem that builds up around a centre like this and that is beneficial to the local community as well as others who come to the region.
The Financial Times Limited 2011