Microsoft exits UK AI data centre deal

Microsoft confirmed on Monday that it had pulled out of a UK AI data centre deal with British start-up Nscale at a planned site in Loughton, northeast of London.

The US technology company had agreed last year to lease computing capacity from Nscale, an AI infrastructure provider backed by Nvidia.

A Microsoft spokesperson said the decision related to a single site and added that Microsoft remained committed to its partnership with Nscale.

Nscale said it remained committed to the Loughton project and the UK, and was exploring alternative power sources for the site as well as other expansion sites in the country. The company said what it called a London-wide grid issue had no impact on its other contracts.

UK media reported that power grid officials had told Nscale the Loughton site would not have access to power until the 2030s.

The deal had been announced alongside multi-billion-dollar US technology investments during President Donald Trump's state visit to the UK last year. Former prime minister Keir Starmer had described the Loughton site as the largest UK sovereign AI data centre.

Nscale is preparing for an initial public offering on the New York Stock Exchange, reportedly targeting a valuation of up to $35 billion. In its IPO filing, Nscale said a large share of its committed revenue came from a limited number of customers with major contracts, including Microsoft and Anthropic.

A person familiar with the matter said the Loughton deal accounted for only a small part of Microsoft's agreements with Nscale.