Why Microsoft is investing in undersea data cables

Microsoft is investing in undersea cables to connect its global data centers in a bid to bolster its cloud business capabilities amid fierce competition from the likes of Amazon and Google.

The Redmond, WA-based company plans to connect its data center infrastructure in North America with Ireland and the U.K. through deals with Hibernia and Aqua Comms, announced Monday. It did not reveal the value of the deals or the timescale.

The two cables will transfer data across the world to customers at rapid speeds, which Microsoft hopes will give it an edge over its competitors while expanding the reach of its cloud business.

"As people and organizations expect data and information at their fingertips Microsoft must have an infrastructure that can deliver the cloud services… which our customers need to support their global businesses," David Crowley, managing director of network enablement at Microsoft, wrote in a blog post on Monday.

Tomasz Wyszoamirski | Getty Images

Microsoft also confirmed Monday it had joined a consortium made up of China Mobile, China Telecom, China Unicom, Chunghwa Telecom, KT Corporation with TE SubCom to invest in a cable connecting North America to China.

"The goal of our expansions and investments in subsea cables is so our customers have the greatest access to scale and highly available data, anywhere," Crowley added.

Under CEO Satya Nadella, Microsoft has focused on becoming a cloud-first company. In the quarter ending March 31, Microsoft reported a 106 percent year-on-year rise in commercial cloud revenue.

But the cloud space is extremely competitive. Chinese e-commerce giant Alibaba is expanding its cloud business outside of its home market, while Amazon's chief technology officer recently told CNBC that cloud could overtake its retail business.

Microsoft is not the only company to invest in underwater cables. Last year, Google was part of $300 million investment to connect major West Coast U.S. cities to locations in Japan.