Microsoft scraps UK data center project with Nscale ahead of IPO

Microsoft has quietly exited a major data center agreement with British cloud and AI infrastructure provider Nscale.

According to a report by Telegraph, the US tech giant recently has terminated Nscale's two largest customers.

The canceled agreement centered on a planned data center facility in Loughton, Essex, where Microsoft was slated to serve as the core anchor tenant.

As reported, the withdrawal comes at a delicate time for Nscale, which recently filed for a U.S. Initial Public Offering (IPO) aiming to raise billions.

With filings showing that major clients like Microsoft and Anthropic account for roughly 85% of its contracts, the exit places fresh pressure on the startup.

Nscale provides infrastructure, including compute, power and data centers, as well as software for training and running AI models.

The vertically integrated AI infrastructure provider filed for an initial public offering in the US last month, with Microsoft and Anthropic expected to be its major customers.

The Nvidia-backed, AI group, which competes against CoreWeave, Nebius, Crusoe and Lambda, has grown rapidly since its launch, scaling from $100 million to more than $103 billion in total contracted value in just two-and-a-half years.

While neither company immediately detailed an official reason for the split, the Essex project has faced persistent hurdles, including local grid delays and infrastructure constraints that suggested a stable electricity supply might not be available until the 2030s.

Despite the setback, Nscale maintained that its broader relationship with Microsoft remains strong and that it stays committed to developing the site.