Recode’s Kara Swisher has a story on the future of Microsoft’s digital empire.
It’s about to get interesting.
According to sources, the company plans to break ground on a $1 billion “digital lab” in New York, where it will work on a new form of digital advertising that will use technology to “optimize content and optimize the design of the digital ads.”
Microsoft will build this “digital laboratory” on a site called “The Lab” at the Microsoft Research Center in Redmond, Wash.
It will be called Microsoft Digital Labs, and it will be the first major “digital studio” to be built in the U.S. The company plans on creating an entire new “digital advertising and content management” team to oversee and oversee the lab, according to Recode.
The new digital lab will be run by Microsoft’s “digital strategy” team.
Microsoft’s new digital team is part of a larger effort to diversify the company’s digital operations.
Last week, Microsoft said that it was closing up shop on Microsoft Research Labs, a project that focused on building “the best research labs in the world.”
The lab’s work was focused on “developing and integrating the most cutting-edge research capabilities,” according to the company.
Microsoft also shut down a major “data center” facility in Santa Clara, Calif., in April, which meant that the company no longer could lease space to data centers across the country.
But, as Recode previously reported, Microsoft was considering moving the lab from the Santa Clara facility to a “data centers center in another city,” which could be as far away as Austin, Texas.
Recode previously said that the move to Austin would have been a “major” blow to Microsoft.
“Microsoft has spent a lot of money on the Austin data center,” Recode reported, “but the Austin facility was so big, it would have taken years to build, and then the company would have had to relocate and hire people to replace them.”
Recode also reported that Microsoft was “actively considering” moving the new lab to New York.
Microsoft declined to comment to Recoding on this report.
According a recent filing with the Securities and Exchange Commission, Microsoft is expected to generate $10.5 billion in operating income in 2016, $3.4 billion of which is expected for its digital studios.
The remaining $5.1 billion is expected in profit.
Microsoft has also spent a fair amount of money upgrading its headquarters.
According to a filing last week, the firm plans to spend $6.2 billion upgrading its Seattle headquarters, while the company also plans to upgrade its San Francisco headquarters.
The Seattle building will also be upgraded.
Microsoft already spent $9.4 million on its Seattle campus in January, while it is also planning to spend nearly $4.5 million on the San Francisco campus in May.
Microsoft is also expected to spend more than $9 billion upgrading the New York headquarters, according the filing.
The New York site will include an “electronic data center” and “office tower.”
The Manhattan site will be used for a “cloud computing and cloud infrastructure.”
Microsoft is expected spend another $5 billion on a “new corporate office complex” in the Bronx, where the company has planned to build an “internet of things” data center, according a report from Recode last week.
Microsoft plans to create another $2.5 to $5 trillion in “digital money,” according the company filing, which is the “fundamentally new form” of money Microsoft plans to invest in digital advertising.
It is also said to “enable Microsoft to create digital value by leveraging its own advertising platform.”
Microsoft has invested heavily in its digital ad business, with the firm now controlling about 10% of the online advertising market.
But Microsoft is also considering using digital advertising to sell more Xbox consoles, which could make the company an attractive buyer for new consoles and other Microsoft hardware.
