A Google data center

Google and Microsoft plan to spend over $1 billion between them on new data centers to handle expected rapid growth in online traffic, reports the Financial Times.

Google said it would spend $600 million to build a new site to house a server farm in Lenoir, a small town in North Carolina, and Microsoft unveiled plans for a $550 million facility in San Antonio, Texas. Several states have been battling to attract internet data centers; Google chose North Carolina after receiving incentives worth $100 million.

Microsoft has been laying the groundwork for its new "Live" range of services, which represent its latest attempt to revitalize its online services business. The San Antonio plant will be the second data center created for the Live business.

The two search giants typically build centers in the Pacific Northwest, where lower hydroelectic power costs make them cheaper to run.