Data centers become military targets in Iran war

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Banking, payments, enterprise and consumer services in the UAE experienced outages earlier this week as AWS (Amazon Web Services) data centers in the country were hit by Iranian drone strikes on Sunday.

Many of the apps have since come back online after companies scrambled to migrate servers, but the downtime of services that many use daily highlights how digital infrastructure has become a strategic target.

After the U.S. and Israel launched joint strikes on Iran last weekend, Tehran’s wave of retaliatory attacks across the Middle East targeted military bases, oil and gas production facilities and data centers.

There are over 200 of these across the Middle East, according to some estimates, and cheap energy and land have drawn U.S. hyperscalers to pour resources into building out capacity in the region in recent years.

“Iran and proxies have targeted oil fields in the past, but their attacks this week on UAE data centers shows they are now considered critical infrastructure,” Patrick J. Murphy, executive director of the geopolitical unit at advisory firm Hilco Global, told me. 

On Monday, AWS said that two of its facilities in the UAE had been directly hit by drones, with one in Bahrain also damaged by a nearby strike.

The latter was targeted by Iran’s Islamic Revolutionary Guard Corps for the company’s support of the U.S. military, Iranian state media said on Wednesday.

Companies using AWS servers in the UAE were advised to migrate to alternative regions as they raced to limit disruption. AWS was still reporting services in the country as “disrupted” on Friday morning. 

Governments have been increasingly acknowledging the strategic importance of data centers in recent years. The U.S. recognizes them as part of its 16 critical infrastructure sectors; the U.K. designated them as critical national infrastructure in 2024; and the EU also gives them special status. Many other nations across Europe and further afield also classify data centers as critical.

But the rise of drone warfare in recent years has brought new scrutiny to the security of the infrastructure that powers digital life across the globe.

Iran targeting data centers in the Middle East could see more governments “bring them into national security planning frameworks alongside energy facilities, telecommunications networks, water treatment plants and transportation hubs,” said Hilco Global’s Murphy.

AWS, Microsoft and Google declined to comment on security arrangements at data center sites in the region as a result of the conflict.

Many digital services have been restored over the past few days, but the Iranian drone strikes could sharpen focus on multi-region replication and backup options, Scott Tindall, partner in the infrastructure and energy team at law firm Hogan Lovells, told me.

While “sophisticated data center operators” already carry out detailed geopolitical risk assessments, he said, these will likely have to be “revisited in light of recent events.”

The U.S. government has officially declared Anthropic a supply chain risk, CEO Dario Amodei confirmed on Thursday and said the company has “no choice” but to challenge the designation in court.

Tech companies with Middle East operations have scrambled to respond as fighting rippled across the region.

Xiaomi plans to launch a new smartphone processor chip every year, the company’s President Lu Weibing told CNBC, underscoring its ambition to expand into more sophisticated areas of technology.

How Iran’s Shahed drone, termed “the poor man’s cruise missile” by some analysts, is shaping Tehran’s retaliation.

The quote: OpenAI CEO Sam Altman said on Monday that the company “shouldn’t have rushed” its recent deal with the U.S. Department of Defense, adding it “looked opportunistic and sloppy.”

The big picture: On Friday, OpenAI announced it had struck a new deal with the Department of Defense.

The move came just hours after the dispute between Anthropic and Defense Secretary Pete Hegseth over safeguards for its Clause AI systems ended with President Donald Trump ordering U.S. government agencies to “immediately cease” using the company’s tech.

Days later, Altman said the company would amend OpenAI’s contract with the department to include new language regarding its principles on topics like surveillance.