Microsoft has tightened oversight of some data center projects from neocloud providers Nebius, IREN and Nscale, Bloomberg News reported on Thursday, Nov. 5, citing people familiar with the matter, according to a Bloomberg Linea carry of Brody Ford’s story and a Reuters summary of the same Bloomberg report.
Bloomberg said Microsoft is stepping away from projects it deems risky and is debating internally whether to sign new neocloud deals. The company is focused on expanding its own data centers rather than adding neocloud deals, though it has not fully ruled them out, Bloomberg reported, according to Reuters.
Some recent setbacks involve cabling problems at a Texas site IREN is developing, Bloomberg reported. IREN also had a generator fire at the site in April and disclosed hardware delivery delays in August, according to Bloomberg via Bloomberg Linea. IREN and Microsoft met last week and negotiated a revised timeline that could push completion back by several weeks or months, people familiar with the matter told Bloomberg. IREN declined to comment, Bloomberg Linea reported. Separately, Reuters said IREN’s earnings report showed it was pushing back delivery dates for some Microsoft AI infrastructure after network-design change requests, without financial penalties for those delays.
Microsoft has sent workers to neocloud sites to check that facilities meet its specifications and regulations, Bloomberg reported, including a Nebius site in New Jersey that was fined $1 million for operating generators without needed permits, and Texas projects being developed by Nscale and IREN.
Bloomberg said Microsoft refused to expand its Texas agreement with Nscale, with some of that capacity later taken by Figure AI, and withdrew from a letter of intent to lease 1.35 gigawatts in West Virginia. Last month it canceled a roughly $3 billion U.K. deal tied to an Nscale data center after multi-year grid-connection delays, Bloomberg reported. Reuters said Microsoft will not exercise an option to more than double its existing Texas Nscale agreement and pulled out of anchoring Nscale’s flagship Loughton, Essex site after power delays pushed supply into the 2030s.
A Microsoft spokesperson told Reuters the company’s approach combines owned data centers, leased facilities and third-party partnerships, and that monitoring delivery and adjusting plans is normal for large infrastructure projects. Nebius and Nscale did not respond to Reuters requests for comment.
The report lands as Microsoft continues a large infrastructure financing push, including a recent bond sale tied to AI capacity spending.
Sources
- Bloomberg via Bloomberg Linea: Microsoft loses confidence in neoclouds amid delays and higher data center costs, by Brody Ford (November 5, 2026)
- Bloomberg: Microsoft sours on neoclouds IREN, Nebius, Nscale on delays, costs (November 5, 2026; paywalled, not bypassed)
- Reuters via Investing.com: Microsoft tightens oversight of neocloud data center projects, Bloomberg News reports (November 5, 2026)
- AI Tech Daily: Microsoft’s $25 billion bond sale, explained (November 3, 2026)
- AI Tech Daily: Nvidia is in talks to give Nscale billions of dollars in credit guarantees (October 30, 2026)