The data centres would allow customers of Microsoft - which competes with Amazon and Google in the $260 billion cloud-computing market - to keep data in Germany, which has relatively strict privacy laws.

The reports, in WirtschaftsWoche and Handelsblatt, said that Microsoft already offered services on the German cloud in partnership with Deutsche Telekom, and hosted other European data centres in Dublin and Amsterdam.

Demand for the German cloud had been weak, however, because of higher pricing and a lack of flexibility in lifting and shifting data, they added.

A Microsoft spokesman declined to comment on the reported investment but did say the US company was happy to offer both German and international cloud services.

"Many customers with particularly sensitive needs, for example in the public sector, prefer our German cloud offering. We give customers the choice," the spokesman said in an emailed response to a request for comment.