MILAN/STOCKHOLM (Reuters) - Amazon's ( AMZN ) computing unit AWS is in talks with Italy to invest billions of euros in the expansion of its data centre business in the country as part of the tech giant's effort to boost its cloud offer in Europe, four people familiar with the matter said.

Discussions between parties over the size and the location of the investment are ongoing, according to the sources, with one of them saying Amazon Web Service (AWS) is considering expanding its current site in Milan or building a new one.

Both AWS and a spokesperson for the cabinet's office digital transition department declined to comment. A spokesperson for Italy's industry ministry was not immediately available to comment.

AWS launched its first cloud region in Italy in 2020 as part of a plan to invest 2 billion euros ($2.2 billion) by 2029.

It counts luxury carmaker Ferrari ( RACE ) and insurer Assicurazioni Generali among its customers in the country, its website showed.

AWS has recently unveiled a 15.7 billion euros investment in data centres in Spain's northeastern Aragon region, replacing a previous 10-year plan announced in 2021, when the company earmarked 2.5 billion euros for the country.

According to one of the sources, AWS' investment in Italy would be in the billions but it might not reach the scale of its plans for Spain. An announcement is not imminent.

In Germany, AWS plans to invest 7.8 billion euros through 2040.

AWS is also building infrastructure to provide cloud services to telecom customers, which require vast resources.

It snagged its first customer earlier this month when Telefonica Deutschland announced plans to move 1 million customers to AWS cloud.

AWS last year announced plans to store data on servers located in the European Union to protect data privacy for government and customers in highly regulated industries.

Analysts and executives say many big corporate customers have started spending again on cloud computing after pausing last year, as interest in artificial intelligence drives a rebound of growth in the $270 billion cloud infrastructure market.

Alphabet, which struck a landmark deal in 2020 to supply cloud services to Italy's biggest bank Intesa Sanpaolo, has invested 1 billion euros in Italy to set up the two cloud regions Intesa relies upon.

Microsoft ( MSFT ) a year ago said it was launching its first cloud region in Italy as part of a $1.5 billion investment plan it had announced in 2020.

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