Democrats' sweeping midterm victories this week could reshape the outlook for the tech industry's data center buildout, with voters in dozens of local ballot measures rejecting data centers and electing officials who campaigned on restricting them. The results, discussed on the latest episode of TechCrunch's Equity podcast, leave Elon Musk and the companies building data center infrastructure facing a harder political landscape.
On the podcast, Sean O'Kane noted that Musk appears to have gained little from donating half a billion dollars to Republicans, a figure that could grow once the final count is known. He added that Musk's companies are now headquartered in a state that has turned about as blue as it could possibly turn, for the first time in a very long time, if ever. Many ballot measures that would have imposed restrictions or moratoriums on data centers passed, while measures meant to speed construction were almost all voted down.
Texas governor-elect Gina Hinojosa, who defeated Greg Abbott, spoke openly during her campaign about restricting data centers and has said she wants to focus on the issue once in power. Anthony Ha said anti-AI and especially anti-data center sentiment appeared to be a potent political force, and that the next two years and potentially beyond will be more difficult for tech companies generally and for hyperscalers and data center companies in particular. He added that companies may worry the issue will persist into 2028 and beyond.
Kirsten Korosec said data centers likely were not what drove voters to the polls, but the issue has become increasingly grassroots, partly because of how hyperscalers and companies have sought project approvals, including secrecy, nondisclosure agreements with elected or appointed officials, and withholding information about project scale in environmentally sensitive areas such as the Southwest, where water scarcity is a concern. She said Republicans, independents and Democrats alike saw that as wrong.
Korosec pointed to OpenAI, which has released what it calls a compute campus policy blueprint and will no longer require NDAs, saying it will share plans and operate with less secrecy. Ha noted the blueprint is also an attempt to rebrand data centers as compute campuses because the phrase has become toxic. O'Kane called the effort ridiculous and unlikely to change anything, while Korosec suggested OpenAI create a cutesy compute campus avatar instead of a power- and water-sucking data center.
Ha also raised what he described as a possible second blow: a shift in how Wall Street is reacting to hyperscalers and AI companies, with investors unexcited about spending heavily on new data centers and compute. That creates a financial incentive not to build, he said, even as companies likely need to build somewhere to reach the scale they want.
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