Did the Midterms Destroy All Hope for Data Centers? | E2360

Democrats won majorities in both the House and Senate after campaigning partly on slowing AI development and data-center construction. More than a dozen Ohio towns voted to halt or restrict new data centers, with similar bans passing in Kansas, Florida, California and Texas. Texas, Georgia and Ohio together account for more than 40% of planned U.S. data-center capacity. The Texas governor-elect campaigned on pausing construction until the legislature adopts new regulations, illustrating how quickly local opposition has become a political issue.

The speakers disagreed about the politics but saw room for negotiation. One argued that calls to pause construction, including Governor Abbott’s, were meant to appease public opinion, and gave Trump an A to A+ for backing data centers, energy development and reduced regulation. That speaker also said Trump made data centers a partisan wedge issue, pushing Democrats toward the opposing position. Jason had predicted politicians would campaign against facilities and then bargain with developers for concessions. Gavin Baker expected Texas rules for new facilities due in 2028–2029 to require tax payments, protections for consumer power prices and water availability, union labor and public input; a speaker considered those requirements reasonable.

The proposed compromise is for data centers to secure sustainable, clean water and electricity, prevent pollution, pay taxes, create jobs and contribute to local communities. Companies that meet those standards could compete for community support; the discussion cited Facebook and Meta increasing their offers. Jason said his investigation had left him viewing data centers as an A-plus, while identifying pollution and facilities too close to homes as genuine problems. OpenAI said it would cover the full cost of powering facilities it owns and operates, seek community input, publish construction plans and avoid NDAs with public officials. A speaker said communication and listening could help residents feel heard, but cautioned that the commitments were not revolutionary. OpenAI’s separate policy blueprint urges lawmakers to make similar commitments legally binding; Meta, Microsoft, Google and Anthropic have also outlined comparable commitments. OpenAI told investors in February that it was targeting $600 billion in total compute spending by 2030.

One speaker warned that slowing data-center development could trigger a recession lasting two to four years and leave Democrats blamed for the consequences. Democrats may campaign against AI and data centers, the speaker argued, but governing from the center requires supporting jobs and economic growth; it was unclear whether voters behind the “blue tsunami” would accept facilities if they were clean. Speakers differed on what mattered most to voters: one saw the Iran war as the leading issue, with AI and data centers also prominent, while another said affordability was clearly number one and also cited the war and concerns about democracy or corruption. Newly elected Democrats were described as often more moderate than Republicans had portrayed them. The speakers urged both parties to work together on problems facing Americans and to discuss data centers in nonpartisan terms.

Reports of industry retrenchment added uncertainty to the outlook. Bloomberg reportedly said OpenAI leaders discussed resetting next year’s capacity expectations, while Microsoft soured on neoclouds and canceled a roughly $3 billion Nscale deal tied to a U.K. data center. The tech sector fell 5–6% on the day discussed; markets rose the day after the midterms as investors anticipated less tariff pressure and an end to the Iran war. A speaker said easing tariffs and the war would be bullish for stocks. On the political aftermath, one speaker said Democrats had largely held back from confrontation because they had little procedural power and expected Trump’s policies to undermine him, judging that strategy to have worked fairly well. Tech leaders may not return to the Democrats, the speakers said, but Democrats should invite them into Washington and the leaders should accept; rebuilding those ties would be difficult because of their recent political alignment.

The discussion also covered disputes over AI’s use of publisher content. Adweek reported that Anthropic made its first content-licensing deal with the Associated Press shortly before the midterms, with no financial terms announced; Claude users seeking election-night polling updates would receive current information provided by and attributed to the AP. OpenAI was said to have more than a dozen content deals, including with Axel Springer, News Corp and The Atlantic. One speaker argued that monetizing publishers’ real-time content without a license is not fair use, while noting Anthropic considers its use legally permissible. The speakers distinguished that dispute from questions about training on lawfully purchased books and from Anthropic’s settlement over pirated books, as well as separate disputes over stolen content and terms-of-service breaches. Other topics included Bloomberg’s report that Apple cut engineering teams’ daily AI spending cap from $300 to $200 in October, with further reductions expected, and a proposal to tax margin loans above $10 million as if underlying gains had been realized.