US hyperscalers face headwinds from the states

Hyperscalers like Amazon, Google, Meta, Microsoft, Oracle, and OpenAI are facing headwinds in the US. Six states are initiating legislation to halt the construction of new, massive AI data centers. These include Georgia, Maryland, Oklahoma, Vermont, Virginia, and most recently, New York.

Senator Liz Krueger, for example, is proposing a three-year construction pause for new data centers in New York. During these three years, the Department of Environmental Protection and the Public Service Commission are to prepare expert reports on the impact of data centers on the public and the environment. They are also to develop guidelines for new construction after the pause. Wired drew attention to the movement.

Hyperscalers should bear the costs themselves

Bernie Sanders, a senator in the US state of Vermont, also advocates for stricter regulations on AI data centers. A moratorium is intended to prohibit new construction with a computing capacity of 100 megawatts or more until the summer of 2030.

On X, Sanders wrote: “I will advocate for a moratorium on the construction of data centers that are driving the unregulated sprint to develop and deploy AI. The moratorium will give democracy a chance to catch up and ensure that the benefits of technology benefit all of us, not just the 1 percent.” He criticizes that wealthy corporate executives profit at the expense of the public.

Georgia, Maryland, Oklahoma, and Virginia are considering temporary construction freezes without specifying concrete timeframes. With Florida, a seventh US state is planning regulations, but these do not provide for a general construction ban. However, local authorities are to be granted the right to prohibit the construction of data centers on a case-by-case basis. Energy providers would also not be allowed to pass on costs to citizens to subsidize data centers.

Ron DeSantis, who is generally considered pro-business, publicly speaks out against hyperscalers: “I don't think there are very many people who want to accept higher electricity bills just so a chatbot can corrupt a 13-year-old online. That's not what anyone signed up for.”

While the largest data centers are being built in remote locations or industrial areas, they can significantly strain the power grid. While large data centers typically consumed 30 to 50 megawatts a few years ago, new projects are now reaching one gigawatt and more. Microsoft CEO Satya Nadella has already confirmed in a podcast that the company has unused AI accelerators because the necessary power is lacking. The establishment of energy-hungry data centers can lead to increased electricity costs for residents.

First countermeasures

Meanwhile, Microsoft is trying to appease concerns. In a blog post, the company lists measures to present itself as a "good neighbor." Microsoft intends to pay enough so that energy costs for residents do not increase. New facilities are to process more wastewater than Microsoft uses in its own data centers, for example, for cooling. The company also plans to invest in local funding and educational programs.

Microsoft also addresses the inadequate power grids. The blog states: “We will work early, closely, and transparently with local utilities to integrate power and the necessary infrastructure for our data centers into the grid as needed. While lowering electricity costs is important, it is only an incomplete solution for local communities if we do not simultaneously expand the power supply. This expansion typically requires complex measures, including increasing power generation capacity and improving transmission and substation systems.”

(mma)