AI data centers are America's next political fight. Big Tech is ready

Once people in his Republican-leaning Virginia legislative district stopped shutting their doors in his face last year, Democrat John McAuliff realized he had unexpectedly landed on a hot-button issue: Voters were getting frustrated with the armada of AI data centers popping up all around them.

McAuliff, a former White House climate adviser under President Joe Biden, ended up narrowly defeating the Republican incumbent by less than two percentage points in November, and is now a member of the state's House of Delegates. He attributes his victory partly to a focus on rising utility costs from data centers across the region, notably in nearby Loudoun County. The enormous concentration of 200 power-hungry data facilities and counting outside Washington, D.C. is cementing Loudoun County's reputation as the data center capital of the world — although Texas is not far behind in claiming that title.

Democrats won control of both chambers of the Virginia legislature and the governor's office last year, a political trifecta. McAuliff now has a chance to deliver on a core campaign promise to make sure that tech companies, not his new constituents, are the ones paying up for utility cost increases. He supports legislation making its way through the legislature that would shift certain grid-connection costs from Dominion $D Energy customers to "high-load" users like data centers.

And now it's the powerful tech industry that has been regularly knocking on McAuliff's door.

"Someone in the industry, either the representatives of the actual companies or their chosen lobbyists, have been in my office probably every other day since I got here," McAuliff said in an interview. "They're a very aggressive industry, and not wholly unhelpful. Sometimes they'll offer to help contextualize something, or sometimes they'll offer to water it down. ... But they are aggressive and they're talented."

Virginia Delegate John McAuliff. (Ralph Alswang/McAuliff for HD-30)

McAuliff's experience provides a glimpse into how tech companies are trying to create an AI-friendly landscape in Virginia and beyond. AI firms including Anthropic, OpenAI, and Meta $META are mobilizing political groups to pour at least $150 million in elections this year at the state and federal levels. One of those organizations is the super PAC Leading the Future, which has raised $100 million so far, most of it from tech and AI executives.

Jesse Hunt, a spokesperson for the pro-AI group, said they want to elect "as many pro-innovation candidates as possible." Leading the Future isn't advocating for a specific set of policies beyond saying that AI standards should be set at the federal level, not left to states.

AI firms are also spending tens of millions of dollars on lobbying efforts such as those in Virginia.

It all comes as Big Tech companies kick off an unprecedented capital expenditure spree to build data centers and related infrastructure across the country. As the compute capacity needed to power the AI boom rapidly grows, Meta, Amazon $AMZN, and Google $GOOGL are leading the charge with more than $650 billion in planned spending this year, a sum rivaling Sweden's gross domestic product.

Yet that tidal wave of AI-related spending is crashing against pervasive and growing skepticism within the American public about how AI affects jobs, the cost of living, and more. Surveys have shown opposition to data centers is rising fast.

"People are skeptical of AI. People want the government to put guardrails on AI," said Alex Jacquez, chief of policy at the left-leaning think tank Groundwork Collaborative. "They would prefer that the pace of AI acceleration slow down so that we can get things right versus speed up so that we can get more innovation and productivity."

A data center in Ashburn, Virginia. (Andrew Caballero-Reynolds/AFP via Getty Images)

'Not a sustainable ask'

Many Americans are already seeing double-digit percentage increases in their power bills. Since February 2020, electricity prices rose 40% on average across the country, according to The Washington Post. Yet the burden is unevenly distributed. Electricity costs for commercial users including giant data centers barely budged over the past four years, while it rose 10% for residential users during the same period, according to Yale Climate Connections.

Even some powerful Silicon Valley investors are warning about nascent opposition to data centers. Chamath Palihapitiya, a host of the "All-In" podcast, pointed to local backlash to data centers with 25 projects cancelled last year alone.

"The core problem as I see it: Local residents are being asked to subsidize AI infrastructure through higher electricity bills with no upside. That’s not a sustainable ask," he said last month.

President Donald Trump nodded to rising voter frustration with higher power bills during his State of the Union address last week. He announced a "ratepayer protection pledge" aimed at ensuring tech companies shoulder all the electricity costs tied to bringing data centers online.

"We're telling the major tech companies that they have the obligation to provide for their own power needs, so that no one's prices go up," Trump said.

The policy was short on details. A White House official later said Amazon, Google, Meta, Microsoft $MSFT, Oracle $ORCL, and OpenAI are among the firms signing onto the pledge at a Wednesday event in Washington.

But some analysts warn that it would be a mistake to explain away the public's frustration with data centers as only being about higher utility bills.

At a recent municipal government meeting in Sunbury, Ohio, residents packed two rooms to voice opposition to a proposal that would rezone 330 acres for an Amazon data center. Their concerns ranged from diminished home values, the potential for damaging effects to public health, and other unexpected consequences of building a data center so close to their community.

"I think that it's often reduced down to like energy and water," said Nat Purser, a senior policy advocate at the think tank Public Knowledge. "But it's the noise of the servers, it's the level of electricity consumption. People just don't like the aesthetics of big warehouse buildings. So I think lawmakers are trying to be responsive to all that."

Virginia Gov. Abigail Spanberger. (Al Drago/Bloomberg via Getty Images)

'Paying their own way'

There's a wide spectrum of views brewing on data centers, at least in Congress. Vermont Sen. Bernie Sanders is pushing for a complete moratorium on further construction. So far, it's a one-man campaign that hasn't gained traction in Capitol Hill.

Most lawmakers are interested in some form of regulation that upholds AI's role in the U.S. economy and as a technology that's here to stay. As a result, current lawmakers and political candidates are beginning to roll out AI policy platforms.

Rep. Ro Khanna, a Democrat who represents a district encompassing Silicon Valley, called last month for a "new tech social contract" that has AI powering middle-class wealth, not extracts from it it. "If we continue with the status quo or adopt poll-tested incrementalism, we will leave ordinary Americans out in the cold and modern prosperity will be only for the privileged," Khanna said.

Part of that, he said, hinges on compelling tech companies pay for electricity bill increases instead of passing off those costs to families. It's a increasingly common position in Congress.

Missouri Republican Sen. Josh Hawley Connecticut Democratic Sen. Richard Blumenthal rolled out bipartisan legislation last month compelling data centers develop their own power sources so they don't add to mounting utility bills. Potential 2028 Democratic presidential candidates are also dialing down their enthusiasm for data centers, Axios reports.

In Virginia, the state's legislative session still has a few weeks left to go. Gov. Abigail Spanberger is eyeing new ways to bring down utility bills, after she campaigned last year in favor of data centers "paying their own way" for power.

Virginia state lawmakers are still weighing a raft of bills dealing with data centers and their effect on electricity grids, water systems, and residents. The data center boom won't be paused anytime soon, but tech companies can probably expect more voter backlash — and perhaps an initial swing at government oversight.

"I’ve been really pleased by the number of legislators who have taken a hard position against continued unregulated industry growth — including our utilities," McAuliff said.