US midterms delivered a blow to tech’s AI ambitions

There’s no question the US midterms elections delivered a blow to Donald Trump. The Democrats took not just the House and Senate back from the Republicans, but won a wave of governor’s races across the country — including in states it would’ve previously been hard to imagine a Democrat winning.

But it wasn’t just Trump who lost. The tech industry and its ambitions to cover the country in hyperscale data centers to power generative AI were potentially even bigger losers than the orange man himself.

It didn’t matter that Elon Musk shelled out over $400 million to try to save Republicans as polling increasingly suggested a wipeout was coming, especially in his chosen home of Texas, or that crypto and AI companies deployed millions more on races across the country. An NBC News exit poll still found 56% of voters said AI and data centers were “crucial or a major factor” in their vote for Congress. And it showed in the results.

The Democrats spent big on attack ads presenting their Republican opponents as backing data centers that were harming communities and being in the pocket of the tech industry. That had a real impact on races, as you can see in Sherrod Brown’s fight for a Senate seat in Ohio.

He slammed his opponent John Husted, saying he “gave up Ohio’s money — our tax money — to Meta, a company worth $2 trillion, to make sure they come to Ohio.” Husted, like so many Republicans who backed data centers, tried to do a last minute pivot, in his case with the Ratepayer Protection Act that he claimed who protect ratepayers from price increases brought on by data centers. It wasn’t enough though: Brown beat him handily. You see similar stories in Pennsylvania, New Jersey, Virginia, and beyond.

Those dynamics were repeated across the country, and not just in Congress. Texas, Ohio, and Georgia are at the center of the current data center buildout in the United States — and they’ve all flipped. Gina Hinojosa will now become the first Democratic governor of Texas since 1990, having run on a moratorium on data center construction after using her opponent Greg Abbott’s relationship with Musk against him. Similar dynamics played out in the races in Georgia and Ohio, while Pennsylvania Governor Josh Shapiro held on after reversing his previous embrace of the industry, pulling data centers out of the state’s fast track approval process, and calling some companies “greedy” and “predatory.”

Voters across ten states also voted on ballot measures related to data centers yesterday, delivering an overwhelming mandate for their governments to crack down on the projects, particularly in Ohio. Whether it’s on the state level, in Congress, or across many communities, Americans have made it clear they are not on board with the AI vision being foisted on them by Silicon Valley and are ready to take power back from large companies trying to shape their surroundings for the interests of billionaires located far away from where the impacts will be felt.

There’s no question this is a major win. It puts the tech industry on the back foot, and will undoubtedly have them recalibrating. Data center stocks are down following the results, and a bruised Musk is whining on his social media platform, posting that data centers in space “are looking pretty appealing” now that his plans to expand in Texas are likely on ice. But now that the blow has been delivered, we should be ready for how the industry will respond.

There will undoubtedly be the more openly right-leaning tech CEOs complaining about a Democratic victory, but the more clever ones will be trying to figure out how they recalibrate to ensure projects are still getting approved. We’ve already seen Amazon announce it won’t use non-disclosure agreements anymore and the industry more widely embrace closed-loop cooling to try to address community concerns about water use (without disclosing the chemical tradeoff), to provide a couple examples. They will surely start taking more efforts designed to assuage concerns, while still trying to move forward hyperscale data centers that are fundamentally unsustainable and beyond what many communities can bear.

Another path is spending. While tech spending still leaned Republican in this cycle, the AI industry is (sort of) bucking that trend. According to figures tracked by Molly White, AI-focused super PACs spent more supporting Democrats than Republicans as groups like Anthropic push for AI regulation, but try to ensure it’s focused on supposed existential risks like AI ending humanity rather than the present-day harms we see from its products. That’s all to say, while this is a win, we need to remain on guard. Some of the wealthiest people and most powerful companies will not just accept a setback to their interests. Their response is already in the works.

I held the monthly recap for a few days because I knew it would be worth commenting on the outcome of the midterms — and luckily, it delivered exactly what we want to see. But that doesn’t mean there aren’t other stories worth following.

Below the break, paid supporters will find great articles on the emissions impacts of data centers, questions about whether AI is delivering economic benefits, and how screens have affected our lives. Plus, other important reads, a (too long) list of tech layoffs this past month, and a bunch of other stories you might have missed.

Before we get to that though, I wanted to remind you I’m on the road to promote my new book Hyperscale. I’ve already had the chance to meet readers in New York City, Montreal, London, Bristol, and Boston, where I had a great event with Becca Lewis last night.

I started doing more events in the United States this week, where I’ll be hitting Baltimore, Pittsburgh, Oakland, San Francisco, and Los Angeles in the coming days. Then I’ll be in Canada, where I’ll be doing events in Toronto, Hamilton, Ottawa, Vancouver, Calgary, and Edmonton. At the end of the month, I’ll be headed back to Dublin, and will have more news on European dates in early December soon. You can find more information and links to RSVP or get tickets on my website. Don’t forget to grab your copy of Hyperscale while you’re at it!

As always, I can only do this work because of the support of subscribers like you. If you’re not already a paying subscriber, consider joining today to support my work and get access to the full monthly recap.

Before I end, I want to make a special shoutout to workers at Proton. Readers will know I’ve been a big advocate of the company’s services, particularly in my push to get off US tech. I was frustrated to see 404 Media’s reporting on CEO Andy Yen’s latest misguided efforts to push AI on his workers and compromise the company’s products in the process, but was heartened by how quickly the backlash forced some degree of a reversal. It also seems to be creating momentum for the company’s employees to push back, as some are now calling on their colleagues to unionize so they can hold Yen accountable, and asking people outside the company to make their voices heard by emailing the board of the Proton Foundation. They certainly have my support.

Have a great November!

— Paris