AI boom runs into US voter backlash

US voters backed restrictions on datacentres while Democrats promising tougher controls scored major victories in the midterms

The midterm elections in the US saw sweeping victories for the Democrats, who gained control of both houses of Congress.

In many areas, resistance to local datacentre development played a crucial role in the outcome, with the Republicans seen as too close to Big Tech and too accommodating of infrastructure developers.

The Washington Post reports that in the city of Hubbard, Ohio, more than three-quarters backed a total ban on datacentres, with resistance to new builds crossing party lines.

Trumbull County, which includes Hubbard, backed Democrats for governor and Senate. Ohio's governor-elect, Amy Acton, backed a conditional moratorium and proposed that developers should be required to cover their power and water costs.

Meanwhile voters Texas, which accounts for more than a quarter of all planned datacentre capacity, elected the first Democrat governor since 1990 as Gina Hinojosa defeated Republican incumbent Greg Abbott after campaigning for a moratorium on new builds. The state flipped Democratic for the first time since 1988 as James Talarico defeated Ken Paxton in the Senate race.

The dramatic shift in political fortunes cannot all be put down to resistance to datacentres, of course, but concern over energy prices, air and water quality and property values, coupled with a perceived lack of transparency by the industry, provided a strong focal point for local political campaigns. Voters in at least 38 jurisdictions backed restrictions or outright bans on datacentre development, according to The Washington Post.

The largely bipartisan objection to the pace of datacentre construction, with only 11% of Americans saying they would be happy to have a large facility in their neighbourhood, has been a growing bugbear for the AI companies, who now have to contend with a loss of political support from the top of government as well as at a local level.

The industry has been accused of rushing through developments, often by lobbying local politicians, and of ignoring community opposition, with developers hiding behind NDAs. A blind eye has sometimes been turned to environmental regulations as the US pushes for AI dominance at all costs.

In the new environment, datacentre development in the US will likely be held to higher standards of scrutiny.

This doesn’t necessarily spell the end of the AI boom. State laws vary widely, and developers may shift their attention to other areas that are more welcoming. North Dakota, for example, has abundant land and energy resources and a cold climate, and the industry has had some success against community pushback by promising to cover all costs, pay full corporate taxes and provide local jobs. In Harwood, voters bucked the national trend, with three-quarters rejecting proposed restrictions on industrial development that could have impeded datacentre construction.

However, in most places developers will likely face longer waits for planning permission and grid connections, fewer tax breaks and the need to make more concessions to local communities who, in some cases, have seen their bills rise as the world’s richest companies become richer still.

Another stated raison d’être for the breakneck buildout, the race for supremacy with China, may also be losing some of its urgency as that country appears to be seeing a deflation of its own AI bubble.