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Trump seeks to quell data center rebellion

In a bid to tamp down growing unrest in communities over tech giants’ expansion of power-hungry data centers, President Donald Trump said his administration would push Silicon Valley companies to ensure their massive computer farms do not drive up people’s electricity bills, seizing on a promise Tuesday by Microsoft to be a better neighbor.

The Trump administration has gone all in on artificial intelligence, pushing aside concerns within the MAGA movemen and seeking to sweep away regulations that it says hamper innovation. But neighbors of the vast warehouses of computer chips that form the technology’s backbone - many of them in areas otherwise supportive of the president - have grown increasingly concerned about how the facilities sap power from the grid, guzzle water to stay cool and secure tax breaks from local governments. And Trump now appears to be recalibrating his approach.

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“We are the ‘HOTTEST’ Country in the World, and Number One in AI. Data Centers are key to that boom, and keeping Americans FREE and SECURE but, the big Technology Companies who build them must ‘pay their own way,’” Trump said Monday in a post on his Truth Social site, teasing Microsoft’s announcement of an initiative to address the issue and framing it as part of a broader effort by his administration.

The tech giant said Tuesday that it was making five policy pledges to ensure that its data centers are not a burden on people living nearby. The measures include replenishing water supplies, not asking for property tax breaks and ensuring that Microsoft’s data centers don’t drive up electricity rates.

Microsoft President Brad Smith announced the plan at an event near the White House, nodding to Trump’s engagement “as recently as last evening.”

“He has made clear, quite rightly, in my view, that we need to stand up and step up as an industry and ensure that we pay the tab for things like the cost of electricity,” Smith said.

Trump’s effort to ease voters’ concern over the AI build-out comes as the politics of data centers is rapidly shifting against Silicon Valley and lawmakers who support its push to quickly build hulking structures across the country that can consume more electricity than entire cities.

The community anger crosses the partisan divide. Conservative activists in ruby-red towns in Oklahoma have been circulating petitions demanding the firing of officials who sign nondisclosure agreements to negotiate terms with tech companies. And progressive groups such as the Democratic Socialists of America and the NAACP have rallied around data center opposition.

Already, some liberal politicians, led by Sen. Bernie Sanders (I-Vermont), are calling for a moratorium on new data center construction. Sen. Elizabeth Warren (Massachusetts) and other Democrats have launched an investigation into the link between data centers and soaring electricity prices in certain regions of the country. On the right, some in the “America First” movement have split with Trump on the issue, most notably former congresswoman Marjorie Taylor Greene (R-Georgia), whose falling out with the president was fueled in part by her opposition to his unyielding support for the AI expansion.

The big tech companies are feeling the sting. Communities that once embraced them are now blocking their plans. And in cities and counties where tech companies have been in quiet negotiations for months or even years to set up shop, local leaders are getting cold feet as they fear a backlash once plans become public.

Between April and June of last year, 20 data center projects valued at about $98 billion were derailed across the country, according to a report by Data Center Watch, a tracking project by the nonpartisan research firm 10a Labs. More projects were derailed in those three months than in the past two years.

Data Center Watch counted 53 active groups across 17 states targeting 30 projects over that three-month period.

“As development expands and media attention intensifies, local groups are learning from one another,” its report says. “Petitions, public hearings, and grassroots organizing are reshaping approval processes.”

Analysts at investment research firm Capstone said Microsoft’s announcement was largely a messaging effort and did not represent a significant departure from the way the industry has done business.

“That said, this move coupled with the Trump announcement illustrates growing political risk facing data center developers, so we’re not surprised to see Microsoft highlight proactively its plan to mitigate local impacts,” Capstone analysts Jack Painter and Ishyan Veluppillai wrote in an email.

Even as opposition mounts, tech companies are unveiling plans for ever-larger data centers. One being built in Homer City, Pennsylvania, will use seven gas-powered generating stations to create more power than is used by all the residents of the Philadelphia metropolitan area. In the Texas panhandle, a firm called Fermi America is aiming to build a data center campus more than twice that size, fueled largely by massive nuclear reactors and gas power plants.

“All this opposition is gelling because the tech industry and the utilities have done a poor job proactively engaging with these communities,” said Eric Eve, a longtime public affairs consultant for big corporations pursuing major infrastructure projects. “Now all these organizations and political leaders opposed to the projects are filling the void, translating what is happening. It is a vacuum created by industry.”

“No White House will be able to help these companies at the scale they need,” he said. “You have to be willing to go to these neighborhoods and actively listen.”

Seeking to curb the backlash, Microsoft promised to work more closely with communities, even as it argued that data centers amount to transformative infrastructure akin to the railroad and the interstate highway system. Smith said the company would be less secretive, acknowledging concerns in some communities that residents do not know who is behind the mammoth projects.

“I think that the future is going to require a lot more communication, which by definition means fewer nondisclosure agreements,” Smith told reporters after the announcement. “We need more transparency. I think we took a big step in that direction today.”