Will Democrats Really Crush Data Centers?

AI Summary

The article examines whether Democratic lawmakers will constrain AI development and data-center construction amid voter concerns and market anxiety. It notes a sharp Nasdaq decline, pressure around data-center loans and Anthropic’s prospective IPO, and Google’s plan to invest $15 billion in Malaysian data-center and cloud operations.

Welcome, Weekenders!  Might I suggest a weekend of yoga, deep breathing—or perhaps a tin of edibles? In the aftermath of a Democratic romp on Tuesday that also partially seemed like a voter referendum against the AI era, anxiety sure seems to be running high in Silicon Valley and on Wall Street.  That unease has been widely apparent. Tech stocks cratered on Thursday, with the Nasdaq falling 5.5%. (It recovered somewhat on Friday.) A Dutch bank is trying to quickly offload a half-billion-dollar chunk of data center loans, including some tied to OpenAI’s Project Stargate. And Anthropic investors are making gloomy noises about the company’s IPO, worrying that it won’t be able to secure its sought-after $1.5 trillion valuation in a few weeks. I especially hope someone does a wellness check on Nikita Bier, the former product czar at Elon Musk’s X, who seems to be quite agitated. On X, he looked out into the future and saw a period of, uh, fierce regulatory interrogation for his industry: “This is going to be like the Nuremberg trials for AI researchers.” (A shekel’s worth of PR advice: If you don’t want to be cast as the bad guys, I’d avoid inviting comparisons between your industry and the ultimate bad guys.) Much of the public worry about AI centers—well, on data centers, which voters do not seem to like very much. In turn, Silicon Valley is concerned that Democrats will bring construction on those facilities to a halt. That’s a doomsday scenario tech hopes to avoid, and to stave off Armageddon, tech is thinking about where else it could put data centers. Overseas is clearly one option, and Google is wasting no time in doing so. On Wednesday, the company said it would spend $15 billion to expand its data center and cloud computing operations in Malaysia. Somewhere besides planet Earth is another possibility: yep, data centers in space! On Friday, investor Ron Baron was on CNBC talking them up, saying they could have “significant capacity” as soon as 2028. Never mind that the economics seem as sustainable as life on Saturn. But will Democrats really crack down hard on AI—and risk worsening an economy that voters already see as dismal? Politicians from both aisles do dumb things all the time. If I had to bet, though, the left’s anti-AI campaign rhetoric will fade once those lawmakers actually get into office. It’s the natural course of politics, and I take further comfort in making that prediction by looking around New York at this moment and seeing none of Mayor Zohran Mamdani’s commie grocery stores. By next year, I suspect AI companies will have found enough wiggle room to squeeze many of their data center projects past Democrats.  AI investor Gavin Baker seems to agree with me. He published an optimistic analysis of the data center plans put forth by Texas’ new governor, Gina Hinojosa, concluding that she “sounds reasonable.” Meanwhile, the state’s new Democratic senator, James Talarico, was out dangling an olive branch to Musk on Wednesday, a day after prevailing in a race in which the billionaire spent heavily to try to defeat him. Talarico described Musk as “a great business leader and entrepreneur and innovator” and vowed to work with him. Musk seemed pleased by Talarico’s remarks. “Nice of him to say that,” Musk wrote on X.  As always, a little flattery can calm the nerves, too.—Abram Brown (abe@theinformation.com) The Information’s Must-Read Stories How Nvidia Uses Its Soft Power to Influence Customers and Shape Policy Airbnb Founder Chesky Is Self-Funding His New AI Startup Anthropic Touts Claude’s Chip Design Skills to IPO Investors How Smugglers Get Expensive Memory Chips to China from South Korea Listening: “The Most Wanted Olympian” When Canadian Ryan Wedding first vaulted onto the snowboarding scene as a teenager in the late ’90s, the 6-foot-4 wunderkind struck fellow boarders and coaches as a guy with real golden retriever energy—a “gentle giant,” as one mentor recalls. More recently, U.S. authorities have described him in much different terms: as a bona fide drug kingpin, with FBI Director Kash Patel labeling him a “modern-day El Chapo.” (Wedding’s crew allegedly referred to him just as “El Jefe.”) “The Most Wanted Olympian,” a podcast co-produced by The Toronto Star and the Canadian equivalent of the BBC, probes into how Wedding broke bad and established a drug empire that stretched across North America and involved the Sinaloa Cartel. It’s a thrill ride of a story, with cocaine, expensive motorcycles and murders in several different countries.—Abram Brown Reading: “The Hunt” by Ryan Devereaux American settlers viewed wolves as a menace and exterminated hundreds of thousands of them as the country expanded west. In the later 20th century, the animals became a cause célèbre, with environmentalists championing their reintroduction within Yellowstone National Park. The proposal encountered fierce resistance from “many a pissed-off local,” as investigative journalist Ryan Devereaux puts it i