Data Centers Have A Politics Problem — And Industry Knows It

The companies that build and run data centers are on the losing end of a populist backlash — and they’re struggling to respond.

Fears that the server-packed data hubs will drive up electricity prices, deplete water supplies and gobble farmland have prompted people across the country to pack meetings of zoning boards and county commissions to oppose the projects, while fueling calls from leaders in both parties for state or national moratoriums. That opposition has become a rising obstacle for an industry that is in the process of developing an estimated 1,500 data centers, in large part to support the growth of artificial intelligence.

In response, the data center companies have tried to sell their projects as a boon to tax revenues and employment — though too often, they fail to actively communicate with the public, tech industry policy advocates and executives told POLITICO. That messaging void has let their critics gain the upper hand. “The void gets filled with misinterpretations about what we do and what impacts we have,” said CleanArc Data Centers chief commercial officer John Day.

Results this month from The POLITICO Poll reveal the scope of the industry’s predicament, showing that majorities of Americans now believe key arguments from the industry’s opponents, such as the idea that the projects will make electricity more expensive. That’s a departure from just six months ago, when most Americans were either undecided or disagreed with key statements of the opposition.

Not even President Donald Trump’s vocal support for building data centers has stanched the bleeding, even in Republican-dominated states.

“I don't think the problem is the way that we engage with communities,” said Kirk Offel, CEO of the data center operations company OVERWATCH Mission Critical. “I think we just haven't.”

‘Just be quiet’

The builders’ and operators’ public relations problems mirror the larger travails of the artificial intelligence industry’s giants, including SpaceX, OpenAI and Meta, whose efforts to win the messaging and political battle over data centers and AI have faced headwinds at the ballot box and a spate of negative headlines and legal woes.

But it’s in some ways a more daunting quandary for the smaller, less visible companies that have been the data center industry’s backbone for decades. Companies in the sector have traditionally flown under the radar, given that they often handled sensitive data and rarely, if ever, got embroiled in political feuds.

“The data center industry always kept everything kind of secret because it was a bit of a risk,” said Carrie Goetz, chief technology officer of the data center IT services company StrategITcom. “It was the course of action that the industry took for a while: just be quiet, don't let anybody know.”

The AI boom is compelling data center companies to communicate more with the public. Goetz notes that there has been an industry trend of creating new community liaison positions over the past two years.

Still, many companies are playing catch up because they haven’t previously established extensive PR operations.

“Data center companies aren’t marketing a consumer product,” said Wes Cummins, chairman and CEO of the data center developer and operator Applied Digital. “You don't typically have a big PR department that has dealt with anything like this before.”

Many of the messaging battles have been local. Patrick Hughes, a senior vice president for the National Electrical Manufacturers Association, said the resistance is particularly fierce when a company doesn’t provide information to communities before breaking ground on a construction project.

“Where projects go astray is when the community finds out because a plot of land is being cleared and construction is already going,” Hughes told POLITICO. “At that point, it's already too late to have that conversation around how this is going to benefit people.”

Yet the data center industry has long been used to keeping information under wraps, and nondisclosure agreements with local officials has traditionally been common practice. Such agreements have recently led to backlash in municipalities like Salem, Oregon, and Posey, Indiana.

“When [data center companies] have gone into communities, they've had those municipalities enter into non-disclosure agreements, so the data around consumption have been in a black box,” said Michelle Lopes Maldonado, associate director of AI policy at the Information Technology and Innovation Foundation. “It's when we don't share the full picture that people start to fill in the gaps with their own information.”

Messaging around the benefits of the facilities is failing to resonate with the public. The POLITICO Poll — which surveyed 2,061 U.S. adults online from July 12 to July 15 — found that just 16 percent of people agreed that data centers “benefit the area they are built in and the country as a whole,” while roughly 60 percent said they either come at the expense of the local area or the country or provide no benefits at all.

Instead, negative messaging seems to be taking hold.

Higher electricity costs, for example, are Americans’ top concern when it comes to building data centers, the results show. In January, 43 percent of Americans said they believe that “data centers raise people’s electricity bills.” This month, that share jumped 16 points to nearly 60 percent of Americans who said the same.

The share of Americans who said data centers deplete the water supply grew from 34 percent to 55 percent during the same period.

Spreading the message on data centers’ purported benefits and costs has been a challenge, according to Software and Information Industry Association President Chris Mohr. He told POLITICO that the industry broadly needs to work on getting that information to local government leaders, who are often in the best position to communicate with residents.

“Local communities have been vocal about these projects,” said Mohr. “It's imperative that their leaders be armed with facts.”

But Offel said people in office often don’t want to publicly discuss such a contentious issue.

“I'm sitting in rooms with mayors all the time, and they're getting advice from other people like: ‘You can't talk about this or you'll get killed at the next election,’” he told POLITICO. Instead of going through proxies, Offel has been trying to directly engage with communities — testifying in Congress and state capitols, hosting town halls, launching a podcast and building a social media presence.

Other data center executives haven’t been as willing to expose themselves to a political firestorm.

“The rhetoric has gotten so aggressive,” said iMiller Public Relations CEO Ilissa Miller, who advises data center companies on messaging. “Executives and companies who don't want to get caught up in that are not comfortable speaking with the media and not comfortable engaging.”

Miller has been working to coax the industry out of its shell. A former village trustee in Mamaroneck, New York, she’s been encouraging data center companies to act more like politicians in a sense — advising them to communicate with local churches and school districts, and to show up at farmers’ markets and fairs.

“Certain developers can get too aggressive in dictating what communities ought to do, and that's really what the backlash is about,” Miller told POLITICO.

The tech industry’s biggest companies, which rely on data centers to power their AI and are involved in developing some of the most expansive projects, have been mounting their own national messaging campaigns. But that effort “hasn't really landed that well,” Applied Digital’s Cummins said. “We spend our resources locally. … We just don't have the bandwidth to be the mouthpiece nationally.”

POLITICO previously reported that Meta poured millions of dollars into ad campaigns promoting data centers as an economic engine, and AI trade group representatives have been leading tours of the facilities to tout their benefits.

Yet Meta also cut a secret tax and public land use deal with Louisiana officials to build a data center, as the New York Times recently uncovered. “That sets all of us back,” said Roshan Shah, co-founder and CEO of the AI data center developer Decimal Digital. “It adds fuel to the fire, and adds to the local distrust that we're already facing.”

Meta spokesperson Ashley Settle told POLITICO in a statement that the deal “went through established state and local economic development processes and approvals … the same process used in many states across the country to attract long-term investment.”

Moratoriums gain momentum

The stakes are rising for data center companies contemplating whether to be more aggressive about messaging in the face of a rising push for moratoriums.

Democratic New York Gov. Kathy Hochul signed an executive order in July establishing the United States’ first statewide pause on large data center construction, and progressives in Congress have proposed such a moratorium for the nation.

Some Republicans, notably Rep. Nancy Mace of South Carolina, have jumped on the moratorium bandwagon as well.

The push for pauses has thrown a wrench into plans for new data centers. That includes a project in Monroeville, Ohio, which Decimal Digital had to put on hold after the village council imposed a one-year ban on data center construction in February.

“We were completely blindsided,” said Shah, Decimal Digital’s CEO. He’s resolved to get information to residents by holding town halls during the pause, in the hopes that they will come around by the time it’s over.

“[We're] doing everything that we can to make sure people make an informed decision here,” he said.

Proposals for data center moratoriums are also playing a central role in some races for the upcoming midterm elections. The POLITICO Poll found that voters are warming to the idea.

A 49 percent plurality of Americans said they would support a local candidate who proposes a statewide data center moratorium "to ensure that there is no impact on energy and water costs in the area." Just 28 percent said they would vote for the candidate who proposed tax breaks for data centers to ensure economic growth in the state.

Given current trends in public opinion, Monument Advocacy’s chief AI officer, Joseph Hoefer, said the midterms may serve as a “deadline” for the industry to “to get their public case built before the politics get any louder.” He told POLITICO, “Data centers have gone from a niche infrastructure issue to a kitchen-table political issue, and both parties are keenly aware.”