The data centre industry must be experiencing a profound sense of collective whiplash at the current moment. Not too long ago, state and local governments across the United States were showering them with tax breaks, energy subsidies and regulatory relief in the hope of enticing them to build their data centres in their respective regions.
Flash forward to today, and the industry is fighting for its very survival as communities clamour for moratoriums on new construction and politicians scramble to more tightly regulate an industry that is increasingly seen as imposing far more costs on communities than benefits.
As Canada begins to experience its own data centre construction boom—along with early signs of backlash—it is instructive to understand how the U.S. industry has organized and responded to widespread community opposition.
We are already seeing major data centre developers begin to organize themselves politically as an industry here in Canada. The newly minted Canadian Coalition for Digital Infrastructure (CCDI) consists of major U.S. data centre developers like Amazon Web Services, Beacon AI, Cologix and Equinix. We should, therefore, not be surprised to see the same advocacy and lobbying tactics deployed by these firms and their industry associations in the United States here in Canada.
Examining the advocacy and lobbying responses of the American industry can help us anticipate what kinds of industry-backed campaigns we might expect to encounter as Canadian communities begin to confront the challenge of data centres in their own backyard.
Controlling the message
As with any industry confronted by a hostile public concerned about the costs associated with AI data centres, the industry in the United States has quickly sought to take back control of the message.
Indeed, the industry has launched an unprecedented public relations and advocacy campaign, using every tool in the corporate social responsibility tool box it can find to try and convince communities and their politicians that the industry has been woefully misrepresented.
While the industry’s messaging blitz focuses on the myriad benefits the data centres supposedly deliver, there is no doubt that the industry recognizes that the growing backlash is hindering its ability to grow. It has thereby sought to diffuse some of the more contentious public concerns that have animated so much opposition.
Promises and pledges
The most prominent example of the industry’s campaign was the announcement by the major tech firms, along with President Trump, that efforts would be made to protect consumers from electricity rate hikes due to data centre energy demand.
Executives from Amazon, Google, OpenAI, Meta, Microsoft, Oracle and xAI met at the White House in March to announce their non-binding and entirely voluntary pledge to ensure “that households and local businesses should not foot the bill for data center growth.”
As critics have noted, the pledge is entirely unenforceable, and ignores the fact that the vast majority of utility regulation operates at the state or local level. Nevertheless, for an industry desperate to reverse its eroding public image and eager to continue its unprecedented growth, the pledge at least signals that the industry is aware that it is perceived as imposing costs on residential consumers.
Microsoft has gone even further in its pledge with its “Community First AI Strategy”, in which it vows to pay higher electricity rates to protect ratepayers, commits to “replenish more of your water than we use,” and states that it will end the use of non-disclosure agreements (NDA) with local governments.
Meanwhile, Meta has spent $6.4 million on a series of advertisements that expound on the tech giant’s ability to transform the economic future of the small towns where it locates its own data centres.
Beyond the individual major tech firms, the industry is also organizing itself politically at the state and federal level. The Data Center Coalition—the industry’s premier trade association—has actively ramped up its lobbying efforts over the past year. Virginia Connects, an industry-affiliated group that includes Amazon, spent at least $700,000 on digital marketing in that state. It has produced and promoted a slate of digital advertisements arguing that the industry is paying its fair share of electricity costs while also touting job creation, increased internet quality and even national security arguments.
Words versus deeds
But while the industry has presented itself to the public as a largely misunderstood source of real economic benefits, eager to redress some of the more demonstrable harms it has caused, its lobbying activities betray a much more self-interested and tactical posture. Indeed, the dissonance between the industry’s public words and its private lobbying is jarring.
Industry lobbyists have been busy trying to prevent public backlash from manifesting itself as concrete legislative change. This has been most evident in Virginia, the industry’s organizational headquarters.
Last year, the Data Center Coalition made $165,000 in contributions to state legislators through their Political Action Committee (PAC) prior to a push by VA lawmakers to regulate data centres. Of 27 proposed bills to regulate the industry, only one managed to pass both the house and senate.
In Washington state, industry lobbyists successfully defeated House Bill 2515, which would have “required data centers to pay additional utility charges, comply with clean energy requirements, and shut off power at times of peak demand on the grid.”
Proposed bills to regulate electricity rates and water consumption for data centres in California have been killed or substantially watered down due to the opposition of industry lobbyists.
Industry efforts to kill proposed regulations are currently ongoing in Ohio, Maine, and Illinois.
Industry tactics at the local level can be even more brazen. Data centre developers and land owners have showered local politicians with campaign contributions in return for favourable treatment. Local government officials have also been accused of corruption and profiting personally through their relationships with data centre developers.
The industry also compels local officials to secrecy over proposed deals through strict non-disclosure agreements. These agreements prevent local officials from sharing with residents essential information about proposed data centre projects, like energy use, water consumption, land development or waste disposal plans. Some of these agreements even compel local governments to give the developer advance notice of public records requests so the company can intervene with its own legal team.
Residents are often left fighting their own elected governments for access to basic information about these projects that can have long-term negative impacts. Moreover, the use of these agreements not only fuel suspicion of the motives of local governments, but also of the developers themselves—further fuelling the backlash against the industry.
In private, it appears the industry lobbies against everything it publicly states it supports. While we shouldn’t be surprised by this kind of corporate hypocrisy, it is important to identify how this strategy can serve the interests of the industry as it comes under much more public scrutiny.
The industry recognizes that the days of flying under the radar are over.It has to address some of the harms that it is responsible for. But the industry doesn’t want to be compelled by state-enforced regulations to always and everywhere address those harms. That could get expensive.
A much better outcome is for the industry to promise to self-regulate and then negotiate individual case-by-case deals with the towns and counties where they develop. This allows the industry to maintain and exploit the tremendous power imbalance they enjoy versus local and even state governments.
This is an industry that includes some of the most profitable and powerful multinational corporations in history. Almost any government—and particularly local government—will be ill-equipped to negotiate with this industry as equals. The industry’s strategy is based on outwardly conceding some relatively trivial costs over taxes or electricity rates, but maintaining the ability to use its substantial economic and political leverage to allow for its continued expansion.
This makes it all the more incumbent on Canadians to ensure that there is a robust regulatory apparatus in place to manage the industry and its harms as it grows in this country. Our federal government has been far too reticent to regulate the tech sector for fear of stifling investment. Indeed, the federal government has already shown itself susceptible to lobbying by the industry, rescinding clean electricity requirements specifically for behind-the-meter natural gas powered data centres.
We need to regulate this industry before it approaches the level of economic and political power we have seen in the U.S. Attempting to tame such a powerful industry after the fact, as Americans are learning, is a difficult task. If we decide to invite this industry into our communities, it needs to be on our terms and under rules of our making.
