Facing pushback on data centres, tech giants are promising hosts more money and fewer secrets

With host communities across the US turning against their gargantuan data centres, America's technology giants are promising to take fewer taxpayer handouts, keep fewer secrets or shower more money onto the communities willing to allow the server warehouses.

The new raft of promises from the world's richest companies comes as anti-data centre sentiment has become a potent issue in the midterm elections, with control of Congress and 36 governors' offices on the line.

Despite backing from President Donald Trump, the data centres powering the artificial intelligence boom have become politically toxic. Community opposition that blocks municipal permits has become a bottleneck, and tech giants could face even more challenges if voters next month elect more public officials who are sceptical of data centres.

The tech industry says it has gotten the message. In addition to ramping up financial incentives, officials with Google and Meta said in interviews with The Associated Press they are trying to address mistrust by being more transparent with communities where they would like to build.

Companies are also making pledges to reduce their impact on the environment and offering assurances that data centres will boost local property values — all while maintaining AI is a positive force for the American economy, despite its sceptics.

Tech giants pledge more transparency

Devi Thomas, Google's global head of community development and engagement, told AP that she wouldn't call resistance to data centres a "backlash", but that "there are often community questions to be addressed".

"Early public consultation is increasingly a very important part of the process. We have done as much as we can to make sure communities are involved early on," Thomas said.

Earlier this month, Amazon rolled out its "Amazon Data Centre Commitment", including pledges to improve the environmental rating of its backup diesel generators and disclose more about its data centres' energy and water use. It also said — as have Microsoft and Google — that it had stopped requiring government officials to sign non-disclosure agreements.

The use of non-disclosure agreements has meant people in host communities may know little or nothing about a project until it shows up on a municipal board's voting agenda. Besides that, tech companies often have hidden their involvement in a project behind a code name and developers who do the legwork with local governments, critics and other developers say.

That practice "raises people's suspicion as to what's truly happening", said Anita Verma-Lallian, a developer with data centre projects in Arizona.

Meta is always evaluating how well it shares information with communities, said Lindsay Elin, Meta's vice president of public policy and external affairs. "As part of that work, we are reviewing our use of non-disclosure agreements," she said in a statement to the AP.

In a report this month that sharply criticised data centre giants including Amazon, Google, Meta and Microsoft, several Senate Democrats said companies have used non-disclosure agreements to freeze out the public. 

The report also said the companies aggressively seek state and local tax breaks and do not cover the entire cost of the electric-grid buildout needed for energy-hungry data centres.

Spending ramps up in host communities, along with skepticism

The dominant players in the industry — Amazon, Google, Meta, and Microsoft — project they'll spend more than $600 billion this year combined on capital projects, primarily data centre construction in the US.

Even as the companies prepare to spend more to entice communities - payments that some critics call "bribes" — Trump urged them in a social media post Wednesday to pay people and communities a "dividend" if they "want to make their Data Centres popular".

"MAKE DEALS, and get them built!!! GREAT FOR THE USA," Trump wrote.

Meta and Amazon said recently they will each spend US$1 billion (S$1.2 billion) on financial incentives to host communities in the coming years, on top of millions they already spend to support schools, charities and job training. Google says its investments in local programs in data centre communities will reach US$1 billion by the end of 2027.

Microsoft has pointed to a couple local tax breaks that it will forego. And Google recently said for all of its new data centre campuses, the company will pay full real property taxes on the buildings and land.

The companies have known since last fall that community opposition was becoming a serious problem.

Data centre demand began driving up electric bills last year across a 13-state electricity grid stretching from Illinois to New Jersey and Maryland, angering ratepayers. The outcry led to promises from the tech giants to pay the cost of the power infrastructure to feed their data centres, while Microsoft rolled out its five-point "Community-First AI Infrastructure" plan.

Data centres' critics aren't persuaded.

Sam Burleigh, who helped start Concerned Citizens of Montour County in rural northern Pennsylvania to fight a potential Amazon-backed data centre project, said the company's commitments are "propaganda."

"What I see is them realizing they have more resistance than they ever dreamt of. And so now they have to find some way, some method to break through that resistance," Burleigh said.

Kathryn Hoffman, executive director of the Minnesota Centre for Environmental Advocacy, which has sued over two prospective Google data centres, said she sees Google doing more public relations outreach, but she doesn't see it doing more to disclose critical details about its plans.

Political stakes are rising

In an Aug. 18 memo, the Senate Republicans' national campaign arm crystallized the midterm election pressure on the tech giants.

It warned the tech sector that it must "fix the toxic brand of an entire segment of the economy" or risk long-term fallout in elections. That included addressing "who benefits, who pays, and why a community should want one".

Drew Nations, a developer in North Carolina, said developers need to aggressively address quality-of-life complaints from neighbours. That includes shielding neighbours from noise and data centres from public view so they aren't an eyesore, and he said they need to forego "corporate welfare" from communities, such as property tax abatements.

Those tax breaks leave people in the community thinking, "'So you're saying that this multi-multi-billion, if not trillion-dollar company, gets tax breaks and I don't?'" Nations said.

Meanwhile, nearly 40 states offer sales tax exemptions that are saving data centre owners and developers billions of dollars annually.

Meta, Google, Microsoft and Amazon collectively reported more than US$300 billion in net income in their most recent fiscal year.

Spending to promote data centres has been on the rise. The Data Centre Coalition, a trade association whose members include the tech giants, said it has spent more than US$10 million running pro-data centre ads in 10 states on TV and elsewhere. Data centre giant QTS and a group that doesn't disclose its donors, Build American AI, also began ad campaigns this year.

Meanwhile, angry residents continue to flood once-sleepy municipal board meetings, pressuring officials to reject data centre proposals.

More municipalities are passing data centre moratoriums and Data Centre Watch, a project of AI security consultancy 10a Labs, said it saw sustained local opposition to dozens of projects in the April-to-June quarter, its latest reporting period.

Balaji Tammabattula, chief operating officer of BaRupOn, which develops data centre campuses, said the pressure of the midterms has helped developers understand how crucial community support is to a project's success.

"It's impossible to build without them," he said.

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