After the US midterms, data centers and Elon Musk face a tougher road

Democrats' victory in this week's US midterm elections could significantly affect the tech industry, especially the building of data centers. In dozens of local ballot measures, voters rejected data centers, and they also elected politicians, such as Texas governor-elect Gina Hinojosa, who promised to restrict them. TechCrunch journalists discussed the outcome on the outlet's Equity podcast.

Musk's setback

Sean O'Kane noted that Elon Musk, who donated around half a billion dollars to the Republican Party, appears to have gained essentially nothing. His companies are based in a state that has turned strongly toward the Democrats. O'Kane explained that several ballot measures would have imposed restrictions or moratoriums on data centers, and almost all of them passed. The tech world broadly expects many obstacles ahead in Texas, where Hinojosa defeated Greg Abbott.

A grassroots issue

Kirsten Korosec said data centers were probably not the main driver of the "blue wave," but the issue is increasingly grassroots. She linked this to how hyperscalers, the large companies building such facilities, secured approvals: in secrecy, sometimes requiring elected or appointed officials to sign NDAs, and without disclosing the scale of projects in environmentally sensitive areas such as the water-scarce Southwest.

OpenAI, the AI company, has released a document called a "compute campus policy blueprint." It says the company will no longer require NDAs and will share its plans more openly. Anthony Ha noted that it is also an attempt to rebrand data centers as "compute campuses," since the original term has become toxic. O'Kane doubted it would change anything.

Financial pressure

Ha added that the election may be the second part of a one-two punch: Wall Street investors are also showing less enthusiasm for heavy spending on data centers and computing power. Regulation will likely make building harder, yet to reach their intended scale, companies will still need to build data centers somewhere.