Earlier this month, Abbott temporarily halted permission for data centers to link up to the electricity grid, as the Republican faces massive grassroots opposition to the building projects.

While Trump called the move a mistake, the Texas governor defended his decision, arguing that data center companies “dug their own grave” by failing to win local support before pressing ahead with their massive building projects.

While for many, the impact of AI on humans is largely a question of effects that will become apparent – for better or worse – in the future, data centers are an instance where the effect is more immediate.

As the Abbott-Trump disagreement shows, political leaders and Big Tech companies are finding it difficult to convince local communities that they stand to benefit from hosting data centers. 

Instead, fears of pressure on electricity and water grids, price rises for the same and broader environmental concerns have led to community backlash. Now, polling from Gallup suggests that 71% of Americans oppose building data centers in their area.

Bigger Than Oil

Ever since ChatGPT launched in 2022, hitting a million users in five days, the race to produce ever-improved AI models has taken on global significance, swiftly becoming a trillion-dollar industry. 

For Big Tech leaders, it holds the promise of a new industrial revolution, raising the possibility of computer systems that will be able to think like humans but with much quicker processing power.

As Forbes summed it up, AI promises to rewire “the very DNA of business, wealth creation and human productivity”, spawning political, economic and philosophical debates and even a book-length reflection from the Pope. 

The two great superpowers of our age – America and China – have made the race for technological supremacy a policy priority, while Europe and the rest of the world scramble to catch up. 

The use of AI in the daily lives of citizens has shot up across the world, particularly in Asia. A 2024 international survey of business decision-makers found that over eight in 10 (83%) organizations in China use the technology, compared with 65% in the US. 

Among American workers, just under half report regularly using AI, with higher rates among company leaders and workers in the financial, technology and education sectors. In other words, AI models are already exerting a significant influence over the daily lives and jobs of two of the world’s largest economies.

Big Data Centers

A key feature of the AI investment boom has been the hundreds of billions of dollars poured into related infrastructure, particularly data centers. 

Data centers have been around for decades. Without this physical infrastructure, there would be no internet, as the data milling around virtually needs to be housed somewhere. 

They are vital to AI’s development, housing vast computing power that stores the reams of data used to train and run models. There are already more than 5,000 data centers in the United States while Europe has just over 2,000. China is reported to have 450, although direct comparisons are difficult due to differing definitions and incomplete reporting.

Size matters here, with some centers in the US functioning as small, private data storage for companies. Others are factory-sized storage facilities that can have footprints ranging from tens of thousands to hundreds of thousands of square feet, with the largest hitting one million-plus.

Tech Companies Invest Heavily

The AI boom has been matched by a data center boom, with the world’s largest tech companies – including Amazon, Meta and Microsoft – expected to spend almost $750bn on capital expenditure this year alone. 

AI companies hope to rapidly increase storage capacity, with the aim of expanding computing power by 565 gigawatts – more than 10 times today’s capacity – by building almost 4,000 new data centers.

While some business experts estimate that fewer than two-thirds of these projects are likely to be built in the next decade, even such a scenario would see $10tn of investment.

Trump has consistently supported their plans in his second term. On the Republican president’s second day in office, he announced a private-sector joint venture that said it would invest up to $500bn in US AI infrastructure, and in July of this year, he touted an executive order that calls for the permitting process for data centers to be expedited.

For Trump and AI companies, the bottom line is that this will drive forward the economy, boost job growth, increase tax yields and lay down an AI infrastructure that will ensure US dominance of the “new industrial revolution”.

Texas' AI Conundrum

So how could a typically business-minded Republican like Governor Greg Abbott block an industry that could be “bigger than oil”? 

He had previously been bullish about the new technology, calling Texas the “epicenter of AI development” in November 2025 as he unveiled Google’s $40bn investment in the state – including data center development.

Texas houses the second-largest number of data centers in the US, after Virginia and ahead of California, home to the tech industry’s hub in Silicon Valley. The Lone Star State has sought to turn itself into one of the chief rivals of Silicon Valley, attracting a wealth of tech talent over the past decade.

However, in June, Abbott directed state regulators to make data centers pay the full cost of electricity infrastructure investments and called for a phasing out of tax incentives aimed at attracting AI developments.

Then, at the start of August, he announced an almost complete U-turn, ordering a moratorium on approvals for data centers to hook up to the state’s electricity grid until regulatory agencies could audit proposed projects. 

The move followed low engagement from data center companies with a state request for information needed to project future power demand, with fewer than 10% of companies responding.

Digging Their Own Graves

It is no mystery as to what is driving the Texas governor’s volte-face. He identified it himself in an interview with ABC, stating that it was partly down to the speed of the buildout and, more significantly, to developers moving into communities without gaining support.

He went so far as to say the AI companies “dug their own grave”, adding that they “got the backlash they deserve” because of the hostility from local communities to new projects. 

https://twitter.com/ABC/status/2091909589046349973

Texans across the state – and across political divides – mobilized in opposition to the new developments, citing concerns that the facilities will drain local water supplies, drive up electricity bills and contribute to pollution.

Rural areas, where most of the almost 250 new data centers planned are set to be located, were particularly angry, with the Texas Agriculture Commissioner Sid Miller calling Abbott’s directive vague and urging legislative action.

Big Data Backlash

Abbott is not the only politician facing backlash to the data center boom. His moves followed a similar but more severe intervention by the state of New York, which has put a year-long pause on new hyperscale data center projects. 

Politicians are increasingly frightened of appearing too soft on data centers, with Republican strategists warning that the vital AI infrastructure is “imperiling” their chances of holding a critical Ohio Senate seat. 

It is not exactly a surprise when you look at the polling. A recent survey from Gallup found that 71% of Americans oppose the construction of AI data centers in their locality. Opposition chiefly came down to the same fears enunciated by Texan voters: increased costs in utilities, pressure on water and electricity supply and environmental concerns.

Dislike for data centers is growing – a separate Annenberg Public Policy Center survey found that opposition rose from 49% in March to 61% in August – and it cuts across political and demographic groups. Even frequent AI users do not want the infrastructure in their localities.

Local communities are now more favorable to having a nuclear plant in their area than an AI data center, while roughly one new anti-data center campaign group forms every day, with the Data Center Opposition Report counting 268 campaign groups in early April 2026. 

At a political level, the US Data Center Moratorium Tracker logged 86 local moratoriums by mid-May, 61 of them active, across 35 states. Statewide restrictions in New York and Texas followed. 

Political Headache

It is a headache for politicians. On the one hand, dominating the AI boom is a national priority; on the other hand, voters appear unconvinced by arguments regarding the promise of economic growth, improved AI capabilities or national security concerns.

It is not as if such local opposition to new technological infrastructure is unprecedented. Previously, the installation of 3G, 4G and 5G cell towers met with resistance over claims that radiation from the towers causes health problems, despite little or no evidence. 

The difficulty for politicians and tech companies is that, unlike cell phone towers, data centers are bigger and more obtrusive, and their benefits are more abstract for local communities.

Finance and tech experts remain divided over the benefits data centers bring to local economies. For example, advocates argue that the infrastructure creates jobs and generates additional tax revenue.

However, critics say that job growth is temporary, as after construction even many of the largest centers employ fewer than 200 staff, while tax breaks reduce benefits from taxation.

Meanwhile, increases in the cost of utilities and pressures on supply remain a live issue. Research from the Federal Reserve Bank of Dallas estimates that existing data centers have already pushed average wholesale electricity prices 2%–6% higher nationwide, with even larger surges in areas where these facilities are concentrated.

A spokesperson for Governor Abbott, in justifying his moratorium, argued that the state had seen a more than 500% increase in peak electricity demand. The spokesman called it “unprecedented growth” that could endanger the Texas electric grid.

Short-Term Pain, Long-Term Gain?

This is the potential downside for local communities, but politicians could argue – as Trump is doing – that this is short-term pain for the long-term gain of a strong, AI-driven economy. 

They could point to the importance of data centers for the financial and technology sectors, both key drivers of the American economy, or to the Trump administration’s estimate that the new technology has already attracted $2.7tn in investment.

They could make an argument about the influence data centers have on the daily lives of citizens, with some pundits warning that internet speeds and cloud storage prices will both get worse without improved data storage capabilities. 

The difficulty for politicians is that these benefits are not as immediate as improved cell signals and require more sacrifices in the short term than a cell tower.

Midterm Elections

Regardless, with a series of tight midterm elections looming, politicians on both sides – Republicans and Democrats – fear for their seats and are reluctant to go against the rising tide of local opposition to AI data centers.

The question is even exerting an influence over Senate races. In Texas again, both the Republican and Democratic candidates are proposing increased regulation of data centers, while attacking their opponents for accepting money from data center-affiliated donors.

All this goes to show that the expanding virtual world is making its presence felt, and AI’s human impact is playing out in real time in America – potentially shaping the balance of political power in the United States.