The rapid buildout of data centers across the US to meet the increasing needs of AI tools has become a controversial topic, with state laws popping up to limit their construction, and cities and individuals weighing in to stop them.
As tech giants rush to build out these massive AI data centers, critics have questioned the land, water and power being guzzled, including the protesters staking out the Microsoft Build software conference focusing on AI in San Francisco this week.
One of the people positioned at the entrance to the Fort Mason event center, handing out leaflets detailing the effects of data centers being built, was Amy Herman. I spoke to her about her concerns.
“I would say it’s more of an opposing viewpoint,” she clarified when I asked about the protest. “It’s not that we’re against technology, or against any sort of monetization of innovation.”
She said it’s more a challenge of balancing limited natural resources with big tech companies that don’t want to be held accountable for managing climate change while chasing technological advancement.
“What we’re doing on our planet and all the impacts that are happening, not just here in San Francisco but across the United States,” said Herman, adding that “the ripple effects of that are going to be felt.”
During the Microsoft Build keynote on Tuesday morning, CEO Satya Nadella said Microsoft would seek community permission to build data centers in the future.
It’s aiming to get approval from local residents by improving the cooling systems and reducing water use by data centers; ensuring data centers don’t increase electricity prices for locals; adding to “the tax base that funds local hospitals, schools, parks and libraries,” and investing in AI training and non-profits in those areas.
Nadella called the rapid buildout of data centers “extraordinary” during a live podcast on Tuesday with Sarah Guo and Elad Gil of No Priors and Swyx of Latent Space.
“At this point, it’s clear that … we as an industry are very principled about ensuring that the benefits of all the stuff we’re talking about are felt in real ways at the community level,” Nadella said. “It has to be real, where people are saying, ‘It’s not changing the prices of energy for me, in fact, if anything, it’s bringing down the prices because long term there’s going to be a better grid, there’s going to be more energy … water is being replenished.'”
He emphasized the importance of getting communities to buy into AI technologies and the data centers that drive them.
“All this has to be real. And if that is the case, then we’ll have permission,” he said. “If it is not, you won’t have permission; it’s as simple as that.”
He added that Microsoft is seeking to add jobs during and after construction of these massive data centers — but he said people are right to question it all.
“We have to take it as an industry very seriously,” Nadella said. “I think it’s good for communities to be skeptical, ask the hard questions.”
Some of the people asking those questions were on hand outside Microsoft Build alongside Herman, with colorful imagery depicting scenes of corporate greed, pollution and poverty, eager to speak with conference-goers.
Herman said one of the major issues is that electricity prices in rural areas are much higher than they were before data centers were constructed in those communities, with people forced to choose between paying for medical support or their electricity bills.
Microsoft has more than 500 data centers in 80 regions, with the tech giant adding more data center capacity in the past 18 months than it did in the first decade of its Azure cloud services. And they’re not only in the US, but across the rest of the globe — Australia, New Zealand, Asia, Africa, the Middle East, Europe and South America.
Speaking during the keynote about the Fairwater data center — “our first AI super factory” — Nadella broke down the three major workflows of such factories into AI training, inference and agent runtime.
“The entire system was designed from the ground up for AI,” Nadella said. “And we’re rethinking even the power delivery … how do we deliver hundreds of kilowatts per row while minimizing … the conversion loss that happens from the grid to the silicon?”
Fairwater went live ahead of schedule in April, with Nadella calling it “the world’s most powerful AI data center” in a post on social media site X.
He says there was a new approach to water use in the Fairwater AI data center’s cooling system, which is filled only once and then can operate “with zero water consumption” thereafter.
“The daily water usage over the course of an entire year is roughly equivalent to what a single restaurant would use,” Nadella said on Tuesday.
Some data centers that are currently under construction “will use more energy than large cities,” according to Harvard Law School’s Ari Peskoe.
Microsoft says Fairwater has “cost-efficient, reliable power,” with usage of around 140kW per rack, 1,360kW per row, as well as software and hardware solutions for reducing power during off-peak times and using “an on-site energy storage solution to further mask power fluctuations without utilizing excess power.” For comparison, the energy usage of a typical US residential utility customer is around 1.2kW.
During the keynote on Tuesday morning, Nadella said Microsoft’s new principles for building out data centers involve ensuring they “do not increase the electricity prices, making sure that we are replenishing all our water use, creating jobs in the local communities for the local residents, adding to the tax base, making sure we’re strengthening the communities by investing in local training and the nonprofits in the area.
“Only when we live up to these principles, do the hard work around it, is when we earn the permission to go ahead and innovate and build,” the CEO said.
When I asked Herman about Microsoft’s promises to give back to local communities after seeking their permission to build data centers there, she expressed doubtful hope.
“If they’re actually that invested, I’d love to see them develop a more cooperative business development model that incorporates democratic values at the core of their operational agendas,” she said. “I haven’t seen that demonstrated in practice internally as a business, so why would I trust it at a local governance level?”
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