Hello, welcome to TechScape. I’m your host, Blake Montgomery, US technology editor at The Guardian.
One year ago today, Donald Trump was inaugurated as President of the United States. Standing with him that day were leaders of the most powerful companies in the tech industry, who donated to him in an unprecedented way. In the coming year, companies have benefited enormously from their alliance with Trump, which my colleague Nick Robbins-Early and I wrote about last month after Trump signed an executive order blocking states from passing laws regulating AI. Trump has sponsored the tech industry with billions in government funding and diplomatic visits, largely involving CEOs as his fellow negotiators in lucrative deals.
As the second year of Trump’s second term begins, Silicon Valley giants appear poised to enrich themselves even further with the president’s enthusiastic support.
Today in Tech, we’re exploring the political consequences of datacenter expansion in the US and Europe as well as taking stock of Australia’s under-16 social media ban.
Trump thinks datacenters could hurt his party in elections
Donald Trump is worried about the data center. In particular, he is concerned about their effects on the already expensive electricity market in the United States. Will Americans’ resentment of rapidly rising energy costs thwart his goal of full regulation of AI and his party’s November election ambitions?
Trump’s concern is clear from two actions over the past week. On January 13, Trump and the chairman of Microsoft jointly announced that the tech giant would pay more for its datacenters, pay full property taxes and accept neither tax cuts nor electricity rate breaks in the cities where it operates datacenters.
“”We are the ‘hottest’ country in the world, and number one in AI. Data centers are the key to that boom, and keep Americans free and safe, but, the big technology companies that build them ‘must pay their own way.'” Trump wrote on Truth Social. “Thank you, and congratulations to Microsoft.”
And then on Friday, Trump and governors of northeastern U.S. states directed the nation’s largest power grid operator to hold emergency reliability power auctions through September. bloomberg. The move could force tech giants to pay to build new power plants, requiring them to bid on the future reliability of the electricity they receive from the grid.
“I never want Americans to have to pay higher electricity bills because of data centers,” Trump said.
Trump is emphasizing the problem of rapidly increasing electricity demand. He promised Americans that he would cut their electricity bills in half. But as my colleagues Oliver Millman and Dharna Noor reported over the weekend, he has little chance of keeping that pledge. At the same time that AI is increasing demand for electricity, the administration is blocking renewable energy projects, with Trump calling them a “scam” and “fraud,” but was determined to provide electricity to millions of American homes instead of pushing for the expansion of drilling for gas and oil. The administration’s orders to close aging coal plants and restart foreign exports of liquefied natural gas could further increase costs for domestic consumers.
Electricity prices play into larger concerns about the cost of living in the US, an issue that has Trump’s party on the back foot in the run-up to congressional elections in November.
As always with technology news, Elon Musk is part of the story. On Thursday, the US Environmental Protection Agency (EPA) ruled that Musk’s company XAI was illegally running methane-powered generators at its Memphis facility. The decision sets a precedent for tech companies looking to generate more power than they can get from the grid: You can’t simply bring in a backup generator, like a homeowner does when experiencing regular power outages. You have to buy nuclear power plants like the rest of us (Meta, Microsoft, Google and Amazon). Musk and XAI have not commented.
European governments are similarly facing the limits that their resources pose on the potential growth of datacenters, which have a limitless appetite. In Germany, which boasts the most datacenters in Europe, high energy prices hinder growth. Like Trump, Chancellor Friedrich Merz is also in favor of building more datacenters, but he has taken a stance contrary to the US President’s agreement with Microsoft. In novemberMeraz’s ruling party agreed to subsidize heavy industrial use of electricity until 2028 and reduce grid tariffs for consumers and businesses. One key difference from the US: Datacenters in Germany are required to get half their electricity from renewable sources. Germans are skeptical of the tech industry’s ability to comply with the requirement, leading to general concerns about the expansion of datacenter construction. The survey was published in October.
In the UK, home to the second highest number of datacentres in Europe, construction of new facilities is increasing, and energy costs are rising. Electricity rates in the UK are already several times higher than in the US and among the highest in the world, and this increase creates serious problems for a population that has been struggling with a cost of living crisis for many years. Despite the growing problem, the Department of Science, Innovation and Technology Proposed Electricity rebates will be offered to datacenters in so-called “AI development zones” in November to encourage investment and development.
A nearby example comes to mind: in neighboring Ireland, datacenter electricity use will surpass that of all urban households in 2024. The pressure on the grid has caused costs for everyday Irish people to rise significantly, so much so that the Irish government imposed a ban on new datacenters connecting to Dublin’s power grid in 2021. This measure effectively banned new construction in the city and its surrounding area. It ended in December.
Next stop for the datacenter boom: the Middle East, where energy is cheap but water is not abundant, and India, where the power grid is not as reliable…
Lawmakers in the UK and around the world are calling for restrictions on the social media accounts of teens and children in the wake of Australia’s successful ban on social media for children under 16. My colleague Josh Taylor takes a look at how the ban is playing out in his country of origin. Despite reports of millions of accounts being removed by social media companies in compliance with the ban, the opposition party is questioning its effectiveness:
The Prime Minister has said that more than 4.7 million social media accounts held by Australians who were under the age of 16 were deactivated, deleted or restricted in the first days after the restrictions came into effect on December 10.
Despite the high numbers, the federal opposition, which had campaigned for the policy before the government adopted it, said last week that ban implementation had “failed”.
Shadow Communications Minister, Melissa McIntosh, said, “New accounts are being created and the age-verification tools that the government assured Australians would be effective have proven ridiculously easy with some make-up and good lighting.”
