Biden Administration Eyes Data Center Regulations

Your data isn’t here — it’s in the cloud. Which is… a rack of servers in a data center. And where’s that data center? Well, that’s an increasingly fraught question.

On Thursday, The New York Times reported that the Biden administration is making a lame duck push for new regulations that could influence where data centers — particularly those powering artificial intelligence software — could be built.

Centering Yourself

The White House has focused heavily on placing export controls on AI chips and AI models (the latter of which experts say is largely performative). Now it may be finally looking to regulate the third leg in the stool of AI infrastructure: data centers, where the vast majority of AI computations are executed (though Nvidia promises to soon bring this technology to your home office, too). 

Which makes Thursday’s news not all that surprising. Even less surprising? Big Tech companies aren’t exactly on board with the plan:

• The new rules, which could be announced as soon as Friday, would place further restrictions on where US-made AI-powering chips could be shipped, which would then sway where data centers would be built. Per the NYT’s reporting, the export controls are designed to promote the building of data centers in the US and in allied nations, and away from adversary nations like China or Russia, as well as Middle East nations attempting to lure tech companies with massive incentives.
• Nvidia, Microsoft, and Oracle are among companies that lobbied hard against the new controls, arguing they could hurt international sales and push some potential clients into buying tech from Chinese firms. 

Which way the Trump 2.0 administration will lean on the issue is difficult to say, though tech companies have worked hard to curry the incoming president’s favor. On Thursday, Google and Microsoft gave $1 million each to Trump’s inauguration fund — joining a list that includes just about every other major tech firm.

Pay Up: Across the globe, Malaysia has emerged as a data center hot spot for Big Tech, with just about every major US firm taking advantage of the nation’s cheap land, labor, and proximity to major markets. But earlier this week, Malaysian government officials told the Financial Times that tech firms should soon expect to pay a premium on the vast amounts of energy and water required to power and cool the server farms. In other words: The party might soon be over.