Hello, and welcome to TechScape. I’m your host, Blake Montgomery, the Guardian’s US tech editor.
One year ago today, Donald Trump was inaugurated as president of the United States. Standing alongside him that day were the leaders of the tech industry’s most powerful companies, who had donated to him in an unprecedented bending of the knee. In the ensuing year, the companies have reaped enormous rewards from their alliance with Trump, which my colleague Nick Robins-Early and I wrote about last month after Trump signed an executive order prohibiting states from passing laws regulating AI. Trump has sponsored the tech industry with billions in government funding and with diplomatic visits that featured CEOs as his fellow negotiators in massive, lucrative deals.
As year two of Trump’s second term begins, Silicon Valley’s titans appear poised to enrich themselves even more with the president’s enthusiastic aid.
Today in tech, we’re exploring the political consequences of the expansion of datacenters in the US and Europe as well as taking stock of Australia’s under-16 social media ban.
Trump thinks datacenters might cost his party an election
Donald Trump is worried about datacenters. Specifically, he is concerned about their effects on an already expensive electricity market in the United States. Will Americans’ resentment of sharply rising energy costs scuttle his goal of total deregulation of AI and his party’s November election ambitions?
Trump’s anxiety is evident in two actions last week. On 13 January, Trump and Microsoft’s president jointly announced that the tech giant would pay more for its datacenters, paying full property taxes and accepting neither tax reductions nor electricity rate discounts in towns where it operates datacenters.
““We are the ‘HOTTEST’ Country in the World, and Number One in AI. Data Centers are key to that boom, and keeping Americans FREE and SECURE but, the big Technology Companies who 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 states in the north-east US directed the country’s largest power grid operator to hold an emergency reliability power auction by September, per Bloomberg. The move could force tech giants to pay for the construction of new power plants by requiring them to bid on the future reliability of the electricity they plan to draw from the grid.
“I never want Americans to pay higher Electricity bills because of Data Centers,” Trump said.
Trump is tugging at the edges of the problem of rapidly rising electricity demand. He promised Americans he’d slash their electricity bills by half. But as my colleagues Oliver Milman and Dharna Noor reported over the weekend, there’s little prospect of him delivering on that vow. At the same time that AI is increasing the demand for electricity, the administration is blocking renewable energy projects Trump calls a “scam” and a “con job” but were set to provide electricity for millions of US homes, instead pushing the expansion of drilling for gas and oil. Administration edicts to reverse the closure of ageing coal plants and to restart the overseas export of liquified natural gas could counterintuitively raise costs further for domestic consumers.
Power prices play into larger concerns about the cost of living in the US, an issue which has Trump’s party on its back foot as congressional elections loom in November.
As ever with technology news, Elon Musk is part of the story. On Thursday, the US Environmental Protection Agency (EPA) ruled that Musk’s company xAI had illegally been operating methane-powered generators at its Memphis facility. The ruling establishes a precedent for tech companies in search of more electricity than they can obtain from the grid: you can’t simply bring in a backup generator, like a homeowner would do when facing regular power outage. You’ll have to purchase nuclear power plants like the rest of us (Meta, Microsoft, Google and Amazon). Musk and xAI have not commented.
European governments are likewise confronting the limitations their resources pose on the potential growth of datacenters, which are limitlessly hungry. In Germany, which boasts the highest number of datacenters in Europe, high energy prices constrain growth. Chancellor Friedrich Merz, like Trump, is very much in favor of constructing more datacenters, but has taken an opposite tack to the US president’s deal with Microsoft. In November, Merz’s ruling party agreed to subsidize heavy industrial use of electricity until 2028 and reduce grid fees for consumers and businesses alike. One important distinction from the US: datacenters in Germany are required to source half of their electricity from renewable sources. Germans are skeptical of the tech industry’s ability to abide by the requirement, which leads to general wariness of expanding datacenter construction, according to a survey published in October.
In the UK, home to the second-highest number of datacenters in Europe, construction of new facilities is expanding, and energy costs are rising. Electricity rates in the UK are already multiple times those of the US and among the highest in the world, and increases pose severe problems for a populace that has dealt with a cost of living crisis for multiple years now. Despite the brewing problem, the Department for Science, Innovation and Technology proposed in November to offer electricity discounts to datacenters in so-called “AI growth zones” to encourage investment and development.
A nearby example looms large: in neighboring Ireland, datacenters’ electricity use overtook that of all urban homes in 2024. The strain on the grid has led to significantly higher costs for everyday Irish people, so much so that the Irish government imposed a ban on new datacenters connecting to Dublin’s power grid in 2021. The measure effectively prohibited new construction in the city and its surrounding area. It ended in December.
The next stop in 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 …
The effects of Australia’s social media ban
Lawmakers in the UK and around the world are calling for bans on social media accounts for teenagers and children in the wake of Australia’s successful social media ban for under-16s. My colleague Josh Taylor offers a look at how the ban is playing out in its native country. Despite social media companies reporting millions of accounts deleted in compliance with the ban, the opposition party is questioning its effectiveness:
More than 4.7m social media accounts held by Australians who platforms have judged to be under 16 years of age were deactivated, removed or restricted in the first days after the ban came into effect on 10 December, the prime minister has said.
Despite the high numbers, the federal opposition, which campaigned for the policy before it was adopted by the government, last week said the ban implementation had “fallen flat”.
“New accounts are being created and the age-verification tools that the government assured Australians would be effective, have proven laughably easy to bypass with some makeup and good lighting,” said the shadow communications minister, Melissa McIntosh.
The wider TechScape
My picture was used in child abuse images. AI is putting others through my nightmare | Mara Wilson
Iran plans permanent break from global internet, say activists
Trump imposes 25% tariff on Nvidia AI chips and others, citing national security
Social media time does not increase teenagers’ mental health problems – study
