Speaker 1The midterm election results are in, and we got the blue wave, blue tsunami, pick your metaphor that had been promised. And the question is, for our purposes here at the AI Daily Brief, what's it going to mean for AI? Does it mean that the data center build-out comes to a screeching halt? Does it mean that we're in for draconian new regulations? What does it say about AI in the 2028 presidential election? Those are the questions for today's episode of the AI Daily Brief. The AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. All right, friends, quick announcements before we dive in. First of all, thank you to today's sponsors, KPMG, CDATA, Granola, and Blitzy. To get an ad-free version of the show, go to patreon.com slash AI Daily Brief, or you can subscribe on Apple Podcasts. And if you want to learn more about sponsoring the show, send us a note at sponsors at ai-dailybrief.ai. Also, a quick reminder today that I have a new podcast, How We Got Here. It is a 45-minute to hour-long deep dive on the history behind the biggest trends, conditions, and phenomenon in today's world. The first couple episodes are out, and the first one, How Tech Lost America, is particularly germane to today's conversation about the midterm elections, as it traces the 15-year history that set up the context into which data centers would be received. You can find How We Got Here with NLW on any of your podcast apps, or just go to howwegothere.com. Well, friends, this time, the pollsters were not. wrong, and the hopeful prognostications of Democrats have been affirmed. America got a genuine blue wave yesterday, as the American citizens handed a resounding defeat to the party of Trump and victory to the Democrats. As of late last night, Democrats had an 11-point swing across national averages. They will take control of the House and the Senate, although they are unlikely to gain a veto-proof supermajority. By way of historical comparisons, in terms of absolute number of seats, the result doesn't look to be quite. at the same magnitude as historic wipeouts like the 2018 Trump or 2010 Obama midterms, but Democrats are flipping unlikely seats in GOP strongholds like Texas, South Carolina, and Kentucky. The question for our purposes is, of course, what is this going to mean for AI? Heading into the vote, it would have been tempting to claim that AI was on the ballot, but of course, the more accurate framing was that AI data centers were on the ballot. According to a Pew Research poll conducted in early October, only 44% of. voters said that AI was a very important issue to them. That compares to, for example, 57% for foreign policy, 59% for immigration, 62% for education, 68% for healthcare, 73% for the future of democracy, and 84% for the economy. When it came to who AI was important to, the issue skewed slightly towards Democrats, with 54% saying that AI was a very important issue compared to 34% of Republicans. Pew even highlighted that labeling it AI as an issue was a lot more important. The actual issue was, of course, data centers, with 61% of voters saying they dislike or strongly dislike candidates who support building data centers locally. Again, this skewed along partisan lines, with 75% of Democrat supporters saying they dislike pro-data center candidates compared to 44% of Republican supporters. Hardly anyone on either side said they liked pro-data center candidates, with just 5% of Democrat supporters and only 14% of Republican supporters. To the shock of no one who has been paying any amount of attention for the last three to six months, being in favor of data centers was a huge vote loser for both parties. Now, when it comes to why data centers are so unpopular, the full accounting for that is beyond the scope of this particular show. In fact, digging deep on those particular issues is exactly why I created the new show, How We Got Here, and why the first episode was, in fact, How Tech Lost America, which is about the 15-year history that set up the context for data centers today. What's notable for our purposes on this show is that data center politics, were to look only at the way that they were discussed on the campaign trail, mostly tied to other key issues around the economy, like cost of living, and the wealth divide between regular people and the group of tech money who are often referred to as the oligarchy. Ohio Democrat Senate candidate Sherrod Brown said, Ohioans shouldn't be forced to subsidize these costs, and Ohioans, not John Husted and his billionaire friends, should get to decide if data centers are built in their community. In the Michigan Senate race, Abdul El-Sayed ran attack ads that, tied flock cameras and AI data centers to his opponent, Mike Rogers' support of the Patriot Act in 2001. In other words, data center opposition was fully enmeshed and mixed into larger electoral themes. Republicans were a bit constrained on how they addressed the data center issue, given President Trump's vocal support for the AI industry down the stretch. In late August, you might remember, he pronounced on Truth Social that communities who reject data centers will end up being, quote, backwards and poor. That was the perfect opportunity for Republicans in tight races to split with the president on the issue, but few took that chance. Instead, Republicans largely offered the status quo, with Ohio Senate incumbent John Husted telling that data centers are and should remain a local decision. Exit polling from NBC News confirmed that data centers were a meaningful issue, but not among the most significant. 56% of voters said that data centers were a crucial or major factor in determining their vote, with Democrats twice as likely to cite data centers as a major factor compared to Republicans. But by comparison, 73% said immigration enforcement policies were a crucial or major factor, and 53% said that data centers were a crucial or major factor in determining their vote, 74% gave that response about the war in Iran, with 89% saying cost of living was a major factor for them. Government corruption was the highest polling issue, with 90% of voters saying that it was a major factor in their vote. In other words, data centers were important enough to be included in exit polls, but among hot-button issues, data centers were in last place. Still, there are a few key races where AI played a central role. The first is California's 11th district, covering San Francisco, where State Senator Scott Weiner was going up against San Francisco Board of Supervisors member Conrad Weiner. This was the district that Nancy Pelosi represented since 1987, and contains the headquarters for both OpenAI and Anthropic. While both candidates are progressive Democrats, Connie Chan was the one that secured Pelosi's endorsement and supported the party apparatus. The race hadn't been called as of the time I was recording, but Weiner has secured a commanding lead with around half the votes tallied. Now, you'll likely remember Weiner from the past few years of AI policy battles in the California State Congress. He was the lead sponsor for SB 1047, the controversial AI regulatory bill proposed in 2024, which included, among other things, a mandatory kill switch, liability for AI developers, and a definition of frontier AI that included all models larger than Lama 3. The bill passed the House, but was vetoed by Governor Gavin Newsom. Still, many of the ideas from the bill found their way into subsequent California legislation, which became the blueprint for AI regulations in other states. Being tough on AI was a cornerstone of Weiner's campaign. During an October debate, for example, he boasted that he, quote, went to war with big tech to pass AI regulation in California. Chan criticized, Weiner for taking $3 million from Public First Action, an anthropic-aligned pro-regulation PAC. But it's pretty difficult to frame Weiner as being in the pocket of the AI industry. In fact, if anything, he's positioned to become a champion for AI safety advocates focused on existential risk. Another real battleground race for AI policy was in Ohio. Ohio has around 200 data centers, although most of them are small. However, 46 new projects are planned that will operate at a combined 16 gigawatts. Chief among those projects are Meta's Prometheus facility outside of Columbus, which is the largest data center in the United States. It's said to be the first data center in the world to operate at a full gigawatt of capacity. And OpenAI has planned a campus in Pike County, which is planned for 10 gigawatts. Democrat challenger Sherrod Brown made data centers the central theme of his campaign to unseat John Husted. Brown hammered Husted on his pro-data center position throughout the campaign, with one attack ad labeling him the face of data centers. Another ad was nothing but the loud hum of a data center, threatening to voters what they could expect if a data center goes up in their neighborhood. The race was called early on Wednesday morning, with Brown reclaiming his spot in the Senate and adding another blue seat. Now, notably for the implications for the AI industry, Brown is returning to Washington not as a freshman senator, but as a veteran leader. He had 18 years in the Senate before being unseated in the 2024 election, thanks in part to a wave of money against him contributed by a crypto pack. And while Brown isn't as much of a hardline progressive as some others in the Democrat party, he has been a consistently harsh critic of big tech in basically all its incarnations. He's returning to the Senate with a clear mandate, to block data centers in his state, and a renewed fury against the tech industry after they spent tens of millions to keep him out of office. The other place where AI might have played an outsized role was in Texas. Texas Flipping Blue is clearly many people's candidate for the most important story of this election. James Tallarico defeated Ken Paxton in the Senate, becoming the first Democrat to represent Texas since 1993. For the AI industry, the even more impactful vote was in the gubernatorial race, where Democrat Gina Hinojosa defeated three-term incumbent Greg Abbott. Now, there was way more going on, in this race, than AI. You have shifting demographics, political realignment around those demographics. But certainly a big part of the narrative coming out of the race was that Governor Abbott got complacent on a range of different issues. Texas has been ground zero for the AI build-out since the beginning, with many large projects flocking to the cheap gas in West Texas and the state's rapid build-out of cheap renewable energy. In September, as the political wind shifted, however, Governor Abbott halted all new permitting for data centers until the Texas Energy and Environmental Regulators completed a full audit of new proposals. At that time, the state had more than 470 gigawatts of new data center proposals, around three times the size of the current grid and new capacity. Alas, Abbott's move was too little too late, with Hinojosa ending a 30-year streak of Republican control in Texas. And indeed, while Democrats winning in Washington is a big change, from a very practical and immediate term standpoint, it's the state and local races that could be even more important when it comes to the AI build-out. Data center policy in particular is determined by the states, with governors saying, having the final say. After last night's results, nine of the ten largest states are now run by Democrats. Democrats. Ohio and Georgia also flipped red to blue, with Florida now being the only top 10 state with a Republican governor. And to put things in economic terms, with almost $3 trillion in GDP, Texas is larger than Canada or Russia. As Sagar and Jetty of Breaking Points put it, the eighth largest economy in the world is experiencing regime change. And the incoming Hinojosa administration is expected to use policy to slow down the data center build-out. Her platform included a moratorium until regulations could be written, ending tax subsidies, and ensuring that electricity and water resources aren't diverted from local communities. Like many Democrats, she tied data centers to broader economic issues, calling Abbott's tax subsidies a, quote, corruption tax on citizens. Now, one important statement, though, that we're going to come back to in a little bit is when, at a press conference in August, Hinojosa told voters, I don't hate data centers. I just hate the way they're taking advantage of Texans. Now, aside from the races where AI sentiment actually moved the needle, there were dozens of other races where AI sentiment actually moved the needle. And AI was at least a central theme of the campaign. Two stand out as especially important, particularly in light of the way that the attention will now shift to the 2028 presidential campaign. The first was Democrat Senator John Ossoff, who cruised to a second term in Georgia after easily dispatching Mike Rogers. The race looked a little close in the early days, but support for a Trump-backed Rogers collapsed down the stretch to make this one of the first races called for the evening. Ossoff was one of the Democrats that most effectively used data centers as the symbol for big tech oligarchy, political corruption, and cost of living issues. During the debates, Ossoff said, no Georgia family should pay a dime more to subsidize the energy consumption of these data centers. He then claimed that Trump's big beautiful bill, quote, gave $70 billion of your money to data center developers. Ossoff tied that money to rising healthcare costs and the shutdown of hospitals. And while there is obviously more context behind that statement, the message clearly resonated with voters. From very early in the year, Ossoff has been pursuing this angle, launching an investigation into data center electricity use in April. Now at this stage, Ossoff has actually done relatively little on AI policy, largely championing toothless investigations that make for good headlines. However, given that he made it a major narrative pillar of his campaign, and given the rising conversation around him as a strong candidate for president in 2028, it wouldn't be surprising to see that change. The first was Democrat Senator John Ossoff, who cruised to a second term in Georgia after easily dispatching Mike Collins. The race looked close in the early days, but support for a Trump-backed Collins collapsed down the stretch to make this one of the first races called for the evening. The other candidate who stood out as a more distinct opponent of AI was Abdul El-Sayed, who dispatched his own Mike, Mike Rogers, to win the Michigan Senate seat. Now, if Ossoff is the new face of centrist Democrats in Washington, El-Sayed represents the rise of the socialist left. He's the first Muslim senator in U.S. history and ran a campaign that borrowed heavily from the Mamdani playbook in New York. El-Sayed's campaign was particularly effective at using data centers as a symbol of state oppression. His campaign conflated data centers with flocking data centers, and his campaign was particularly effective at using data centers with flocking cameras and the use of AI-powered warfare in the Middle East to paint a dystopian picture. In an interview with 60 Minutes from this past weekend, when he was asked what he saw as the most important issue for Michiganders, he responded, Had you asked me five years ago, I would have said healthcare. It still is really high on people's mind. I think right now, we are barreling toward a world where the most important issue I hear about every day is AI. El-Sayed mentioned job loss, economic disruption, and even the risk of losing control or seeing AI used to create a bioweapon. He commented, All of these outcomes are really, really quite scary. I hear it in so many different ways. These are issues that people are deathly afraid of, and it shows up in just all kinds of ways. Now, when it comes to what policies he's going to support, El-Sayed as a freshman senator with no particular connection to the democratic establishment is a bit more of a wild card. If you're leading AI inside an enterprise, you already know that the gap right now isn't capability but execution. That's why KPMG's You Can With AI is back with a new season featuring conversations with leaders like Sarojit Chatterjee of Emma, May Habib of Writer, McKesson CIO Ellery Fisher, and others focused on practical execution. 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There were 41 down-ballot proposals related to data centers across the country, and as of last night, it looks like all 41 will pass, sending a very clear signal that AI companies have completely lost the narrative war around the data center build-out. Brad Carson, the co-founder of Americans for Responsible Innovation, said, What we just witnessed was an AI earthquake. Voters sent a clear message that they want rules for AI and data centers. Still, when it comes to major policy change in Washington, I think it's unlikely that we see some comprehensive regulatory framework. One reason for that, of course, is that in an interview with Fox News shortly before the election, President Trump said that if the Democrats win, quote, I guess I'll become Mr. Vito. Given that, we're also not likely to see a full top-down federal moratorium on data center construction or frontier model training. But that doesn't mean that we won't see any changes. Among those that I think are likely are a lot of the low-hanging fruit, where there's actually a fair bit of common-sense consensus and less disagreement than it might at first seem. A great example of that is whistleblower protection for lab employees. That strikes me as the type of issue that's going to be popular across party lines. I think we'll see attempts to codify the executive branch has taken to voluntary testing, frontier LLMs, before they get released to the public. I would certainly expect to see new rules around incident reporting, which while the devil is in the details, I think in general will be popular again across party lines. I think we'll see stronger liabilities written into law for the model builders. We might see some momentum around actual data sovereignty rules. One of the big question areas will be around export controls. And there I think it's a little bit harder to tell exactly what will come. Export control regimes and how to think about China has not exactly been clear-cut along party lines. I think it's a little bit harder to tell exactly what will come. And so I don't think there's an easy extrapolation to say because Democrats won, we're going to get more or less export controls, but I do think that will be an area of debate. And I think that that debate will of course be tied in with what will be on the agenda, at least from a discussion perspective, which is questions of pausing, pacing, and even potential prohibitions on certain training techniques like AI building AI through recursive self-improvement. We're certainly going to see tons of AI executives hauled before Congress for multiple hearings, but outside of the potential of Democrats deciding to go after Elon, I don't actually think that any of those hearings will be particularly impactful. In general, I think it was inevitable that we were going to see a shift with this election closer to the Democrat or left position of wanting more rules around AI. And frankly, I don't think there was any chance, even if Republicans had surprisingly outperformed, that that wouldn't have been the case. The reason for that is that while this is in part a shift in the political winds, with the country rejecting the last couple of years of Trump and wanting something different, I also think that this is in part just a reality based on models getting more powerful. In other words, more powerful AI means that we should have more rules on AI. For a lot of folks, it's simply common sense that as the models get more powerful and have more capabilities, including capabilities for not great things, there is a natural ramp up in the amount of controls you want to put around things. And while certainly there are AI safety advocates who have fierce debates around how early we want to put in rules and around how far ahead of capabilities we want the rules to be, there are also many for whom the correlation between the rampant rules and the rampant capabilities just makes sense. And if you take that list of likely incremental regulations, one of my major points of optimism is in how many foundational common sense issues there are where I think you can find common ground and get foundations that you can build on top of. Which is not to say that there won't be extremely contentious debates given how significant AI already is and how even more significant it could be in a myriad of ways in the future. Now, when it comes to data centers, it's an interesting one. To me, these elections sort of just confirmed what we already knew, which is that the previous era where data center developers didn't really have to court or care about local communities are completely over. But frankly, it didn't take an election for data center developers to have gotten that memo. That shift has been happening all year, and as I've discussed in numerous shows, I think we're already starting to see some of those changes. Moratoriums on NDAs, commitments around paying their own way around infrastructure and electricity, and a lot more community sweeteners and incentives to get both individual and community buy-in. There will be some for whom they just don't like AI, and they don't want any data centers under any circumstances with any amount of transparency or community sweeteners, and that's that. Others, though, I think will understand, but for some of these new leaders, I think you'll see that they understand the economic importance of data centers, and it will be within their incentives to create perhaps hard but achievable rules to give communities agency and a say while creating a path for data centers to move forward. Remember that line from new Texas governor Gina Hinojosa, who said that she didn't hate data centers, she hated what they were doing to ordinary Texans. The difference between those two is a political and practical space that can be carved out, and that's basically what I think you're going to see. And not for nothing, but if you had never thought about this issue, but just from the first principles of fairness, or asked roughly what the relationship between data centers and the communities that they operate in should look like, it's a lot of fun. closer to the version where there aren't NDAs, and there is community agency, and the data centers pay their own way on infrastructure and electricity, and where they make commitments that make them an active and supportive part of the community, than the version that we had a couple of years ago. Ultimately, I just continue to think that the data center build-out is just about the most winnable political issue I've ever seen. And by winnable, I don't mean for one side, I mean for everyone. Now, I guess for the sake of completeness, it is worth articulating what the disaster scenario would be. Let's say that the data center moratoriums pick up even more momentum, that we very quickly see a bunch of executive level action from the new governors. And because of that action, Wall Street starts to withdraw its funding. Data centers can't get funded, which in turn brings a screeching halt to the AI build-out, which ends up with a bunch of the neoclouds going bust, which spills over into a broader downturn, which picks up its own momentum and ends up ravaging the economic landscape, because the AI build-out is pretty much all we've had going for us for the last couple of years. That sets up the people still debating AI from the standpoint of jobs and cybersecurity and x-risk, but also in light of a bubble bursting. This is certainly not outside the realm of possibility. And I think the data center developers know that. And so we're going to be working over time to find whatever accommodation it takes to be able to continue moving forward. So when all is said and done, did things really change for the AI industry last night? The short answer is sort of, and potentially yes, but mostly it was a confirmation of the direction that things were already headed. And call me overly optimistic, but I just think there is tons of political room to find better alignment on a huge portion of these questions. But we'll see. The 2028 presidential election cycle starts now. And if this new crop of leaders decide that being more virulently anti-AI and actually trying to put a stopper on it is a winning political issue, I could be eating those words. For now, that's going to do it for today's AI Daily Brief. Appreciate you listening or watching. As always, until next time, peace.
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