Inside Big Tech's Absurd Data Center Pitch
Inside Big Tech's Absurd Data Center Pitch
Tech lobbyists are insulting our intelligence.
This is Boondoggle, the newsletter about corporations ripping off our states, cities, and communities. If you’re not currently a subscriber, please click the green button below to sign up. Thanks!
Last year, the Kentucky legislature approved a tax giveaway for the construction of data centers. Democratic Gov. Andy Beshear vetoed it, though, saying “Legislation creating these programs requires more time, discussion, and nuance. I also have concerns about the amount of up-front dollars that the bill provides based merely on the promise of a project, as well as the lack of discretion to say ‘no’ to a project that is certain to fail.”
Well, some time has passed and now the bill is back. It passed a Kentucky House committee recently and is likely going to come close to passage again, if not sail through largely uncontested. But of particular note is the way in which the tech industry is pushing for the bill — and what that says about how economic development boondoggles are built and sold.
When the bill was up in the Kentucky House Small Business and Information Technology committee, an organization named NetChoice made a presentation in favor of it. NetChoice is a trade association that represents the biggest of the big when it comes to tech firms: Amazon, Google, Facebook, Yahoo, TikTok, Twitter, and on and on.
Those are, of course, the corporations most likely to receive massive data center subsidies, as I’ve explained before. Big Tech wants to build its infrastructure on the backs of taxpayers, and has been largely successful doing so thus far, with Google, Facebook, Apple, and Yahoo all receiving hundreds of millions of dollars in data center subsidies.
Tech front groups like NetChoice, which has a schtick running around pushing for data center subsidies, are barely trying to make the case on the merits, clearly believing that lawmakers are going to fall all over themselves to subsidize data centers with the barest of nudges.
The Kentucky legislature posts materials from committee hearings online, including NetChoice’s data center pitch. Of the six slides — which are numbered 1, 2, 3, 7, 8, 9, for the record — one is a title page, one is a picture of the inside of a data center, one is a picture of the outside of a data center, one is about Idaho (remember, this was a presentation in Kentucky), and two look like this.
Fund Big Tech’s infrastructure with public dollars and you will be here with good things. Or you can choose not to and the good things will be not here. The choice, my friends, is clear: Be a plus sign, not a zero.
Mocking aside, this is a load of hokum, and an insult to everyone’s intelligence, most notably the lawmakers who had this put in front of them during official government business. With the nearly limitless resources of massive Big Tech firms behind them, this is the best these folks could do?
To review, the idea that data centers are job creators or economy boosters is nonsense. After an initial bump in construction jobs, which certainly exists, just 30-50 people staff them permanently, and many of those jobs are janitorial and administrative positions, not high-paying tech gigs.
Even the tech jobs inside the actual centers are often contracted out, with enforced, high turnover so as to maintain the fiction that the workers aren’t full-time employees. This is not the stuff sustainable incomes, spending, or revenues are made of, and the overall cost comes to millions of taxpayer dollars per permanent job created.
To the rest of the above slide, there’s quite literally no reason to believe that the presence of a data center has any correlation with “education” coming to a state — I’m assuming they mean university research jobs or something, but who knows — and I’d argue that data centers are actually barriers to diversifying local economies, because they’re hulking, resource-intensive structures surrounded by giant parking lots that no other business wants to be located next to. They’re bad for the environment and strain local resources, making it less likely that other businesses will be drawn to the area, not more.
Local businesses, particularly those based on agriculture or tourism, hate these things for a reason. And that’s why so many of the deals are draped in secrecy: To avoid negative local feedback.
All of that, though, doesn’t even get to the most important point: Tax incentives aren’t actually influencing individual data center location decisions. The whole premise NetChoice and their ilk are pushing is false.
In a 2014 survey, just 3 percent of data center owners described monetary incentives as the most important factor when choosing a location. Which makes sense: Data centers are critical infrastructure to the corporations that build them, so many factors go into where they are located, including utility costs, a location’s weather and seismic activity, proximity to suppliers, and access to transportation. To think that these massive firms are making long-term infrastructure decisions based on a few million dollars in tax breaks is silly.
Kentucky Democratic State Rep. Josie Raymond, as is usually the case, got it right.
But maybe the joke is on all of us in the end, because the bill did pass out of committee after the above NetChoice presentation. There are so many states rushing into the data center incentive game that any old justification will apparently do.
Like with so many things in the economic development machine at the moment, I think the tech industry and its lobbyists have built the sense that states “have to” have data center subsidies in order to “compete” for “tech jobs,” and so the thinnest veneer of a justification that appears based on something empirical is enough to get their giveaways over the finish line.
That doesn’t change, though, that subsidizing data centers is terrible policy being done for terrible reasons, based on a truly terrible pitch.
SHAMELESS SELF-PROMOTION: I had a piece in the Albany Times-Union last weekend about why New York legislators should support a bill to rein in Apple and Google’s power over app stores. You can read it here. I also provided testimony before Illinois House and Senate committees in favor of a similar bill, which you can read here, and talked to Center Square about the Illinois effort to rein in Big Tech monopolies, which you can read here.
Thanks for reading this edition of Boondoggle. If you liked it, please take a moment to click the little heart under the headline or below. And forward it to friends, family, or neighbors using the green buttons. Every click and share really helps.
If you don’t subscribe already and you’d like to sign up, just click below.
Finally, if you’d like to pick up a copy of my book, The Billionaire Boondoggle: How Our Politicians Let Corporations and Bigwigs Steal Our Money and Jobs, go here.
Thanks again!
— Pat Garofalo
And let's not forget how many millions of gallons of water that those data centers use.
In Charleston, SC, Google is taking 545 million gallons a year from an ancient pristine Middendorf aquifer to cool its servers. This aquifer use to supply the town of Mt. Pleasant with its water. Our water bills have tripled over the years because Mt. Pleasant must now buy 70% of their water from neighboring Charleston ground water.
.... and here is a news story from 2017. Seems to coincide with Google asking for more water.
https://abcnews4.com/news/local/spike-in-water-bills-concerns-mt-pleasant-residents