What the US Midterms Could Do to the Technology World
The real tech story isn’t in Washington. It’s at the end of someone’s road, and it hums.
If you would rather watch a video then watch it here
https://www.youtube.com/watch?v=nsOm6P_TfOo&t=122s
Everyone is watching Congress: red or blue, who controls what. For anyone building a company, that’s the circus. The real action for technology is happening in county councils, planning boards and state governors’ offices, and the issue is not “AI regulation” in the way you probably think about it. It’s far more boring and far more expensive. It’s data centres.
Why data centres are the real election
Every clever AI tool you use runs on a giant warehouse full of chips, and that warehouse needs electricity, water and land. Americans have started noticing that their electricity bills are going up and a very large building has appeared at the end of their road. It employs a handful of people and hums.
One poll found that 63% of voters oppose a data centre within ten miles of their home. Only 13% support one. I’ve seen better approval ratings for parking fines.
It’s not just talk. Data centres are on the ballot in ten states, with 41 local measures. Of the six decided earlier this year, every single one went against development. Monterey Park in California has banned them outright. So the people deciding how much AI capacity America builds are not in Washington. They’re in a town hall with a coffee and a clipboard.
Why a founder should care
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1. Your AI bill. If data centres get harder and slower to build, and the companies building them have to pay for their own power and grid upgrades, who ends up paying? You do, quietly, in the price of the tools you rent. A senior Democratic senator has already said they want an extra tax on data centres. Whoever wins, I wouldn’t plan on AI getting cheaper forever. The price per token is falling while the bill is rising, and this is the political version of the same problem.
2. The bubble question. Big tech is on track to spend something like $800bn on this build-out this year. Bank of America has warned that a sustained correction in the AI trade is a major risk to the global economy. If voters and councils slow the build-out, that matters to the people who financed it. And when the money men get nervous, startups are the first to lose funding. It always is us.
3. Regulation. Both parties now sound rather alike on tech: nobody wants to look soft on Big Tech, and nobody wants to be seen slowing America down. The White House has a voluntary agreement with the big AI firms, with no stated consequences if they ignore it. The President called it “morally binding”. I’ve had morally binding agreements with my children about tidying their bedrooms. How did that go?
If the Democrats win a chamber, expect letters, hearings and investigations. They’ve already asked the big AI firms to report safety incidents within 48 hours. Expect the compliance questions to roll downhill to everyone who builds on top of those models.
4. Tariffs. Most analysts expect tariffs to stay whoever wins, and Goldman expects more increases after the election. If you build hardware, or depend on anything with a chip in it, put that in your plan. Don’t hope.
A word for the crypto crowd. The big market structure bill stalled in September, and Coinbase and Circle shares fell by as much as 11% that day. The midterms decide whether those rules become law or stay one election away from being reversed.
Three things to do about it
- Don’t build a business that only survives on cheap AI from one supplier. If your margin only works at today’s prices, you don’t have a business, you have a promotion.
- Put a line in your plan for compute getting more expensive, and show it to investors before they ask. The founders who look calm in a storm are the ones who’ve already drawn the storm on a spreadsheet.
- Watch your own state and your own council, not just Washington. That’s where the rules that touch your costs are being written.
Technology has become political. The age of “move fast and nobody notices” is over. People noticed, they have opinions, and they have a vote.
I’m David Murray-Hundley, the Grumpy Entrepreneur. Watch the full video here: https://www.youtube.com/watch?v=nsOm6P_TfOo&t=122s. More at www.thegrumpyentrepreneur.com.
