Artificial intelligence (AI) may dominate today’s technology headlines, but behind every AI model, cloud platform,
financial transaction, and digital service lies a far less visible asset: the data center.

Data centers have become the physical backbone of the digital economy. As demand for computing power grows,
governments and technology companies compete more for the resources that make them possible.

Reliable electricity, water, available land, high-speed fiber networks, and efficient permitting have become strategic
advantages in a rapidly evolving global race. At the same time, communities are asking difficult questions about how
these projects affect housing, public infrastructure, natural resources, and long-term economic development.

As countries seek to strengthen their position in the era of AI, the challenge lies in determining which locations can
sustainably support this infrastructure and how governments, businesses, and communities can work together to
balance economic opportunity with long-term resilience.

The demand driving the global race

The rapid adoption of AI has transformed the scale of data center infrastructure required globally. While cloud computing had already driven steady growth in data center investment over the past decade, the development of data-intensive tools and technology like generative AI and advanced analytics are accelerating demand at an unprecedented pace.

Hyperscale operators like Meta, Amazon, Google, and Microsoft are major technology companies that are actively
expanding the AI capabilities of their products and services. As they continue to adapt to the growing demand for AIsupported technology, they require larger infrastructure footprints to support the continuous development of their
platforms and AI ambitions.

However, the global race to keep up with the rapid adoption of AI is driven as much by technological demand as it is by
the limited availability of locations capable of sustainably supporting this infrastructure. The competition revolves around securing strategic resources to keep the infrastructure running, including land, water, electricity, permitting capacity, and public support.

What makes a location competitive?

Not every region can accommodate a hyperscale data center or an AI-focused computing campus. Although capital
remains essential in developing data center infrastructure, site selection now depends on more than land. Site selection
decisions are influenced by the availability of resources that determine whether the infrastructure can operate efficiently
over the long term.

These principal factors are involved in data center site selection:

• Reliable and affordable electricity to support continuous operations and manage long-term operating costs
• Grid capacity and long-term energy security to ensure that data centers can operate in the long term
• Land availability to accommodate massive power infrastructure, extensive cooling systems, and space for future
  campus expansion
• Water availability and cooling conditions to support cooling systems that prevent data centers from overheating
• Fiber connectivity and network infrastructure to boost data transfer rates and reduce latency
• Political and regulatory stability to comply with local regulations to avoid legal complications that could disrupt
  operations
• Permitting efficiency and investment incentives to ensure a data center complies with zoning laws, ensuring
  compatibility with the local environment
• Skilled labor capable of building and maintaining increasingly complex facilities
• Community acceptance to help avoid local pushback and project delays or cancellations

These requirements compete with the needs of residents and other industries for public infrastructure and essential
resources like land, energy, and water. The best location for building data center infrastructure isn’t necessarily the
cheapest, but rather the one that can effectively balance infrastructure, regulation, and public support.

Utah’s data center controversy: When infrastructure becomes political

Utah has become an attractive destination for hyperscale and AI infrastructure, with the state currently hosting 48
operational data centers, per Deseret News. The state’s Box Elder County is politically aligned with Utah’s energy
expansion agenda, has large land assemblies, is close to major energy infrastructure, and has space for dedicated power
generation, according to Data Center Frontier.

The proposed Stratos AI development in Utah quickly became one of the most closely watched infrastructure projects in
the United States. The proposed $100 billion Stratos AI project illustrates the massive scale of infrastructure needed to
support next-generation AI workloads. The proposed AI data center will be more than twice the size of Manhattan,
spanning more than 40,000 acres over three sites in Box Elder County, according to The Guardian. However, projects of this scale inevitably raise concerns that extend well beyond technology. As local officials, residents, and industry stakeholders evaluated the proposal, the debate quickly expanded beyond the project itself to questions about resource availability, infrastructure capacity, and long-term community impact.

Public debate intensified further as high-profile investors like Canadian businessman Kevin O’Leary became associated
with the project. Discussion extended beyond local infrastructure planning into broader questions about investment
structures, foreign participation, national security, and the strategic importance of AI infrastructure.

The Utah situation illustrates a broader trend emerging around the world. While technology companies continue
expanding hyperscale infrastructure to meet growing demand, governments and communities evaluate these projects
from a broader perspective. Decision-making about data center development involves questions about infrastructure
resilience, energy security, economic development, environmental stewardship, and geopolitical interests, with these
factors carrying as much significance as computing capacity.

In this environment, data centers are treated as strategic national assets with impacts far beyond the technology sector.

The housing question: When digital growth meets community growth

The debate over the Stratos AI proposal also highlights another challenge facing rapidly growing regions. While data
centers themselves aren’t the sole cause of housing shortages, projects of this scale can intersect with existing pressures
when introduced into communities already experiencing strong population and economic growth.

With large infrastructure projects like hyperscale data centers competing for land, rising investment in an area may
contribute to higher land values, potentially making future residential development more expensive.

These projects can also place additional demands on roads, water systems, schools, and utilities, particularly in
communities already experiencing rapid expansion. The Stratos AI situation in Utah, for example, has raised concerns
surrounding water demand and potential ecosystem impacts.

These questions illustrate the importance of coordinated planning. As governments pursue digital infrastructure
investment, they must also consider how housing, transportation, utilities, and other public services can grow alongside
it to ensure long-term community resilience.

New York’s pause: A different policy response

While Utah’s experience reflects the challenges of attracting major AI investment, other jurisdictions are responding from
a different perspective. New York’s imposed one-year pause on new hyperscale data center development shows how
some governments are prioritizing long-term infrastructure planning before approving additional large-scale projects.

Concerns over electricity demand, grid capacity, environmental impacts, and community benefits have prompted
governments to reconsider how projects of this scale should be approved.

The experiences of Utah and New York demonstrate that data centers are evaluated as strategic infrastructure requiring
long-term planning rather than ordinary commercial developments.

Public-Private Coordination as a Competitive Advantage

Despite growing constraints, governments continue to compete for data center investment because of its potential to
strengthen digital infrastructure, support AI innovation, attract foreign capital, and contribute to long-term economic
growth. However, success also depends on more than financial investment alone.

A hyperscale project may require coordination between various parties, including government agencies, technology
companies, environmental regulators, and local communities. If one party isn’t aligned, the project may face delays,
additional costs, or be canceled entirely.

Exploring practical solutions like transparent permitting processes, community benefit agreements, and long-term
resource management can help stakeholders find common ground where they can coordinate to make hyperscale
projects happen while ensuring that all parties involved accept and support the project and work together to manage the
trade-offs.

Global leaders and emerging competitors

The competition for data center investment extends far beyond the U.S. Established markets continue to attract
significant investment, but growing infrastructure constraints are creating new opportunities for emerging economies to
strengthen their position in the global digital economy.

Established markets like the U.S., Northern Europe, and Singapore benefit from mature digital infrastructure, strong
connectivity, and established technology ecosystems but face more constraints related to access to reliable power, land
availability, sustainability goals, and the long-term capacity of supporting infrastructure.

Emerging markets, meanwhile, have opportunities to compete by strengthening energy infrastructure,
telecommunications, regulatory certainty, skilled workforces, and investment partnerships. For emerging economies, the
opportunity lies in attracting individual facilities and improving on the factors required to support long-term digital
growth.

Looking ahead

As demand for computing capacity continues to grow, governments and technology companies need to balance rapid
infrastructure development with energy availability, permitting, environmental stewardship, community acceptance, and
geopolitical considerations. Together, these interconnected factors will influence which regions can sustainably support
long-term digital infrastructure.

The contrasting examples of Utah’s Stratos AI controversy and New York’s decision to pause new hyperscale development
show how the competition is shaped by more factors beyond technological demand. Questions surrounding resources,
housing, public infrastructure, local governance, and geopolitics are factoring into where these projects will be
implemented and whether they will move forward at all.

The regions that emerge as long-term leaders will create resilient digital ecosystems where infrastructure investment,
responsible governance, and community development reinforce one another.