The historic victory of the Democratic Party in this week's mid-term elections could also have a significant impact on the tech industry.

Among dozens of local voting measures, voters rejected the data center proposal. Even without a direct vote on this issue, they elected politicians who advocate for restrictions on data centers—such as Gina Inohosa ( Gina Hinojosa ), the newly elected governor of Texas.

In the latest episode of the TechCrunch “Equity” podcast, Kirsten Korosec, Sean O, Kane and I discussed what the mid-term elections mean for the tech industry. At the beginning of Sean, it was pointed out that after Elon Musk donated $500 million to the Republican Party, “it seems he basically got nothing in return,” and the state where his company is now headquartered has “surprisingly become as blue as possible.”

Kirsten indicates that although data centers may not be the main cause of this 'blue wave,' they have become an increasingly grassroots issue, partly due to the way that ultra-large cloud providers and enterprises are pushing for project approvals. And now, 'we have seen companies like OpenAI suddenly start saying, 'In fact, we can change the policy.'"

The following is an excerpt from the conversation that has been edited to improve length and clarity.

Sean O ’ Kane :First of all, let's talk about this fact: one of the largest data center builders is also one of the biggest donors to the Republican Party. Elon Musk donated 500 million dollars – and when the final figures are settled, it might even be more. It seems that he essentially got nothing in return. In fact, all the companies he now owns are located in one state, which has surprisingly become as “blue” as possible for the first time in a long time, and possibly ever.

I believe this is the biggest factor that looms over many of these discussions. However, there were also a number of voting measures across the country that could have paved the way for faster construction of data centers. Almost all of these measures were rejected or opposed by votes.[In fact, many of the voting measures were intended to impose restrictions or suspensions on data centers, and almost all of these measures were passed.]

With the Democrats coming to power, there is at least one consensus in the tech community: this means that data centers will face many obstacles in the future, especially in places like Texas. For example, Governor-elect Gina Inohosa has quite openly stated that this is one of her campaign promises and something she will focus on implementing after defeating Greg Abbott ( Greg Abbott ).

I think the tech community might be a bit too focused on this matter. I’m really curious about what you all think.

Anthony Ha:I don't necessarily think they are overly focused, but I understand why it might feel a bit unbalanced. There are certainly many voting measures regarding data centers, but not every ballot includes this topic.

The specific dynamics in different elections may vary slightly, but there is a underlying current and overall sentiment that this appears to be a nationwide issue with cross-party implications. Moreover, it seems that the Democratic Party has been more effective in mobilizing this momentum. Of course, there are many reasons for the Democratic Party's outstanding performance on Tuesday, but the anti-AI sentiment, especially the opposition to data centers, indeed seems to be a significant factor. This appears to be a rather powerful political force.

The next two years, and possibly even longer, will be more challenging for tech companies as a whole; this is especially true for the largest cloud service providers and data center companies. I also think they might be concerned about whether this issue will continue to persist, not just affecting those elected this year, but possibly extending into 2028 and beyond.

Kirsten Korosec:Absolutely. I don't think the issue of data centers is the reason that brought everyone to the polls and contributed to what's known as the "blue wave." However, what I want to say is that data centers are increasingly becoming a grassroots issue. Part of this is due to the way that ultra-large cloud providers and corporations push for the approval of these data centers—very confidentially. They often require elected or appointed officials to sign confidentiality agreements and do not share information about the scale of the projects. Moreover, these projects are often located in areas with very sensitive environments, including the southwestern United States, which already faces severe water shortages.

So I think that many people – Republicans, independent voters, and Democrats – feel that this approach is not right. They are touched by this, but I don’t think this is the only issue at hand.

What's interesting now is that many people have been emphasizing before that AI companies simply could not operate under other conditions. Yet we've seen companies like OpenAI suddenly start saying, "In fact, we can change the policies." They just released a document they call the "Computing Park Policy Blueprint" ( compute campus policy blueprint ). So what's the result? They no longer require signing confidentiality agreements. They will share their plans and are also said to be reducing secret operations.

I believe that this indicates that when you establish a certain level of regulatory certainty in the market, or at least send signals indicating a direction of development, companies will respond accordingly. If you don't do so, they may not take the initiative to do what we hope they will.

Anthony:One point I would like to emphasize is that they refer to this as the “Computing Park Policy.” In addition to listing these policy changes, this effort is also an attempt to rebrand data centers, as the term “data center” has become rather negative or problematic. Therefore, they no longer call them data centers but instead “computing parks.” I’m curious whether you think this new terminology will be effective.

Sean:What I mean is, this is just absurd. Come on, it won’t change anything at all. It will only cause them extra trouble. For a company that claims not to focus on side quests anymore, OpenAI still seems to really enjoy going off on tangents everywhere. This is just the latest example that makes you wonder: why bother spending time on this? It doesn’t seem to have any real impact at all.

Kirsten:I have a great idea for OpenAI. Since it's currently popular to make things that seem threatening look more cute, they should create a mascot for the “Computing Park” – a cute and adorable character – and use that to represent the park, instead of showing off data centers that consume electricity, energy, and water.

Anthony:If these were just lovely computing parks, then they should build their offices there or work next door to see what the results would be.

What I'm still thinking about is to what extent this election might be the second strike in a combination of actions. We just saw that there has been a significant change in Wall Street's attitude towards many large-scale cloud providers and AI companies. Investors don't seem to be happy with them spending so much money on building new data centers and investing so much in computing power. Therefore, from a financial perspective, there is also an incentive not to build so many data centers.

I'm very curious about how this will develop. From a regulatory perspective, building data centers might become more difficult; Wall Street probably won't reward you for doing so either. But at the same time, if they want to reach the scale they aim for, they may indeed need to build data centers somewhere.