How Utah locals fought Kevin O'Leary's AI data center
Josh Jezza discusses his investigation into Kevin O'Leary's failed Stratos/Wonder Valley data center project in Utah, where local residents successfully mounted unprecedented bipartisan opposition that scaled back the development. The story reveals how the AI infrastructure boom's obsession with speed conflicts with local democracy and community interests.
Summary
Josh Jezza, a features writer at The Verge, recounts his months-long investigation into Kevin O'Leary's proposed Stratos data center project in Utah, which was supposed to be the world's largest at 40,000 acres with 9 gigawatts of power—more than double Utah's current power usage. The project was approved by MITA, a state military development agency with authority to override local land use regulations, but the county government wasn't informed until late March, just weeks before O'Leary publicly announced it in late April. When word spread through local media and social networks, residents organized immediate opposition across unusual political alignments, united by environmental concerns, tax break objections, AI fears, and anger over being excluded from the process. Unlike similar projects such as Foxconn in Wisconsin, which generated hope through the promise of manufacturing jobs, Stratos encountered near-universal opposition because data centers create no local jobs and offer minimal community benefits. The backlash was so severe that it became the defining political issue in Utah, contributing to the loss of Senate President Stuart Adams, the "king of Utah politics," and two county commissioners who supported the project. A referendum to repeal county consent was filed and is currently in litigation, effectively pausing the project. O'Leary initially responded aggressively to protesters, calling them Chinese spies on Fox News—a claim that backfired and resulted in defamation lawsuits and on-air Fox apologies, ultimately forcing him into the background behind legal counsel. Josh contextualizes this within the broader AI infrastructure boom, where hyperscalers locked in an "existential race to AGI" drive developers to acquire permits and power as quickly as possible, creating "paper data centers" (projects announced with massive capacity but unfunded) and attracting wildcatters who assemble land packages to sell at 20 times raw land value. The entire system operates at state and developer levels with no local participation, treating residents as an afterthought rather than stakeholders. Financial actors—pension funds, private credit firms, and others—sustain this velocity because major hyperscalers like Meta and Google are creditworthy enough to backstop these projects regardless of AI profitability outcomes. Even with no clear path to ROI for AI companies, the contracts alone attract investment. The opposition in Utah succeeded not through anti-AI sentiment specifically but through concrete concerns: water use near a shrinking Great Salt Lake during drought, air pollution and heat exhaust, the gas-fired power plants driving carbon emissions, and the absence of any perceived local benefit. When asked if they'd accept the data center for Netflix streaming or Amazon fulfillment, residents said no—they opposed the data center itself, not just its AI purpose. Josh notes that the political realignment around data centers is unique because there's something for everyone to dislike, creating bipartisan consensus without agreement on underlying principles. He contrasts this with Trump's recent claim that "people are going to love data centers," which has no clear mechanism for success based on the reporting. The story illustrates how local democracy, when mobilized at sufficient scale, can pump the brakes on even well-funded, politically connected mega-projects, but questions remain about whether this slows the macro-level AI buildout or merely creates friction that developers navigate around.
About this episode
Today I’m talking with Josh Dzieza, a longtime features writer here at The Verge, about a massive data center in Utah that does not exist, might never exist, and yet has already completely reshaped the politics of the entire state. Josh just published a major feature this week on the struggling Stratos data center project in Utah backed by Shark Tank star Kevin O’Leary. So I invited Josh on the show to discuss what’s happening inside the AI industry’s infrastructure boom, inside the bipartisan backlash to data centers, and how the tech industry is running into the one obstacle it can’t seem to spend its way out of: local democracy. Links: The People of Utah vs. Kevin O'Leary | The Verge Adams — burdened by data center fallout — ousted by voters | Salt Lake Tribune ‘Shark Tank’ star sued by opponents he claimed were foreign agents| NYT Fox News apologizes for airing O’Leary claims about data centers | The Hill Kevin O’Leary agrees to downsize massive Utah data center | The Verge The biggest data center ever is becoming a huge problem in Utah | The Verge America's data center future is Loudoun County's past | The Verge The left and right agree on one thing: no data centers | Decoder Decoder is a Signal Awards finalist in the Business category! You can vote to help us win here. Subscribe to The Verge to access the ad-free version of Decoder! Credits: Decoder is a production of The Verge and part of the Vox Media Podcast Network. Decoder’s producers are Greg Ott, Kate Cox, and Nick Statt. This episode was edited by Ursa Wright. Our editorial director is Kevin McShane. The Decoder music is by Breakmaster Cylinder. Learn more about your ad choices. Visit podcastchoices.com/adchoices
Key Insights
- Josh argues that Stratos failed because it combined maximum visibility (Kevin O'Leary as public face), extreme scale (9 gigawatts near a shrinking Great Salt Lake during drought), and perfect political timing (announcement during Republican primary), creating an unusually severe backlash.
- The MITA approval process allowed the state to bypass normal local consultation by establishing the project area before informing county government, revealing how speed-focused systems can systematically exclude community input.
- Unlike Foxconn, which generated local hope through promised jobs that never materialized, Stratos encountered opposition because residents correctly understood data centers create no local employment and offer no discernible community benefits.
- Josh found that AI concerns were secondary to opposition—when asked if they'd accept the data center for Netflix or Amazon, residents said no, indicating the opposition was fundamentally about the industrial project itself, not its AI application.
- The hyperscaler race for AI chips creates financial velocity through pension funds and private credit firms who view these projects as reliable long-term returns backed by creditworthy companies like Meta and Google, regardless of whether AI actually becomes profitable.
- Developers announced massive capacity data centers as 'paper' facilities—projects with potential footprint and power access but no actual funding—as sales pitches to hyperscalers, exemplifying how the race for speed encourages speculative announcements disconnected from actual development plans.
- O'Leary's attempt to use nationalist anti-China messaging to defend the project backfired by additionally insulting residents who viewed the accusation of being Chinese agents as an attack on their generations-long residency.
- Josh observed that the data center race's speed imperative has created infrastructure decisions—gas plants in remote areas instead of grid-connected solutions—that will persist for decades regardless of whether AI generates expected returns.
Topics
Transcript
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