On Friday, venture capitalist Chamath Palihapitiya warned that Big Tech firms such as Microsoft Corp. (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) could face growing backlash from local communities unless they act to offset rising electricity rates tied to massive AI data center expansion.

Microsoft Cancels Wisconsin Project Amid Local Opposition

Microsoft has scrapped plans to build a large-scale data center in Caledonia, Wisconsin, following pushback from residents and local officials concerned about energy use and infrastructure strain.

"Based on the community feedback we heard, we have chosen not to move forward with this site," Microsoft told the Milwaukee Journal Sentinel, noting it still plans to invest elsewhere in Racine County.

The canceled project, known as Project Nova, would have spanned 244 acres and included a 15-acre substation, raising concerns about potential spikes in power bills and disruptions to local grids.

The decision follows Google's reported decision last month to withdraw a proposed $468-acre data center project in Indiana after similar community objections.

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Palihapitiya: Hyperscalers Must Pay Their Share

Commenting on the rising opposition, Palihapitiya said on X, formerly Twitter, that pushback against data centers is just getting started. 

He said hyperscalers need to get serious about adding clean energy capacity or risk community revolts.

"The simple solution for hyperscalers is as follows," Palihapitiya wrote. "Option A: agree to a higher rate base with the utility so that local citizens won't see increased electricity rates. Option B: agree to pay for residential solar and storage for local citizens."

He warned that unless companies like Microsoft and Google use their "gobs of free cash flow" to cushion ratepayer inflation, "you should expect to see a lot more pushback."

Microsoft scores strongly in Benzinga's Edge Stock Rankings for Momentum, Growth, and Quality, with positive trends across short, medium and long-term performance. Get a full breakdown of the stock, including comparisons with its peers and competitors.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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