How Utah locals fought Kevin O'Leary's AI data center

0:00Support for the show comes from CrowdStrike. It's not a huge stretch to say that AI is the next major computing platform. Every platform shift changes the way we build software, and it changes security, too. CrowdStrike is defining cybersecurity in the AI era with AI Detection and Response, or AIDR, a solution for seeing, monitoring, and securing AI across the enterprise. Learn more about how leading companies are turning to CrowdStrike to secure AI and secure their business at CrowdStrike.com slash decoder. Maybe that late night ping is an urgent email from your CEO. Or maybe it's a deep fake targeting your business.

0:42Doppel is the AI native social engineering defense platform fighting back against impersonation and manipulation. As attackers use AI to make their tactics more sophisticated, Doppel uses it to fight back. Automatically dismantling cross-channel attacks, building team resilience, and providing agentic email protection. Doppel, outpacing what's next in social engineering. Learn more at doppel.com, D-O-P-P-E-L dot com.

1:16Interrupted sleep, headaches, constant fatigue. For a lot of women, these aren't three separate issues. In perimenopause and menopause, they're often the same hormonal story. And you don't have to quietly push through. MIDI can help. Because your symptoms have answers. Visit JoinMIDI.com with code VOX right now to book your first visit today. That's joinMIDI.com, code Vox, to book your first visit. JoinMIDI.com, code Vox. Insurance coverage varies. Check with your plan for coverage.

1:54Hello and welcome to Decoder. I'm Neil Apatel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. Today I'm talking with Josh Jezza, a longtime features writer here at The Verge, about Kevin O 'Leary's plans to build a massive data center in Utah. The idea was to build the largest data center in the world, a 40 ,000-acre AI campus with more than 9 gigawatts of power, more than double the average power usage of the entire state of Utah. The project is technically called Stratos, but it's more prominently known as Wonder Valley, a reference to O 'Leary's nickname on Shark Tank.

2:24Josh has spent months reporting on this project, and it's fair to say Wonder Valley has completely upended Utah's politics. What Josh found throughout the course of his reporting was that the way this data center came together, How it was planned, how it was announced and approved, and how local residents were kept in the dark, ultimately created a political firestorm so severe it stopped Stratos and its trucks. Now, the details of what happened with Wonder Valley are obviously fascinating, but the story itself is also a larger look at the AI industry's infrastructure boom, the bipartisan backlash for that build-out, and how the tech industry is running into the one obstacle it can't seem to buy its way out of, local democracy.

2:58Okay, The Verge is Josh Jezza on the Utah data center disaster. Here we go.

3:15Josh Trezza, your features writer here at The Verge. Welcome to Decoder. Thanks for having me. I'm very excited to talk to you. For people who don't know, Josh has one of the hardest jobs at the entire Verge. You just disappear for long periods of time, and then you come back with 15 ,000-word home runs, which is an enormous amount of pressure, but you keep hitting them. It's a great job. Kevin might say that editing those 15 ,000 words is the hardest job, but down to something manageable. Kevin Wynn is our features editor who works very closely with Josh. The home run we sent you out to get this time was the story of what happened with Kevin O 'Leary in Utah, where he promised to build what was going to be the biggest data center in the world.

3:58He was all over the news talking about building the biggest data center in the world. that was called Stratos. He was calling the entire development Wonder Valley. This thing fell apart in a bunch of anger from the local community. There's a defamation lawsuit because O 'Leary referred to all of his critics as Chinese spies on Fox News. Fox News had to apologize on the air. When you started reporting on this story, it struck me that there would be some similarities to the huge feature you wrote about the Foxconn project in Mount Pleasant, Wisconsin, my hometown, where President Trump announced that Foxconn was going to build a massive LCD factory in the middle of Wisconsin.

4:36There would be 13 ,000 jobs, and none of that happened. And actually, what's funny about that is it's now that land is being used for a Microsoft data center, which is just maybe the natural end state of all things. Walk me through those just at a high level. What did this feel like to report? I did not expect this to feel so similar to Foxconn initially, because unlike the Foxconn project, the data center build-out is real and at least theoretically can make sense in many cases. Like these things are actually getting built unlike an LCD tab in the middle of Wisconsin. It turned out that there are more parallels than I thought in, I mean, one, just sort of the actors that you have.

5:20It sort of takes place mostly with local officials and planning meetings and things like that and angry residents. But also there's a lot more kind of data centers on paper, speculation, things that are maybe real, maybe not, that are difficult to suss out than I was fully aware of going into data center reporting. Let's start at the very start of this project. There's an enormous cast of characters involved. There's a whole bunch of government agencies. But this starts with people in Utah looking at, what is it, 40 ,000 acres of empty space and realizing that something is about to happen. Most people in Utah, except for a handful of people who own property in this remote valley, some people in the state government at this one agency that becomes involved, a few real estate developers, everyone except that maybe like dozen people or so found out about this project when Kevin O 'Leary starts talking about it as an enormous data center that he's building in Utah called Wonder Valley or sometimes Stratus, depending on what program.

6:30word they're using at the moment. But he comes out in late April and says, you know, we're building this giant thing. And that's the first most people in the county and the state heard about it. How did he get the approvals to even begin saying he was going to start building this data center so publicly if no one knew about it? It is partly because it ran through an agency called MIDA. It's like a state development agency that deals with projects that have some military purpose. I think the military purpose can be fairly tangential. They have a luxury ski resort that gives veterans discounts. But it began as a way to create projects on military property that was unused or could be put to more economic use.

7:22And then the taxes go back to the state, some of which can fund military developments. It also has a lot of power to override local land use. It basically becomes the municipal government in whatever project area it establishes. So if it establishes a project area, in theory, it would really speed up all the sort of permitting and zoning and other regulations that can be a huge problem for data center projects. In order to establish a project area, the board has to ratify it. All the landowners in the area have to give their consent. And then the local government, in this case, the county, has to give its consent.

8:01The issue with this is by the time Kevin O 'Leary is talking about it on Fox in late April, MIDA has approved it. The county has not. The county didn't even know about it until about a month before this happened. So did Kevin O 'Leary just go to this obscure military agency and say, I need a bunch of land in Utah and get it? According to the documents we have, he starts asking around at the state level with the governor in January, in early January. Then the project gets passed from the governor's office to MITA. So January, February, he's basically going around, which is not uncommon with these developers, state to state, being like, I want to build a data center, what do you got?

8:41and whoever kind of gives the best pitch, the best, you know, you can have this property, we're going to make permitting easy, we have these tax breaks, wins. And this is also quite similar to what we saw with Foxconn, right? And a lot of big development projects. People do this sort of beauty pageant, like we're auditioning this day, we're auditioning this day. It's a race, there's a competition, who's going to win? And so there's some of that going on there. O 'Leary has been very publicly out in front. His big defense of the project is, well, states compete with these tax breaks. And Utah gave me these tax breaks.

9:19Somewhere in there is a big disconnect from the actual people living in the area and the process, right? I mean, that's the conflict here. That's the real heart of the story is eventually the people in the area find out this is happening and they don't want it to happen and they mount furious pushback. What happened there? Yeah, it's a really interesting case with Stratus where all of the conversations until very late are happening at the developer and state level. And in this case, they literally forgot or failed or for some reason did not tell the county government that this was happening until very late, whose consent they needed.

10:02And so that happens in late March. The county commissioners start hearing rumors that, like, apparently there's a data center coming. They have no idea. They ask around. The state says, we're sorry, I forgot to tell you, essentially. But we really need your approval fast. The county commissioners then have a meeting in late April. And that's when word starts to trickle out. And then Mida votes to approve it two days later. And then kind of over that weekend in late April, you've now had two public meetings. There's local coverage. People start talking about it saying, oh, did you hear about the data center?

10:36Several people found out about it, you know, at the coffee shop, at the grocery store. They just hear about it. They see it on Facebook. They're like, oh, there's a big data center coming. For some reason, the Shark Tank guy is involved. And that starts to kind of trickle out late April when you start to see that conversation happen. No one was happy about it. Everyone, you know, one of the interesting things about data centers right now is social media is so full of data center backlash stories. People hear data center, they like know broadly what's coming, some of which is exaggerated, some of which isn't.

11:08But like, you don't need to get people up to speed that they realize, oh my God, there's this huge project. It's supposed to be, you know, they're saying it's nine gigawatts and it's coming to your metaphorical backyard. This is the big difference in my mind between the Foxconn reporting and the Stratus reporting you did. So many people in Wisconsin were excited about the promise of a giant, illusory LCD manufacturing plant that they ignored the very obvious fakery. And in the course of that reporting, you would literally go to empty buildings and point out that they were empty. And Foxconn would issue statements saying they were not empty.

11:47It was all just built on people's hope, right? It was an inkblot test about whether manufacturing could come back to the Midwest. And so many people wanted to believe that, that they ignored the obvious realities. In this case, if they had let Kevin O 'Leary build a data center, it seems very likely that he would have built a data center. But the people there did not want that. It was the very opposite. All of the hopes and dreams were replaced by people's anger and fear about AI and maybe what they'd heard on social media. How did that play out in this story? Because that feels like a massive point of departure.

12:22And Stratos is a really interesting case because it is kind of what you've seen played across the country, but times 100 because Kevin O 'Leary is involved and has sort of knack for attention. But the response was immediate. I mean, people found out about it, you know, through local coverage. They start organizing to attend the next meeting. It's already contentious. People are calling out questions. They're not happy about it. And Kevin O 'Leary starts talking up how huge it's going to be. And it really just escalates. You have the weird political alignments start to form. Kind of everyone is against it.

12:59And activists do something interesting that is kind of the most unifying issue in politics right now. Because not because people agree on data centers, but because there's something for everybody to hate. And so you have people who are upset for environmental reasons. You have people who are upset about the tax breaks. You have people who are upset about just kind of like surveillance spheres with AI. You have just kind of everything in there. And people start protesting right away and saying, you know, we don't want this is something that you hear all the time at these protests. It's just really different from any kind of other big development projects.

13:40because not only are people acutely aware of the costs, but there's no pros. It's not like people are excited for jobs. And Utah is not, unlike Wisconsin, not a de-industrialized area. It's an agricultural community for the most part. Like people are not nostalgic for the golden age of manufacturing. And they don't believe any of the jobs numbers anyone tosses out with data centers, I think rightly for the most part. And there's just not a lot of upside, You know, your county taxes might go down in 10 years. It's just not that exciting compared to where you're going to have a giant industrial project on the horizon.

14:19You talk to a lot of the protesters, the people who succeeded in having this project scaled down pretty dramatically. Who are these characters? What are they like? There's a wide range of people. I got some, one of the records that I thought was really fascinating that I got came from kind of a state intelligence fusion center thing, talking to the sheriff saying, you know, just heads up. It's in theory, a very combustible group of people who's going to be attending one of these rallies. You have, you know, conservative groups with names like Utah Patriot Alliance or something like that. and the sort of water preservation, like Salt Lake activists.

15:02Normally these groups just counter-protest each other, but here they've all come together for the same purpose, that they hate this data center. And so you have just like a very wide spread of people, even within one of the key activist group. It's a lot of people who weren't activists before, just local people, some conservative, of some progressive people with environmental concerns, people who are just upset about it. A lot of people upset about the process, feeling cut out, like this is something that has really, is really offensive to them that this happened in their county with their county government and that they weren't told, they weren't brought into it.

15:42They had no say. I think that galvanized a lot of people. The people I spoke to, they're mostly residents of the county or sometimes nearby counties, but everyone who was kind of most involved was a resident of the immediate area in Boxelder, not necessarily Hansel Valley, the remote region where the center would be based.

16:13Support for the show comes from CrowdStrike. AI is already fundamentally changing how companies build products and run their businesses. If you listen to the show, you probably already know this. But while AI drives innovation, every new model and agent also creates new cybersecurity vulnerabilities. That's why CrowdStrike built AI Detection and Response, or AIDR. AIDR helps organizations discover where AI is being used, monitors AI activity at runtime, and helps teams detect, investigate, and respond to threats involving AI systems. As companies adopt AI, security has to be built in from the start.

16:53More than 70 % of the Fortune 100 trust CrowdStrike to protect their businesses. Now CrowdStrike is helping secure the AI era. You can learn more about AI detection and response at CrowdStrike.com slash decoder.

17:30www.joinmidi.com

17:37Midi.com. Code Vox to book your first visit. Join midi.com. Code Vox. Insurance coverage varies. Check with your plan for coverage.

17:50Support for the show comes from PipeDrive. Sales teams spend up to 50 % of their time on admin work rather than selling, building relationships, and closing deals. They could really use a tool that covers all the admin stuff. That way, sales teams could actually focus on the work they were hired to do. That's where Pipedrive comes in. It's an intelligent AI-powered sales CRM loved by growing sales teams. Their new meeting intelligence features, like an AI note-taker, are built right into the CRM. Pipedrive automatically pulls deal history, email records, and previous conversations. You can walk into a call already briefed.

18:27During meetings, Pipedrive's AI note-taker records and takes notes. Then it turns those notes into accurate auto-drafted CRM updates ready for you to review and approve. The end result, less admin, more selling. Switch to a CRM built by salespeople for salespeople and join the over 100 ,000 companies already using Pipedrive. Our link gets you an exclusive 30 days free instead of the usual 14-day trial. No credit card or payment needed. Just head to pipedrive.com slash decoder to get started. That's pipedrive.com slash decoder and you could be up and running in minutes.

19:13When we first started talking about the story and you went off to report it, my assumption was that all of those folks would get steamrolled. Because we've seen that play out in so many of these other projects around the country. People mount some opposition. The local city council says it's already done. We have an NDA. We can't even talk about it. They scoot the meetings to the next one. There's protests. We've seen people get arrested for trying to talk about data centers at their local city council meetings. And there was just something about this one in particular because it was Kevin O 'Leary, this outsized personality, because it was so big, because the state officials could trumpet the size of the development, that it felt to me like there was a foregone conclusion.

19:55This project was going to happen over the objections of a handful of people in a very remote part of Utah. And yet they succeeded. Tell us about how they pushed the project back, where it is now, and how they succeeded. because that seems like the important part. I think the project has definitely been wounded. I don't know whether it will happen or not, but it doesn't have the momentum that it had initially. I think there's a couple of reasons for that. One is just the scale of the backlash was so extreme that it took local officials aback. I don't think anyone anticipated that it was going to be so severe.

20:33the way it was announced sort of Kevin O 'Leary's 40 ,000 acres 9 gigawatts biggest thing in the world it's proximity to Great Salt Lake which is shrinking and Utah's in a drought so extremely sensitive the developers say it won't diminish the water going to the lake but no one believes that the residents don't believe that it was just such a perfect combination of ingredients that it became and it exploded right at the beginning of the Republican primary in the state. So officials are getting asked about it constantly. People are calling their office. They're showing up at debates. It becomes the biggest issue in the state.

21:15There were a lot of casualties of the project. You had two local commissioners who lost their seats. You had Stuart Adams, who was the Senate president. Multiple sources refer to him as the king of Utah politics. It really sent shockwaves through the state that he lost his seat over this. I mean, there were other issues, but he was the MITA chair, and so he was very much at the center of this project. It really, I think, was a wake-up call for politicians. The project is not dead. Basically, what's happened is activists, local activists filed a referendum trying to repeal the county's consent, and everything, it was thrown out by the county court and now it's being litigated and everyone has kind of hit pause on it for now until that case gets resolved but the data center race is all about speed and now this is looking like it doesn't have that momentum it had earlier you know you have you're gonna have lawmakers even if the referendum gets struck down you have an extremely activated activist organization, this network that is formed around opposing this data center.

22:28And it's going to not have a very easy road ahead of it. Just, you're going to have lawmakers scrutinizing it. You're going to regulate scrutinizing it. There will be other lawsuits. It's just so unpopular. And it's so infamous. Like, why would you want to be associated with that project when you have so many other projects out there that you could choose from? There's a Kevin O 'Leary component to all of this, where he came out, he was very loud. He was the face of it. He almost didn't believe that there would be a grassroots backlash to him to build a data center. He did call all of these folks Chinese spies.

23:05He had to apologize for that. Fox News, where he said those remarks, they had to apologize on air for it. He posted an Instagram apology. You sent him a list of questions. This is real inside baseball. But to make a story like this, we do an email called the no surprises email, where we just say all the things we're going to say and people are allowed to respond to them. And his response to us was to have his lawyers like lightly threaten us, like make sure everything's accurate. We're not we're not responding to you. Make sure everything's accurate or something bad will happen. He went from being the face to being so not wanting to be a part of the story that his lawyers spoke for him.

23:38Why do you think that happened? I mean, one, now he is in a defamation lawsuit. But I found his arc to be really fascinating as a window into the politics of data centers because he came out kind of in a maximum conflict, partisan posture. There's these protests. He immediately starts attacking the protesters. He reads names on Fox, says that they are being paid by China. He goes on the offensive against them. And it just doesn't work. I mean, more than it doesn't work, it backfires. Like it really, like many people I spoke to in Utah, came out because they were additionally insulted by the idea that they were being accused of being Chinese agents, you know, when they've lived there for generations.

24:22On another political issue, maybe he could have gained some support. He's trying to play this race with China nationalist card. But it just didn't work here. And it only kind of mobilized more people against him. And he went on Tucker Carlson. Tucker, for the most part, was skeptical of the China argument and kept pressing him on, you know, why would anyone want a data center? Like, why should anyone support this project? It's just really interesting to see the degree to which he failed to get any kind of partisan traction on this with that strategy. You know, there's an interesting parallel here to the CEO of Flock, whose initial defense of Flock was to try to use MAGA talking points, and it also didn't work.

25:13And there's something about the political realignment here that is utterly fascinating to me. And it's coming right up against the speed that you mentioned, right? There's an entire industry that is built around trying to acquire money from hyperscalers as fast as possible by getting these deals done, by getting the permits, by going through the process as quickly as possible. And it feels like our politics in that process are in absolute conflict. Talk about that process a little bit. You would think that they would understand that they're up against the actual people in these communities not wanting this to happen.