Kanter’s Wrong: Data Center Power Won’t Be a Major Antitrust Issue

By Paul Steidler: In a disturbing October 21 story, “Data-Center Power Use to Become Major Antitrust Issue,” The Wall Street Journal gave a forum to Jonathan Kanter, the chief antitrust official in the Biden Administration, to sketch a literally dark vision of America’s future.

Central to sustained U.S. economic growth is the construction of AI data centers, which require large amounts of electrical power. That means attracting multi-billion-dollar investments and curtailing regulation as an old and antiquated grid is modernized and cleaner, more efficient generating power sources come online.

As Assistant Attorney General (AAG) for the U.S. Department of Justice’s Antitrust Division from 2021-24, Mr. Kanter led an aggressive antitrust enforcement regime.

He warns, “Looking ahead, energy power is going to be an extremely important area of focus for antitrust enforcers. Data centers consume more natural resources, and the cost of power goes up, and data centers consume power at the expense of local communities and businesses.”

Several things are wrong with his statement and the story’s focus.

First, energy production and distribution are already highly regulated by the Federal Energy Regulatory Commission, regional transmission organizations, and state public utility commissions. At a time when more power is imperative, the last thing needed is added bureaucracy by getting the U.S. Department of Justice or Federal Trade Commission enmeshed in these issues.

Second, the tech companies investing billions of dollars in data centers have a bunch of options. Many states, including Oklahoma, Mississippi, Louisiana, and Ohio, are courting data center investments.

Tech companies can also construct power sources just to serve their data centers, take it from the public grid, or work through some combination. The public benefits from data centers even if they generate their own power, as they are substantial economic engines for the community.

But when the tech companies get power from the grid, often through long-term power purchase agreements, it bolsters generating and transmission companies’ ability to make investments for more affordable, reliable power. State and local officials are on the front lines for such deals, and they have a vested interest, regardless of party affiliation, in ensuring the data centers are a win-win for the public and the company.

Third, the Trump Administration is making an all-out push to get new power up and running. This began on January 20, when the President declared a national energy emergency, and there have been numerous executive orders since then to accelerate energy production. Having a federal antitrust regime needlessly bearing down on tech and energy companies would negate the benefits of cutting red tape in other areas.

So, while former AAG Kanter’s statements appear to have little if any chance of becoming reality during the current administration, they offer a warning about potential regulation and what some powerful folks are thinking. And that troubling threat is just one more reason why the U.S. needs to build data centers and their power sources as soon as possible.