Tech Giants Have Long Kept Data Center Deals Secret. Public Outcry Is Forcing A Rethink

Data center builders for years have asked local government officials to sign nondisclosure agreements before discussing potential projects.

Now, as public opposition to data centers intensifies in communities across the U.S., these NDAs are becoming political liabilities, prompting some developers and tech giants to reconsider whether the benefits of secrecy outweigh the costs.

In March, Microsoft announced it would end its use of nondisclosure agreements with local governments in areas where it is building data centers. The decision — a first among major tech firms — came as a surprise to many in the data center sector.

The use of NDAs with public officials is widespread. According to a Mary Washington University study published last year, 25 of 31 local and county officials surveyed in Virginia had signed NDAs pertaining to data centers. 

But there is growing recognition that the use of NDAs is becoming a public relations liability in an industry struggling with worsening perception. As major data center projects now routinely face organized local opposition, the revelation that public servants have agreed to withhold information about controversial projects from their constituents has repeatedly emerged as a political flashpoint that has derailed proposed data centers.

“I realize that NDAs are an important part of doing business, but at the same time, sometimes data centers can tend to go overboard on some of that,” Nick Myers, chairman of the Arizona Corporation Commission, said at Bisnow's DICE Southwest event in April. “Letting other people view what's going on so that it relieves the political pressure is an important part of the discussion.”

Tech giants are pouring resources into winning over communities as local opposition becomes a primary impediment to building the data centers needed to fulfill their artificial intelligence ambitions. Microsoft framed its decision to stop using NDAs as part of a transparency effort intended to build trust in the areas where it hopes to develop. 

“We’ve made the decision that being transparent with the communities where we operate or seek to operate is paramount,” the company said in a statement announcing the policy change. “This shift is about strengthening public trust, enabling better dialogue, and ensuring that our growth is matched by meaningful engagement.”

Thus far, Microsoft is the only major tech firm to make such a commitment.

At an Ohio legislative hearing last week in which a Microsoft official discussed this pledge, representatives from Google, Amazon and Meta declined to make the same promise, telling lawmakers that NDAs remain a necessary part of their development playbook, Cleveland.com reported. 

Still, a growing number of developers responsible for delivering data centers for these tech behemoths are calling for an end to the practice. Many such firms are bound by their own NDAs with Big Tech tenants that prevent them from disclosing the end user of a data center project, even after it has already been announced. 

They say these NDAs make it difficult for the firms building these facilities to build trust in the communities where they have their boots on the ground.

Some also question the ethics of asking public officials to withhold information. 

“Attempting to force elected officials to sign NDAs is generally a bad idea,” Dan Golding, chief technology officer of Appleby Strategy Group, said at a Bisnow event in February. “It sort of subverts the democratic process.”

Companies typically ask local officials to sign these agreements early in the development process, when developers are considering land acquisitions and engaging with local officials about zoning, permitting, infrastructure needs and potential economic incentives prior to submitting formal applications. 

While such conversations are common across commercial real estate, the data center industry has long been particularly zealous about seeking confidentiality. Industry executives say that stems in part from a culture of secrecy that has historically permeated a sector in which firms often viewed “security through obscurity” as a competitive and operational advantage. 

“The problem is, inside the industry, the first rule of Fight Club is we don't talk about Fight Club,” Oracle Vice President TJ Ciccone said last month at Bisnow’s DICE: National event in Maryland. 

Tech giants and developers also have strategic reasons why they often want confidentiality in the early stages of a project.

Hyperscalers like Google have argued that NDAs allow companies to engage with local officials while protecting proprietary information about facility designs, new technologies and their overall digital infrastructure strategy. 

There is a more transactional consideration as well: land prices. In many markets, data center developers are willing to pay significantly more for a site than other buyers. Keeping a project under wraps prevents landowners from realizing a data center is the intended use, allowing developers to avoid paying the premium that often accompanies data center sites. 

“The minute the person selling the land knows who's going onto the land, the price goes up exponentially,” Neila Wilson, regional director of data center engineering and operations at Visa, said at DICE: National. “There is, from a business perspective, some intentionality there.”

For these reasons, there remains widespread sentiment across the data center space that NDAs are needed to bring new data centers to market. Some industry executives also push back on the notion that information is being hidden from the public. 

While there may be secrecy in the earliest stages of a project, Ciccone said, almost every new data center faces significant scrutiny and goes through a public process in which developers provide all the pertinent information needed for residents and lawmakers to make informed decisions. 

“NDA or not, that exposes all of the information about the data center that's going to be proposed,” Ciccone said. “It's no longer just a blank check to put a data center where you want to.”

But a growing number of industry leaders say the political winds shifting against data centers should lead to maximum transparency. 

Ethical concerns aside, NDAs are proving to be project killers.

Data centers have become wildly unpopular, and new proposals are all but guaranteed to generate local opposition. So building trust with skeptical local groups is paramount to gain the support needed to bring a project to fruition.

Fair or not, the idea that a developer of a major tech firm asked elected officials to hide information from the public is a red flag for many residents. It can appear to confirm fears that a large corporation and politicians are colluding to foist a bad deal on the community for their own benefit. 

Such sentiments were on display last week at a contentious community meeting in Boyd County, Kentucky, where AI cloud provider TeraWulf hopes to build a 285-acre data center campus.  

The three-hour meeting featured a barrage of negativity toward the project from residents, with much of the outrage focused on the revelation that local officials had known about the project months before it was revealed to the public.

Residents framed the NDAs as a betrayal, and they said the secrecy made it hard for them to trust anything the developer or local officials told them. 

“You’re starting it off shady,” resident David Sparrow told community leaders, according to the Kentucky Lantern. “We can’t trust that. At least that’s the way I feel now.

“I think we should hold the people accountable that signed this NDA that left us in the dark for so long.” 

With similar scenes playing out in towns from Limerick, Pennsylvania to Menomonie, Wisconsin, a developer’s willingness to eschew NDAs in favor of full transparency can be a competitive advantage over other firms looking to build in the same area, DBT Data President and CEO David Tolson said at DICE: National. 

Tolson said DBT experienced this firsthand. The company attempted to build a data center in a community that had rejected five previous projects due to the unwillingness to reveal the site’s end user and other key details. DBT advanced its project simply by being transparent and committing to share detailed plans with residents and stakeholders prior to the plans being filed. 

“We now have their support simply by engaging, being present and being transparent,” Tolson said.