Can AI Keep Going After The Democrats’ Big Win? — With Teddy Schleifer

0:00 Now that the Democrats have swept the US midterms, is the AI industry about to get stopped in its tracks by a hostile government? We'll talk about it with New York Times reporter Teddy Schlifer right after this. Welcome to Big Technology Podcast, a show for Coolheaded and Nuance conversation of the tech world and beyond. Stop the presses. We had an episode scheduled for today, but after the big Democrat win in both the Senate and the House, we could see some major shifts in the AI build out coming. So, we scrapped our traditional plan for Wednesday, and we're bringing in New York Times reporter Teddy Schlifer for an emergency episode about the implications, the potentially far-reaching implications of what this midterm win from the Democrats, who will potentially be extremely hostile to the AI agenda could mean for the AI buildout and the massive business that is expecting the buildout to continue to go as planned. Teddy, it's good to see you.

0:55 Welcome to the show. >> Thanks for having me. So, I'm looking at the New York Times homepage right now. headline at the top, Democrats will have huge majority in the House. the Senate right now has 54 Democrat seats to 44 Republican seats. And the House, where they're still counting, has 230 Well, they're counting in still counting in both, but the the House has more outstanding 237 Democrat seats to 147 Republicans. obviously this is going to have major implications on the AI buildout.

1:29 because a lot of these candidates were talking about data centers. They're talking about AI safety in their victory speeches like John Assaf did the Georgia senator when he won on Tuesday. So, what are the implications for the AI buildout? and what's your broader reaction to what happened off the bat? Yeah, I mean it's it's clearly going to be a a new time for the tech industry. I mean this is not the 2025 2026 bull run that the industry had politically. I mean going forward there is going to be obviously a Democratic majority in both chambers which are going to be not as pro AI and not as pro data center as the Republican majorities that this industry has enjoyed for the last two years. And you know just how bad it is I don't I don't totally know yet. but the I think we're going to look back on the last year and a half as as as a bygone era when this this it was so unencumbered that we we didn't appreciate it in the moment. Now for me when I think about US politics I always think well the bark is typically louder than the bite and especially regarding their regulation of tech and the rules they've applied to tech they haven't really done much even though there have been like clear exes like all these companies lost all the big tech companies lost antitrust cases or had to settle them with the FTC and the DOJ and yet nothing really stopped them. I do wonder if this time is different or at least if we're going to see an even greater backlash than we did previously.

3:07 And one of the things that makes me think about this is a lot of the things that need to happen for the AI buildout to continue are physical, right? The world the word is build out. They need compute. They need data centers to continue to expand and serve their models. And let me just read you a a headline from the Washington Post. n a n a nationwide backlash against data se centers erupts at the polls. Voters in at least 38 jurisdictions across the country pass bans or restrictions on data centers on Tuesday. 38 jurisdictions reflecting the widespread public revulsions to the facilities and adding to the grow growing push back on the ambitions of the artificial intelligence industry. I mean enough said, right? 38 jurisdictions voted were for bans or restrictions on data centers. So on top of this wave where by the way they're probably going to be reading the tea leaves here. You have a massive amount of voters coming out and saying we don't want data centers in our backyards. So what do you think the implications are there?

4:05 >> Yeah, I mean this is as close to a national referendum as you're going to get. I mean this is obviously a brand new industry with or the politics are still being sorted out in real time. and clearly a lot of Americans in 38 different places at least feel the same way. I I haven't reported a ton on on on these different or at all on these referendum or referenda, but clearly 38 to zero is is is a pretty good average. I mean we also saw for the first time this election the data center industry do their own super PAC which is kind of a I think speaks to the ways in which the political winds are blowing here which is that all of this political energy around AI I think is going to be channeled much more narrowly into the next battle around data center specifically where why do you start a data center super PAC it's because you have you face political challenges or or policy headwinds And the data center super PAC spent a bunch of money to try to help elect Darlene Graham in South Carolina.

5:09 She did not win. and I think going forward a lot of the as a lot of these fights kind of take off, you know, there's going to need to be money spent on behalf of the data center industry because clearly regular people are voting the other way. I mean that's why advocacy operations happen. It's to basically convince people to do something that they wouldn't do otherwise. a and right now a lot of voters are registering their point of view and the data center industry is only beginning to kind of play play offense. So, you know, I think we're just getting started here and I think next 2028 I think there's going to be a ton of spending politically on data centers.

5:55 Now, you're the world's pre-minent reporter on how tech money influences politics and >> Thank you. >> It's true. It's true. >> Okay, folks, for those listening, Teddy and I are friends in case you can't figure it out, but it's it's really true. No one does it like you, Teddy. And I just want to hear your perspective on what your sources are telling you about what the implications are going to be if you can share because I would imagine they are likely like the people who are politically active in tech spending money to get their agenda. They were very pleased in 2024. I imagine they're equally terrified now.

6:35 >> Yeah. Yeah, I mean look, the the the comeuppance here for for the tech industry, I think, is still TBD, but clearly like I don't think we're appreciating just how good they had it. you know, on on AI in particular, I mean, this was an administration that was very pliant to the industry. the the you know Trump is still going to be the white in the White House. It's not as if there's going to be like massive you know democratic reforms that are going to be passed from both chambers and and signed by President Trump. I think I think it's probably unlikely but there's going to be guardrails now in a way that there wasn't at least in terms of legislation. and there's going to be investigations too, right? I mean, you know, take Elon Musk who, you know, is is suddenly going to be in in the barrel in a way that he was not, two days ago. So, whiplash is coming, right? I mean, you went from being, you know, a co-president or or for or a while effectively kind of helping lead the US government to suddenly being like testifying on the hill. And there's going to be this whole whole effort by Democrats, I think, to atone for the last two years of what Democrats see as as an industry run a muk. So, I expect it to be pretty brutal. I think that the political calculus is changing rapidly for all these companies too.

8:04 Like I think there's going to be there's been all there have been all these jokes I've seen on Twitter or about like these efforts by democratic or tech companies to like re-mbbrace their DEI policies and and you know rembrace kind of their their democratic bonafites. Like it's a joke and it's funny because there's an element of truth to it. I think there's going to be, you know, tech companies that are, hiring or promoting, you know, government relations heads who are tied to the Democratic party and, making sure that they know that, they have, a Democratic mega donor in leadership, stuff like that. Part of this is perception. And I think the companies wanted to fulfill a certain perception from 2025, 2026, and they'll fulfill a different perception in the next two years.

8:52 Okay. And as much as you can say is the vibe around the people that you speak with like this is not going to be a big deal or or oh goodness we're in trouble like what is their basically emotional state today? >> I think it's the latter. I think it'll be a big deal for the tech industry and it'll be it'll be painful >> and they realize that. I don't know. I don't know if they realize that yet, but the I think there's there's they're beginning to realize that the things are I think there's still the election last night was very shocking in a way that people are not totally grappling with the results yet. Also, this is I'm saying this is only two years like like you know a lot of these US senators were obviously just elected for six years.

9:33 So, you know, there's going to be a lot of Democrats who ran for the Senate on a agenda at least when they ran on like taking on the billionaire class, taking on the AI industry, taking on data centers. and these people are going to be in office for the next six years. so, it is not as if these things will be easily reversed. So, they have six years to grapple with it. and and and I in a lot of ways that shows kind of the generational impact of this election is that there's all these accidental senators or accidental congressmen who are going to be here for at least some of them will be here for a while and and that's going to reshape kind of the political political context of tech. Mhm. you know, it is interesting because the tech leadership did embrace Trump and the Republican party pretty intensely.

10:28 Now, there's nuance there, right? It's like, of course, like David Sax and the All-In podcast and Jensen Wong have been like very big, you know, supporters of well, supporters of Trump, they've praised him. You know, Sax works in the administration. But to Democrats, that's also, you know, there and not everybody has been on that level. But I think what really matters is what it looks like to Democrats. And to Democrats, you know, they're going to look back at those pictures of all the tech CEOs at the inauguration.

10:59 they're going to look at the vibe that they're getting from Silicon Valley. They're going to look at the polling numbers for AI, which are miserable, right, in in the toilet. and I'm curious what you think, whether you think that will embolden them to, you know, take more aggressive action or make this one of their bigger issues. >> Yeah. I I I I think that's true. I mean, I mean, tell me what you think is going to be what do you what what's striking you with that question.

11:29 >> Well, I I I think so. I mean, I it's one of it's almost a perfect storm. Like, we're we're about just think about this. the election swayed on, you know, depending on who you ask, swayed on a couple of things. I would say number one is cost of living and and maybe one a is the war in Iran, which comes back to cost of living because of, you know, the because of the what its impact on fuel prices and hence goods. and you have so you have a nation upset about cost of living and ready to like legitimately vote out any party that they think is making it worse.

12:11 On the other hand, you're or on in column B, you're going to see these AI IPOs come out and we talked about on the show on Friday how many multi-millionaires the anthropic IPO is going to is going to mint. >> how many multi-millionaires the OpenAI IPO is going to mint. the fact that Nvidia is a five trillion dollar company etc etc goes down the line and so if you're if you're it's interesting because regulating tech has never been a winning political issue like think about Elizabeth Warren's campaign she went big into regulating tech you know how she placed you know as a non-factor that was one of her bigger issues so the political calculation is not straightforward but if you look around and you see what's going on in the country, somebody's going to make that a big issue. And if they start to get traction, you know, you could see a pileon effect. That's my perspective here.

13:08 >> Yeah, I I I I I see that for sure. I mean, clearly there's going to be these elections are are in addition to being meaningful for policy criteria. I mean, like these politicians read these election results and act in ways that are response to them, right? I mean, the 2028 campaign is is shaped by the 2026 campaign and 2024 was shaped by 2022, etc. And and if you're a Democratic politician right now, you're sort of observing what types of messages are getting through, what types of things are working. and Republicans as well, right? I mean, I think, you know, JD Vance is, you know, put out a statement today that was laced with 2028 presidential campaign intrigue because it's like a response to what he sees the electorate is saying in 2026. And that's sort of politics is is responding to elections and responding to what the perceived narrative or or mandate is that that arises out of those.

14:12 Senator Ed Marky, Democrat, responded to a post on X live televised trials of big tech executive executives when and he wrote they are going to need to plant new forests for all the subpoenas we'll be printing. >> Yeah. >> is that bluster or you think we could see a march of AI CEOs and big tech CEOs coming down to Washington? >> Yeah, definitely. I don't think I don't think that's bluster. That's that that's that's that's easy. I mean, you know, some Republicans will probably join them in that, >> right? And so, what do you think the the is it just like, bully pulpit stuff where you sort of you talk down to Sam Alman from your high desk and it becomes viral on YouTube, or is it >> that's what everyone else has done to date, right? I mean, >> right.

14:59 >> Yeah, sure. Let's I mean run back the the same aesthetic and logistics of the of all the the you know social media trials so to speak in in before Congress in the in the Trump term and the Biden term. I think there's going to be a lot of scrutiny on on all these AI company CEOs. >> Yeah. >> Do you think those are actually effective? Like I I look back and it's interesting because I was in the room for the Mark Zuckerberg hearing the famous one where he said, "Senator, we run ads."

15:31 >> And you know, you almost expected it to be this excruciating moment for Zuckerberg, but >> he handled it well enough. It almost shifted the public sentiment on Facebook to a degree and nothing happened to the company. and you know, the the the meme became, you know, Zuckerberg stands up to the bullies as opposed to Zuckerberg is the bad guy. So, I I am curious like if you think these things are effective and what you think the effect could be on AI companies.

15:59 >> I don't I mean the the they're effective and that they that are like public spectacles, right? and that's, you know, if you're a Democratic politician who wants to kind of keep the spectacle, you know, make it make it as spectacular as possible. you know these are easy targets right I mean Altman or Daario or you know Dennis or whomever I mean I think there's an element of of their spectacles because the public is kind of on your side so there's a flogging of them and clearly I don't I mean effective in what in in kind of making you you can successfully flog them if you do these things what is that what is that achieving I guess is a kind of a question about what is it why are these people in Congress to begin with is just kind of >> Yeah.

16:50 >> Yeah. I I think it all it all boils down to data centers effectively is will these will these companies have well will these companies ultimately they need public support to be able to build data centers and they need to build data centers to grow. I mean, we're living in the middle of a pretty big compute shortage. And there have been a few states that have been friendly for these companies to build their data centers in Virginia, Texas, and Texas actually had a pretty interesting result where the I I would say mostly pro, although recently somewhat more lukewarm, governor, >> Abbott has lost. And now there's a Democrat that's going to come in. And in fact, like I was speaking with somebody recently who's like who watches this very closely and I said, "How are you feeling about the midterms?" And this person said, "Up until recently, I was feeling fine until I saw the Texas polling numbers and now could be a real issue." So I'm curious to hear your perspective on on what happened there.

17:51 >> Yeah, I mean, Texas, I think, you know, is like I saw some stat that it was like 30% of like data center development is in Texas. like you know this is this is a a state that has embraced it and Abbott you know has embraced the issue and he's a powerful I think three-term governor now he's ending its third term and you know that's an earthquake there right I mean you know Gina Hinosa has like really tried to use that as as a millstone around Abbott and has been pretty successful or you know she won based in part on that and you know that's why there was so kind of tech spending in or one one reason why there was so much tech spending to try to save Greg Abbott. I mean Elon Musk gave $5 million to the Abbott campaign in September. and clearly I mean obviously his companies are based in Texas and there was an effort by the Musk operation to make sure this did not happen. And now it's a sea change in Texas politics. I mean I started my first job was in Houston, Texas covering the Wendy Davis campaign in 2014. And you know it took 12 years for that to finally pay off. And you know still sort of feels unbelievable given the PTSD that I think lots of Texas Democrats and lots of Texas-based reporters have had about this ever actually happening. to see it actually happen. you know it's it's cool to witness history. Darling Graham, Lindsey Graham's sister, she was one that was supported in a major way by this data center industry super PAC that you reported on.

19:28 >> Yeah. >> I don't think she lost in particular because of her data center perspectives. I think she was asked in one debate you know a foreign policy question. She said I don't really pay attention much to foreign policy or something along that line. But it does seem like she was one of the main candidates they were hoping to get elected and that's not going to happen for them either. Yeah. Yeah. I mean, there's always a lot of reasons why people lose lose or or win. And I think one of the one of the challenges about kind of super PACs and political spending in general is like people, you know, everyone who wins is a genius, everyone who loses is an idiot. And like the reality is, you know, this is a wave election. And and I don't really know if any of these kind of campaign interventions like really worked. you know what we could talk about Musk if you want but I mean everybody who spends in these races is trying to shift public opinion and public opinion here was pretty baked and it didn't quite succeed >> right okay before we go to break because I do want to talk to you about Musk and I want to talk to you about the billionaire's tax yeah interesting thing that's happening in the market today that I was somewhat surprised by but I probably shouldn't have been Bloomberg has the headline big tech sores on bet Dems will save AI spenders from themselves. So clearly the market believes that the Democrats or whoever it will be will be successful in their attempt to stop AI buildouts.

20:57 This is the Bloomberg story. The shares of US technology giants led the market higher on Wednesday as investors bet that a Democratcontrolled Congress will slow the massive spending on artificial intelligence that's eating up free cash flow. Amazon jumped 8.3%, Microsoft 7%, Alphabet almost 6%, Meta 3.6%. I mean, they this is crazy. Together with Apple, which has avoided heavy AI spending, and leaped more than 6%, the five tech beas are on pace to add nearly a trillion dollars in market value on Wednesday. all stemming from this belief that that that the government is going to make them stop spending on data centers. It's remarkable.

21:39 Yeah. I don't know what to say. All right. Okay. Well, I'll leave that as the last point. it's going to be very interesting to see what happens on that moving forward. Okay. When we come back, a word about Elon Musk, a word about the billionaire's tax. and then, we'll let get Teddy get back to his reporting. So, I'll be back right after this. And we're back here on Big Technology Podcast with Teddy Schlifer, reporter at the New York Times, covering billionaires and their impact on the world, tech money, and its effect on politics. a lot going on on Teddy's beat, of course. Teddy, you joined the Times in 2024, just as Elon Musk was, spending a fortune, getting close to Trump, being a major national political player.

22:25 >> You put your your sort of scorecard up on X last night, owned by Elon Musk, of course. You wrote a very overly simplified report card for big money tonight. Elon Musk lost, Republican donors lost, crypto lost, billionaires tax DBD. you also pointed out that Elon Musk had a post on X Tuesday morning said vote red today and then that disappeared from his profile. what do you think the impact of this is going to be on Musk?

23:01 Musk spent, you know, nearly $500 million. It's the most that anybody's ever spent on an election. ever when they were not running themselves. >> Yeah. Yeah. It's the most everyone's ever spent on election ever when they were not the candidate themselves. 500 $500 million in the midterms. probably more, but we'll see. you know this is a a dramatic failure for him. I mean, even though I do think it is true that there's a lot of reasons why, you know, Ken Paxton did not win in Texas, for instance, politics is a binary. It's about, you know, campaigns are a binary. It's about winning versus losing. And his people lost. you know, Republicans lost. So, everybody affiliated with the Republican spending operation lost. and and you know, it just happens that Musk did more than anyone else. so, it's it's a tough it's a tough day to be the the Musk team. I mean, I think they're ultimately going to have to, assess what they want to do politically going forward. you know, Musk has basically been saying that he wants to play a big role in 2028. He wants to play, you know, that this is a multi cycle effort. but, the fact that he's like deleting tweets and, you know, making jokes about his political spending suggests to me that he knows this did not go well. and I think there's going to be significant pain for him politically going forward. I mean you mentioned the Ed Marky tweet earlier, but like you know there's going to be investigations and obviously it's not just about Tesla and SpaceX. I mean like Musk, you know, oversaw so much gutting of the federal government with with Doge and Musk could be investigated or or or probed for for that work specifically, which are things sort of things that probably would not have happened in a Republican Republican le Congress.

24:59 I I am anticipating the hearing where the Democrats call big balls to testify and >> Yeah, >> that's I think I think I think I think you're joking, but also I mean I mean that's very plausible. >> Yeah, this was a guy who was involved in Doge. That was his nickname somehow. >> Yeah. >> Elon wrote, "Guess my election interfering space lasers didn't work this time." So, he's having a sense of humor about it. I mean maybe, you know, a could a silver lining for him be that because you won't be able to build data centers on Earth, his plan to build data centers in space actually becomes a good business.

25:36 >> I think the silver lining for him is that there's actually a and and this is true of of I think this is going to sound like spin, but I think there's an element of truth to it that that Republicans are more likely to win in 2028 with kind of opposition from Democrats. you know, if you're obviously the next two years will be painful for Republicans, including President Trump, but like if you want Republicans to win in 2028, like some spin I've heard is that this will be good for for them to have a Democratic foil. Maybe Democrats will overreact, try to impeach, stuff like that. and that's potentially good news for for for Mr. Musk.

26:17 >> Okay. billionaires tax, another big thing on the ballot. >> Yeah. >> I said I said TBD in that tweet, but as of as of now, it's looking like a win >> that. So, talk a little bit about what's >> a win for the billionaire tax opponents. Yeah. >> Okay. So, talk about what was at stake there and what happened. >> Yeah. So, the proposal was for a one-time 5% tax on people in California who have over a billion dollars in net worth. there was a pretty unprecedented campaign against it where over $330 million was raised into a political nonprofit. linked to Sergey Brin, the the Google founder.

26:53 This was Sergey's most significant political activity by far ever. and it looks like they killed it. you know, at the time we're recording this, you know, the New York Times has not made a call in that in that race yet, but you'd rather be the side that's that's that's opposing the tax and the side that's supporting it. And the Musk, sorry, the Brin operation had a massive advantage in paid advertising. I mean, you know, I the the pro tax side barely mounted any any campaign for it. and this kind of galvanized the tech industry and, you know, I did a story with my colleague Erin Griffith about all the ways in which Sergey and Patrick Collison and John Door were like, you know, getting their their buddies to to chip in on this thing and it became a victory story for for the tech industry or appears. So, so, not only that, actually, there's also another tax, proposition on the California ballot that would effectively ban this in the future, and that looks like it's going to pass. So, there's going to be this kind of downside protection going forward, too. And, you know, for all the trouble of of of achieving your impact with money and politics, this is the this is the counter example where the billionaires look like they succeeded.

28:11 The interesting thing I think a lot of folks were like if if the billionaire tax passes I'm going to move to Texas and now Texas is blue. >> Yeah. Yeah. I'm like well now and now the tax now the tax has if the tax is if the tax repeal if the tax loses people can move back right I mean like like I I've been joking with some people today on this. so >> I I can only wait for California's new slogan to be California open for business.

28:44 >> Yeah, come back escape. You know, there's a there's a blue state governor in Texas and a blue state governor in California, but at least California has banned wealth taxes, which I don't think Texas has done. >> That's correct. Very important. any thoughts on actual legislation being passed? I mean, there's these bans that will probably happen locally. there was a story in Transformer what the blue tsunami means for AI policy. the likelihood of strong frontier AI legislation passing next year shot up.

29:15 Democrats have signaled repeatedly that AI is a top priority. Some citing it in victory speeches with such large majorities the need for them to compromise is much lower. I'll just say personally, I don't I don't see any coherent AI legislation outside of like we're banning something come out of the US government or the federal government at least. >> Yeah. Yeah. I mean, there's still going to be a Republican in the White House, right? So, like, you know, the way things pass, just as a refresher, you need both houses of Congress to sign to pass something and then the president has to sign it and and and that seems unlikely to happen, but who knows? I mean, there's going to be a deal making there's going to be some desire for deal making somewhere maybe. so I don't know if AI is in the ven diagram of of kind of what Republicans, Democrats can agree on, but that's certainly >> I think.

30:08 >> Yeah. >> Yeah. Okay. any any big picture thoughts about what happens from here? >> None. No, I mean I mean I mean this is like a a massive massive news story obviously and I think there's going to be significant fallout in both parties. and try and you know this was a highly newsworthy in terms of the the in terms of the possible outcomes here. I mean this is probably the newsiest possible outcome. So you know we're just getting started and figuring it out and coming to terms with what it all means.

30:40 So I'm humble and humble in not knowing what happens next. All right, folks. I I'll leave you all with one stat before we leave. Adam Kavakovic, who is a big tech friendly policy guy. I don't know if he was trying to make the point that it wasn't a big deal, data centers weren't a big deal, or he was just giving some context. He tweeted this poll, how important was AI in data centers to your vote with NBC News Link? 23% said crucial, 77% said major factor, minor factor, non-factor. I think the point is that most people didn't see it as a as a crucial election election issue, but 23% saying crucial is still that's a lot of people to say that data centers are crucial. Okay, we'll leave it at that. I I know you've been working non-stop for like 48 hours and it's busy and I appreciate you spending the time with us to help help us figure out what's going on. Thanks, Teddy.

31:36 >> All good. You bet. folks, if you want to follow Teddy's writing, obviously go to ny times.com. what's your Twitter handle, Teddy? >> Teddy Schlifer. >> Teddy Schlifer. Easy. Okay. Thank you, Teddy. Thanks everybody for listening and watching. We'll see you next time on Big Technology