Mark Cuban says communities are falling victim to 'contractual terrorism' in data center deals

Mark Cuban warns American towns to secure their interests before approving data center deals, alleging that developers employ healthcare-style contracts to confuse local communities. These contracts, often lengthy and complex, grant insurers the power to dictate terms, creating what Cuban calls "contractual terrorism." Data centers, vital for the AI revolution, have sparked intense debate nationwide.

While healthcare has traditionally utilized intricate contracts, Cuban argues that data center developers are employing a similar strategy. He contends that many communities have been duped by these deals. Cuban, who previously coined the term "contractual terrorism" in relation to healthcare, asserts that these healthcare contracts are so extensive and convoluted that insurers can exploit the situation, just as he suggests data center developers can exploit communities.

The data center boom has become a contentious issue across the US, with residents near facilities reporting various inconveniences. In Northern Virginia, the epicenter of data centers in the country, opposition from locals has influenced elections, resulted in lawsuits, and pushed for stricter noise and zoning regulations. A recent poll found that 65% of Americans opposed building an AI data center in their community, with 49% expressing strong opposition.

The number of announced AI data center projects significantly outpaces the number of operational facilities, leaving local governments to negotiate long-term agreements for projects that may never materialize. Cuban has warned about the risks associated with these agreements, proposing a 10-point plan for communities to consider before approving a data center.

His advice emphasizes the importance of scrutinizing developer promises and establishing clear, enforceable terms before any construction begins.