What Silicon Valley really wants from Sacramento
Available free through April 11, POLITICO Pro's Technology: California Decoded newsletter will explore how the Golden State is defining tech policy within its borders and beyond.
QUICK FIX
— A major tech business group says California must avoid being left in the dust on data centers.
— Republican data bill sees path in key committee.
— Rob Bonta cites Trump admin policies in data privacy crackdown.
Welcome to California Decoded! Glad you're with us, this is your sign that Tuesday is half over. Send feedback, tips and story ideas to tkatzenberger@politico.com and chasedf@politico.com.
Driving the day
FIRST IN DECODED: POWERED UP — Big, existential battles over AI safety are so last year: The next big fight in Sacramento is shaping up to be about the hardware, not the bits, that power the state's AI economy, according to a major tech business group.
Cutting a legislative path toward building more energy-gobbling data centers in Silicon Valley and California is a major priority this session, said Silicon Valley Leadership Group CEO Ahmad Thomas, whose group wields significant sway in Sacramento with a membership roster that includes tech companies from Airbnb and Amazon to Zoom and Zoox.
'Data centers are huge,' Thomas told California Decoded ahead of his group's 'Advocacy Day' with Sacramento lawmakers and lobbyists today. The thinking goes that more data centers means more AI companies can take root and train the next generation of models.
'A lot of our focus is around the modernization of our infrastructure to allow for [the] tech to scale, and to scale here in Silicon Valley,' Thomas said.
Thomas' group has also been in talks to merge with another major business organization, the Bay Area Council — a deal that if it goes through would throw major lobbying muscle behind a central priority for the tech industry.
Thomas said he sees lifting limits on building new data centers as key to enticing big projects like OpenAI's massive Stargate effort to California.
The San Francisco AI company recently announced the construction of its flagship data centers in Abilene, Texas. California is one of 16 states under consideration for the next phase of the $500 billion project announced by President Donald Trump, alongside OpenAI's Sam Altman and other tech luminaries in January.
But there's a major catch: Data centers guzzle power and water at a prodigious rate, and building new ones could clash with California's relatively tight environmental regulations.
OpenAI's Chris Lehane has said a Stargate campus would require at least 1 gigawatt of capacity — 10 times the upper limit to avoid the California Energy Commission's lengthy power plant licensing process, which can delay projects by months.
'We locked in place these arbitrary limits years ago, before the AI revolution was taking place, and it's just inflexible,' San Jose Mayor Matt Mahan, a data center proponent, recently told us.
Last session, an effort backed by state Sen. Dave Cortese and SVLG that would have bumped the licensing limit up to 150 megawatts ran aground, in part over environmental concerns about the diesel generators that kick in when the power goes out.
It doesn't look to be getting any easier for the data-center accelerationist crowd this year, though.
One bill from Assemblymember Diane Papan would create energy and water efficiency standards for data centers, while Assemblymember Rebecca Bauer-Kahan's AB 222 would require companies to be financially accountable for the power they use and annually report energy demand data to state regulators at the California Energy Commission.
Bauer-Kahan told us she hasn't met with SVLG about her bill but has met with other industry groups, including the Data Center Coalition. She said those groups haven't taken issue with her proposal so far.
It's not all stick from Sacramento. State Sen. Steve Padilla's SB 58 would give tax credits to data centers that use more green power and deploy water efficient systems.
HAPPENING TODAY
ALL DAY — Silicon Valley Leadership Group talks AI policy with state lawmakers and regulators during its annual 'Sacramento Advocacy Day,' hosted at Microsoft's Sacramento headquarters. Listed speakers include: State Sens. Scott Wiener, Cortese, Angelique Ashby and Aisha Wahab; Assemblymembers Bauer-Kahan, Marc Berman, Buffy Wicks, Ash Kalra, Lori Wilson, Patrick Ahrens and Alex Lee.
6:30 p.m. PT — Ned Segal, former CFO of Twitter and now San Francisco's chief of housing and economic development, speaks at Manny's in San Francisco.
IN DC — Tech leaders, including the likes of Amazon and Meta, will meet at the INCOMPAS policy summit today to talk AI, energy (read: data centers), broadband and more.
Privacy
FIRST IN DECODED: NOT DEAD YET — Republican Assemblymember Carl DeMaio has a shot at advancing legislation that would let Californians shield their personal information from foreign governments (*cough* China) — so long as he's willing to play nice in deep-blue California.
'I look at every bill with policy in mind. If it's a bill that I think is in the best interest of Californians, then it'll get a fair shot,' Bauer-Kahan, chair of the Assembly's key Privacy and Consumer Protection Committee, told California Decoded.
Gaining support from Bauer-Kahan and her committee is likely the first hurdle for DeMaio as he tries to pass AB 364, which as we scooped yesterday, would require businesses to obtain consent from California-based users before sharing or storing their data in foreign countries.
That could prove an uphill battle in the Democratic-controlled Legislature given DeMaio's reputation as an outspoken conservative. But privacy and digital safety have often proven fertile ground for cross-party collaboration in California: For example, Republican Assemblymember Josh Hoover last year successfully passed a law restricting student phone use in schools.
Bauer-Kahan said she wants to keep the bipartisan vibes going, so long as DeMaio and other lawmakers work with committee staff and accept recommended amendments.
'We had less Republican [authors] in the last year than the year before, so it's getting harder. It was an election year, so maybe this year will be better,' she said. 'I'm optimistic.'
LOVE, ROB — Attorney General Rob Bonta is hunting down companies that appear to be breaking California's privacy laws through location data as part of an investigative sweep aimed at protecting groups targeted by Trump administration policies.
Bonta's office announced yesterday that it sent letters warning some advertising networks, app providers and data brokers that they may be violating the California Consumer Privacy Act, which gives users the right to opt out of sharing location data and other personal information like email addresses and phone numbers.
His office said the issue is 'immediately and particularly relevant,' amid Trump's threats to carry out mass deportations and restrict access to gender-affirming care.
'This location data is deeply personal,' Bonta said in a press release. 'Given the federal assaults on immigrant communities, as well as gender-affirming healthcare and abortion, businesses must take the responsibility to protect location data seriously.'
Bonta's office declined to identify organizations that received a letter, because the information is 'part of the investigative files of the Attorney General.'
Byte Sized
— Silicon Valley Rep. Ro Khanna says Democrats should condemn vandalism at Tesla dealerships (X post)
— OpenAI plans to double its workforce at newly opened San Francisco HQ (San Francisco Business Times)
— Waymo is expanding its robotaxi service to parts of Silicon Valley (San Francisco Chronicle)
— A new report finds two-thirds of Silicon Valley tech workers are foreign-born (The Mercury News)
— HumanX conference to move from Las Vegas to San Francisco next year (Business Wire)
Have a tip, event or data center pitch to share? Do reach out: Emma Anderson, California tech editor; Chase DiFeliciantonio, AI and automation reporter; and Tyler Katzenberger, Sacramento tech reporter.
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