The Morning Download: AI Data Centers Hit Home

What's up: Microsoft's data-center pledge; Trump Administration enacts security rules for Nvidia’s China chips; Why actor Matthew McConaughey is trademarking himself.

Good morning. Sure, call artificial intelligence the greatest invention since sliced bread. But have you seen your recent utility bill? 

The WSJ's Katherine Blunt and Jennifer Hiller report a growing flashpoint of the AI boom: Power-hungry data centers and the strain they place on local grids.

Rates are going up for consumers who rely on grid operator PJM. The nonprofit’s footprint spans 67 million people across a 13-state region, including Northern Virginia’s “Data Center Alley,” where hyperscale computing has created a seemingly bottomless appetite for electricity.

Older power plants on PJM’s grid are retiring faster than new ones can be built, and both customers and tech companies have resisted proposed rules that would require data centers to build on-site power or curtail usage during demand surges, WSJ reports.

Resistance is mounting. About 20 projects representing nearly $100 billion in combined investment were blocked or delayed because of local opposition in the second quarter of last year, according to Data Center Watch, a research firm tracking the fights.

Business leaders take note. The data-center fight is about a power crunch, yes, but also a reminder that rolling out AI is more than a tech upgrade. It's a social shift too and getting it right requires thinking through those ripple effects and being clear communicating about who pays and who benefits.

More on those ripple effects, from privacy to security, below, but first Microsoft makes a plea for the locals to put away the pitchforks.

Microsoft, addressing local fears that AI is pushing up electricity prices, said Tuesday it would pay electricity rates high enough to fully cover the cost of powering its data centers so they aren’t passed on to consumers. The company said it would also pay full property-tax rates and replenish more water than it withdraws locally.

“The industry operated in a certain manner in the first half of the decade that is not an appropriate path for the second half of the decade,” Microsoft President and Vice Chair Brad Smith told the WSJ in an interview, citing private land purchases as an example. 

Many of the promises build on current practices in states such as Wisconsin that the company is now applying to its entire portfolio.

One artist is taking a stand against unauthorized AI fakes.

Oscar winner Matthew McConaughey (David Wooderson to "Dazed and Confused" fans) has secured approval for eight trademark applications from the U.S. Patent and Trademark Office featuring his image and voice, an effort to prevent AI tools and users from simulating his likeness without permission.

The trademarks include a seven-second clip of McConaughey standing on a porch, a three-second clip of him seated in front of a Christmas tree, and audio of him delivering his iconic line, “Alright, alright, alright,” from the 1993 film, according to the filings.

Mark McKenna, a UCLA law professor who studies intellectual property, tells the WSJ's Ben Fritz that existing U.S. trademark protections, along with state right-of-publicity laws, already cover most commercial uses. But on internet video platforms, where creative work generated by AI can be monetized with advertisements, the law is murkier.

A lawsuit between Palantir and AI startup Percepta reflects a broader wave of AI-sector fights around top tech talent, trade secrets and anticompetitive behavior, WSJ reports.  

Palantir sued the startup, founded by former Palantir staff, alleging it poached employees and stole trade secrets. Percepta has denied the claims, saying Palantir is using litigation and sweeping noncompete agreements to intimidate workers from leaving.

The U.S. and China are adding layers of oversight to Nvidia’s AI chip sales, while Beijing leans on subsidized, low-cost models to expand abroad.

The Trump administration said Nvidia must meet new security conditions before exporting H200 AI chips to China, the WSJ reports.

The rules require that Nvidia ensure sufficient U.S. chip supply, verify customer security practices and identities, and have chips tested by a U.S. lab to confirm performance limits. Critics say the new rules illustrate the security risks inherent in approving the exports.

Beijing, for its part, is applying its own gatekeeping.

The Chinese government this week told some local tech companies it would only approve H200 purchases under special circumstances, such as for university research and development labs, according to two people with direct knowledge of the situation, The Information reports.

Meanwhile, China is leaning harder on low-cost, “open” models backed by state subsidies to expand abroad.

Microsoft has warned that U.S. AI groups are being outpaced by Chinese rivals in the battle for users outside the West. Brad Smith, Microsoft’s president, told the FT that the rapid adoption of Chinese AI start-up DeepSeek’s technology in emerging markets such as Africa underscores the competition American groups face around the world.

Tesla Chief Executive Elon Musk said the EV maker would stop selling a suite of advanced driver assistance features for a one-time payment, switching instead to a monthly subscription service, the WSJ reports.

Cerebras Systems, a Sunnyvale, Calif.-based AI chip startup, is in talks to raise about $1 billion, valuing the company at $22 billion before the new investment, the Information reports. 

A Pew Research survey finds that 41% of U.S. teens ages 13 to 17 support banning middle and high school students from using cellphones during class.

By studying large language models as if they were living things instead of computer programs, scientists are discovering some of their secrets for the first time, MIT Tech Review reports. It turns out that LLMs are even weirder than they thought. 

The parent of Saks Fifth Avenue and Neiman Marcus filed for bankruptcy protection, barely a year after an ambitious bet on luxury department stores brought the two storied retailers together in what was supposed to be a powerhouse deal. (WSJ)

China’s trade surplus, the difference between its exports and imports, reached a record in 2025 at $1.19 trillion. Exports jumped 5.5% last year from 2024 in dollar-denominated terms, compared with 5.9% growth the prior year, China’s customs agency reported Wednesday. (WSJ)

Iran’s Arab rivals across the Persian Gulf, led by Saudi Arabia, have been lobbying the Trump administration against a strike on Tehran, after the U.S. warned them to be prepared for such an attack. (WSJ)

At least six prosecutors have resigned from the U.S. attorney’s office in Minnesota over the Trump administration’s handling of the federal investigation into the killing of a woman by an ICE agent, according to people familiar with the matter. (WSJ)

This February 10–11, technology leaders will gather in Palo Alto for The WSJ Technology Council Summit to explore the realities of enterprise AI, the evolving role of tech leadership and the urgency behind building meaningful, business-driving AI strategies. Join the Technology Council and be part of the conversations shaping the future of corporate innovation.

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The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.