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

Mark Cuban says towns must protect themselves before approving data centers. Shafkat Anowar/The Dallas Morning News via Getty Images Healthcare has long used complex contracts that can obscure who pays for what. Mark Cuban says data center developers are using a similar playbook."A lot of communities have been really dumb with the deals they've negotiated for data centers," Cuban said on an episode of "The A16z Show" released on Wednesday. "They've fallen for the contractual terrorism in a lot of cases."Cuban, who co-founded Cost Plus Drugs, a company that sells generic medicines at a transparent markup, previously coined the phrase "contractual terrorism" while discussing healthcare.On the A16z podcast, he said massive healthcare insurers and their subsidiaries use sprawling, opaque agreements to obscure costs and make it difficult for employers to know where their money is going.Cuban said those contracts are "so big and so long" that insurers "get to be contractual terrorists" — a formulation he also applied to communities' data center deals.His comments come as the data center boom has become a hugely contentious issue in communities across the US.Residents living near facilities have reported incessant low-frequency hums, diesel smells, intrusive lights, construction disruption, pressure on water and electricity supplies, and the loss of trees and open land.In Northern Virginia, the country's data center capital, local opposition has helped reshape elections, prompted lawsuits, and pushed residents to demand tighter noise and zoning rules.A University of Massachusetts Amherst poll of 1,000 Americans from September found that 65% opposed building an AI data center in their local community, including 49% who said they strongly opposed it. The ghost data center backlashThe race to build AI infrastructure has also produced far more announcements than operating facilities.Aterio, which tracks projects through satellite imagery, permits, and other records, counted 8,268 announced US facilities as of October 20. But only 2,126 were active, and 861 were under construction.Thousands more had just been announced, leaving local governments to negotiate consequential long-term agreements for projects that may never progress beyond a press release.That is a risk Cuban has warned about.In a series of X posts in September, he laid out a 10-point playbook for communities considering their first data center, arguing that every promise from a developer should come with a measurable limit, independent oversight, financial backing, and a remedy if it is broken.Cuban's advice is to settle those questions before construction begins."Resolve it before granting the approval that spends the last of the town's leverage," Cuban wrote at the time. Read next Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Business Insider tells the innovative stories you want to know Thibault is a tech reporter at Business Insider's London office.He covers the intersection of technology and work — focusing on AI’s impact on the workplace, job and cognitive skills, and how economic changes are affecting careers.Before moving to the trending team, Thibault covered international affairs, including the Russia-Ukraine war, tensions in the South China Sea, and Russia’s economy on the news desk.He has previously worked at the Daily Express and held internships at Agence France-Presse, Politico Europe, and Factal.Il parle français. Habla español.Email Thibault at tspirlet@businessinsider.com, connect with him on LinkedIn @ThibaultSpirlet, or follow him on X @ThibaultSpirlet and BlueSky @thibaultspirlet.bsky.social.ExpertiseAI and the future of work Job and cognitive skills in the AI economyWorkforce trendsFirst-person, "as-told-to" stories AI Artificial Intelligence Mark Cuban More Data Centers