Inside our months-long investigation into Kevin O’Leary’s Utah data center debacle

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Verge features writer Josh Dzieza discusses his investigation into the Stratos data center, and how Utah residents fought back against it.

Today I’m talking with Josh Dzieza, a longtime features writer here at The Verge, about Kevin O’Leary’s plans to build a massive data center in Utah.

The idea was to build the world’s biggest data center — a 40,000-acre AI campus with nine gigawatts of power, or more than double the average power usage of the entire state of Utah. The project is technically called Stratos, but it’s more prominently known as Wonder Valley, a reference to O’Leary’s nickname on Shark Tank.

Josh has spent months reporting on this project, and it’s fair to say Wonder Valley has completely upended Utah politics. What Josh found throughout the course of his reporting was that the way this data center came together — how it was planned, how it was announced and approved, and how local residents were kept in the dark — ultimately created a political firestorm so severe it stopped Stratos in its tracks.

Now, the details of what happened with Wonder Valley are obviously fascinating. But the story is also a larger look at the AI industry’s infrastructure boom, the bipartisan backlash to that buildout, and how the tech industry is running into the one obstacle it can’t seem to spend its way out of: local democracy.

Okay: The Verge’s Josh Dzieza on the Utah data center disaster. Here we go.

Josh Dzieza, you are a features writer here at The Verge. Welcome to Decoder.

I’m very excited to talk to you. For people who don’t know, Josh has one of the hardest jobs at The Verge. You just disappear for long periods of time, and then you come back with 15,000-word home runs, which is an enormous amount of pressure, but you keep hitting them.

It’s a great job. [Verge features editor] Kevin Nguyen might say that editing those 15,000 words down to something manageable is the hardest job, but it’s all fun.

The home run we sent you out to get this time was the story of what happened with Kevin O’Leary in Utah, where he promised to build what was going to be the biggest data center in the world.

He was all over the news talking about building the biggest data center in the world, it was called Stratos. He was calling the entire development Wonder Valley. This thing fell apart in a bunch of anger from the local community. There’s a defamation lawsuit because O’Leary referred to all of his critics as Chinese spies on Fox News.

Fox News had to apologize on the air.

Josh, when you started reporting on this story, it struck me that there would be some similarities to the huge feature you wrote about the Foxconn project in Mount Pleasant, Wisconsin, my hometown, where President Trump announced that Foxconn was going to build a massive LCD factory in the middle of Wisconsin. There were supposed to be 13,000 jobs, and none of that happened.

Actually, what’s funny about that is now that land is being used for a Microsoft data center, which is just maybe the natural end state of all things. Walk me through the parallels and differences at a high level. What did this feel like to report?

I did not expect this to feel so similar to Foxconn initially, because unlike the Foxconn project, the data center buildout is real and at least theoretically can make sense in many cases. These things are actually getting built — unlike an LCD fab in the middle of Wisconsin. It turned out that there are more parallels than I thought.

I mean, one, just the actors that you have that takes place mostly with local officials and planning meetings and angry residents and things like that. But also there’s a lot more data centers on paper and speculation, things that are maybe real and maybe not that are more difficult to suss out than I was fully aware of going into data center reporting.

Let’s start at the very start of this project. There’s an enormous cast of characters involved. There’s a whole bunch of government agencies, but this starts with people in Utah looking at 40,000 acres of empty space and realizing that something is about to happen.

We can start with the beginning of the project, which is several months before anyone had any idea anything was happening, including most people in Utah — except for a handful of people who own property in this remote valley, some people in the state government at this one agency that became involved and a few real estate developers.

So everyone except maybe a dozen or so people found out about this project when Kevin O’Leary starts talking about it as an enormous data center that he’s building in Utah called Wonder Valley, or sometimes Stratos, depending on what program word they’re using at the moment.

O’Leary comes out in late April and says, “We’re building this giant thing,” and that’s the first time most people in the county, and in the state, had heard about it.

How did Kevin O’Leary get the approvals to even begin saying he was going to start building this data center so publicly if no one knew about it?

It is partly because it ran through an agency called MIDA (Military Installation Development Authority), which is like a state development agency that deals with projects that have some military purpose.

I think the military purpose can be fairly tangential. MIDA has a luxury ski resort that gives veterans discounts, but it began as a way to create projects on military property that was unused or could be put to more economic use. And then the taxes go back to the state, some of which can fund military developments.

It also has a lot of power to override local land use. It basically becomes the municipal government in whatever project area it establishes.

So if it establishes a project area, in theory, it would really speed up all the permitting and zoning and other regulations that can be a huge problem for data center projects. In order to establish a project area, the board has to ratify it and all the landowners in the area have to give their consent and then the local government — in this case, the county — has to give its consent.

The issue with this is by the time Kevin O’Leary is talking about it on Fox in late April, MIDA has approved it. The county has not. The county didn’t even know about it until about a month before this happened.

So did Kevin O’Leary just go to this obscure military agency and say, “I need a bunch of land in Utah,” and get it?

According to the documents we have, he starts asking around at the state level with the governor in early January. Then, the project gets passed from the governor’s office to MIDA. So in January to February, he’s basically going around, which is not uncommon with these developers, state to state saying, “I want to build a data center, what have you got?” Whoever gives the best pitch, the best, “You can have this property, we’re going to make permitting easy.

We have these tax breaks,” wins.

This is also quite similar to what we saw with Foxconn, and a lot of big development projects. People do this sort of beauty pageant thing: “We’re auditioning this state, we’re auditioning this state. It’s a race, it’s a competition. Who’s going to win?” So there’s some of that going on there.

O’Leary has been very publicly out in front. His big defense of the project is, “Well, states compete with these tax breaks, and Utah gave me these tax breaks.” Somewhere in there is a big disconnect from the actual people living in the area and the process.

I mean, that’s the conflict here, that’s the real heart of the story is eventually the people in the area find out this is happening, and they don’t want it to happen and they mount furious pushback. What happened there?

It’s a really interesting case with Stratos, where all of the conversations until very late are happening at the developer and state level. In this case, they literally forgot or failed or for some reason did not tell the county government, whose consent they needed, that this was happening until very late. So that happens in late March, and the county commissioners start hearing rumors that apparently there’s a data center coming.

They have no idea. They ask around and the state says, “We’re sorry, we forgot to tell you essentially, but we really need your approval fast.”

The county commissioners then have a meeting in late April, and that’s when word starts to trickle out, and then MIDA votes to approve it two days later. Over that weekend in late April, you’ve now had two public meetings, there’s local coverage, people start talking about it saying, “Oh, did you hear about the data center?” Several people found out about it at the coffee shop, at the grocery store.

They just hear about it on Facebook. They’re like, “Oh, there’s a big data center coming. For some reason, the Shark Tank guy is involved.” That starts to trickle out in late April, when you start to see that conversation happen.

No one was happy about it. One of the interesting things about data centers right now is social media is so full of data center backlash stories. People hear “data center” and they know broadly what’s coming, some of which is exaggerated, some which isn’t, but you don’t need to get people up to speed.

They realize, “Oh my God, there’s this huge project. They’re saying it’s nine gigawatts and it’s coming to your metaphorical backyard.”

This is the big difference in my mind between the Foxconn reporting and the Stratos reporting you did. So many people in Wisconsin were excited about the promise of a giant illusory LCD manufacturing plant that they ignored the very obvious fakery. And in the course of your reporting, you would literally go to empty buildings and point out that they were empty and Foxconn would issue statements saying they were not empty.

It was all just built on people’s hope. It was an inkblot test about whether manufacturing could come back to the midwest, and so many people wanted to believe that, that they ignored the obvious realities.

In this case, if they had let Kevin O’Leary build a data center, it seems very likely that he would’ve built a data center, but the people there did not want that. It was the very opposite. All of the hopes and dreams were replaced by people’s anger and fear about AI, and maybe what they’d heard on social media.

How did that play out in this story? Because that feels like a massive point of departure.

Yeah, and Stratos is a really interesting case because it is kind of what you’ve seen play out across the country, but times 100 because Kevin O’Leary and his knack for attention is involved. But the response was immediate. I mean, people found out about it through local coverage. They start organizing to attend the next meeting.

It’s already contentious, people are calling out questions. They’re not happy about it, and Kevin O’Leary starts talking up how huge it’s going to be, and it really just escalates.

These weird political alignments start to form because everyone is against it. An activist told me something interesting that data centers are the most unifying issue in politics right now, not because people agree on data centers, but because there’s something for everybody to hate. So you have people who are upset for environmental reasons, you have people who are upset about the tax breaks, you have people who are upset about just surveillance fears with AI.

You have just everything in there, and people start protesting right away and saying, “We don’t want this.” That’s something you hear all the time at these protests. It’s just really different from any kind