Amazon faces Seattle scrutiny over AI data center expansion amid layoffs

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Amazon's AI data center scrutiny

Highlights

Seattle's Land Use and Sustainability Committee unanimously approved a one-year moratorium on new large-scale AI data centers to draft new regulations as Amazon accelerates $200 billion in capital spending alongside 30,000 corporate layoffs since October.
Four developers proposed five new mega data centers to Seattle's utility provider, but public opposition led two to withdraw, reflecting growing pressure to require renewable energy use, limit non-disclosure agreements, and ensure quality jobs in new projects.
Nationally, 14 states consider restrictions on new data centers, with Data Center Watch reporting at least $156 billion in AI-linked projects delayed or blocked for 2025, while Amazon, Microsoft, Alphabet, and Meta maintain $700 billion in AI infrastructure spending plans amid ongoing layoffs.

Seattle hearing ties AI expansion to labor and energy concerns

As reported by CNBC, Amazon engineers spoke at a Seattle City Council hearing on Wednesday in support of stricter limits on new mega data centers, arguing that rapid AI infrastructure expansion is advancing alongside deep workforce reductions. The council's Land Use and Sustainability Committee unanimously approved a one-year moratorium on new large-scale artificial intelligence data centers to give the city time to develop rules for such projects.

Patrick Schloesser, a software engineer at Amazon Web Services, told officials that Amazon is spending $200 billion on capital this year, largely on data centers and AI, while the company has cut 30,000 corporate jobs since October. He said that pattern suggests major technology groups are racing to add computing capacity as quickly as possible.

Amazon does not immediately respond to a request for comment. The moratorium proposal follows approaches by four developers to a local utility provider with plans for five large-scale facilities in Seattle, though two developers later withdraw their proposals after public opposition.

Schloesser urges city officials to require developers to use renewable energy, stop relying on non-disclosure agreements or shell companies for project announcements, and ensure that new projects create quality jobs. He also calls for a new tax tied to large layoffs to help fund city employment.

Broader pressure builds on hyperscalers and local governments

Seattle is joining a wider push by cities, counties and state lawmakers to curb the fast expansion of AI-linked data centers. The National Conference of State Legislatures says 14 states are considering measures that would pause or ban new data centers, while Data Center Watch says at least $156 billion in projects are blocked or delayed in 2025 because of local opposition and litigation.

Even so, major technology companies continue to increase spending. Amazon, Microsoft, Alphabet and Meta have committed about $700 billion in capital expenditures this year, mostly for AI infrastructure, while also pursuing cost cuts that include layoffs.

At Amazon, the cuts cited by Schloesser are part of Chief Executive Andy Jassy's effort to remove management layers and reduce bureaucracy. Amazon says in February that it plans to spend $200 billion on capital expenditures this year, with most of that directed to AI infrastructure, and it reaffirms that forecast in April.

Schloesser and fellow speakers Liesl Wigand and Darius Irani are part of Amazon Employees for Climate Justice, a group of current and former workers that has repeatedly challenged the company's climate, labor and AI policies. In November, the group sends a letter to Amazon executives calling for a more responsible AI rollout, while Wigand tells the hearing that local governments should set the terms for data center development because the industry's drive to deploy AI is overlooking its resource costs.

Our earlier article on the $1.26 billion Ohio single-tenant data center CMBS deal explained how a hyperscale-leased facility in New Albany is being financed through securitization, with preliminary ratings assigned across multiple bond classes. We highlighted the deal’s long-duration lease through 2045, along with more conservative cash-flow and valuation assumptions that pushed the transaction’s loan-to-value ratio above 100%, underscoring the leverage and risk considerations tied to big data center projects.

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