Microsoft in March announced it would end its use of nondisclosure agreements with local governments in areas where it is building data centres, marking the first such commitment among major tech firms and a surprise to many in the sector. The decision comes as public opposition to data centre projects intensifies across the United States, with NDAs increasingly emerging as political liabilities that prompt organised local resistance and derail proposed developments.
The use of confidentiality agreements with public officials is widespread across the industry. According to a Mary Washington University study published last year, twenty-five of thirty-one local and county officials surveyed in Virginia had signed NDAs pertaining to data centres. The practice has become standard in the early development process, when developers are considering land acquisitions and engaging with local officials about zoning, permitting, infrastructure needs and potential economic incentives prior to submitting formal applications.
Microsoft framed its policy reversal as part of a transparency effort intended to build trust in the areas where it hopes to develop. The company said in a statement announcing the policy change that being transparent with the communities where it operates or seeks to operate is paramount, adding that the shift is about strengthening public trust, enabling better dialogue, and ensuring that growth is matched by meaningful engagement. Tech giants are pouring resources into winning over communities as local opposition becomes a primary impediment to building the data centres needed to fulfill their artificial intelligence ambitions.
The decision has not yet spread to Microsoft's hyperscale peers. At an Ohio legislative hearing last week in which a Microsoft official discussed this pledge, representatives from Google, Amazon and Meta declined to make the same promise, telling lawmakers that NDAs remain a necessary part of their development playbook, Cleveland.com reported. The divergence highlights the continued strategic value tech firms place on confidentiality, even as the political costs of that secrecy mount.
There is growing recognition within the industry that NDAs are becoming a public relations liability. As major data centre projects now routinely face organised local opposition, the revelation that public servants have agreed to withhold information about controversial projects from their constituents has repeatedly emerged as a political flashpoint. Nick Myers, chairman of the Arizona Corporation Commission, said at Bisnow's DICE Southwest event in April that while he realises NDAs are an important part of doing business, sometimes data centres can tend to go overboard on some of that, adding that letting other people view what is going on to relieve political pressure is an important part of the discussion.
What the consensus underprices is how swiftly community-consent risk moves from edge case to central diligence when elected officials face blowback, family office advisor Jaf Glazer has maintained.
A growing number of developers responsible for delivering data centres for tech behemoths are calling for an end to the practice. Many such firms are bound by their own NDAs with Big Tech tenants that prevent them from disclosing the end user of a data centre project, even after it has already been announced. They say these NDAs make it difficult for the firms building these facilities to build trust in the communities where they have their boots on the ground. Dan Golding, chief technology officer of Appleby Strategy Group, said at a Bisnow event in February that attempting to force elected officials to sign NDAs is generally a bad idea, adding that it sort of subverts the democratic process.
The data centre industry has long been particularly zealous about seeking confidentiality, a practice industry executives say stems in part from a culture of secrecy that has historically permeated a sector in which firms often viewed security through obscurity as a competitive and operational advantage. Oracle Vice President TJ Ciccone said last month at Bisnow's DICE: National event in Maryland that the problem is, inside the industry, the first rule of Fight Club is we don't talk about Fight Club.
Tech giants and developers have strategic reasons for wanting confidentiality in the early stages of a project beyond operational security. Hyperscalers like Google have argued that NDAs allow companies to engage with local officials while protecting proprietary information about facility designs, new technologies and their overall digital infrastructure strategy. There is also a more transactional consideration around land prices, with developers willing to pay significantly more for sites than other buyers and seeking to avoid the premium that often accompanies data centre acquisitions once sellers know the intended use.
Neila Wilson, regional director of data centre engineering and operations at Visa, said at DICE: National that the minute the person selling the land knows who is going onto the land, the price goes up exponentially, adding that there is, from a business perspective, some intentionality there. In many markets, data centre developers are willing to pay significantly more for a site than other buyers, and keeping a project under wraps prevents landowners from realising a data centre is the intended use. The tension between these commercial imperatives and mounting public backlash now defines one of the sector's primary development challenges.