In an effort to buttress its AI growth, Microsoft wants to be a “good neighbour” to communities hosting its data centres, pledging to ask public utilities to set higher electricity rates for such facilities. The company operates more than 400 data centres across over 70 Azure regions worldwide, including Chennai, Pune, and Hyderabad.
The commitment comes in the light of rising public backlash around data centres, pushing Big Tech to rethink how it builds AI infrastructure.
The crisis has hit Microsoft close to home in India. In 2023, local residents of Mekaguda village—around 50 km away from Hyderabad—filed a petition in the Telangana High Court, accusing the software giant of illegally occupying land beyond property boundaries to build its data centre and dumping industrial waste into a nearby lake.
Such community resistance threatens to foil Microsoft’s grander plans for India. Last year, its CEO Satya Nadella announced an investment of $17.5 billion in the country by 2030 to expand its data centre capacity, and help build other AI infrastructure and sovereign capabilities.
Now, the company is committing to creating jobs in host communities globally, optimising water intake to run its data centres, and publishing region-wise water-use data for each US facility, along with progress on replenishment.
“Especially when tech companies are so profitable, it’s both unfair and politically unrealistic for our industry to ask the public to shoulder added electricity costs for AI,” Microsoft vice-chair and president Brad Smith said in a statement earlier this week.
What stands out is not the scale of Microsoft’s buildout, but the promises it has made about how that expansion will be handled. The company has not disclosed financial details of the initiatives.
Planet vs Progress
Data centres—the physical backbone of AI infrastructure—power everything from ChatGPT queries to electric vehicle software and streaming services. They also consume vast amounts of electricity and water. Goldman Sachs Research forecasts that global power demand from data centres will rise 50% by 2027 and by as much as 165% by the end of the decade, compared with 2023.
Microsoft’s community-focused commitments come at a critical moment. Data centre construction has become a political flashpoint, triggering protests and organised resistance. According to Data Centre Watch, opposition to data centres in the US has surged 125% between March and June 2025.
Alongside building its own facilities and offering capacity via Azure, Microsoft also leases data centre space from providers such as CoreWeave. It is a major vendor to OpenAI and is a partner in the broader $500-billion Stargate data centre initiative.
In India, Microsoft recently signed a deal with climate tech startup Varaha to buy more than 1 lakh carbon removal credits through 2029 as it scales its AI and cloud operations.
Applauding Microsoft’s approach, Jaspreet Bindra, founder of AI&Beyond, tells AIM, “If AI needs massive power and water, the companies profiting from it should not pass those costs on to households. Publishing region-wise water use and replenishment data creates the transparency communities have been demanding.”
However, Bindra cautions that philanthropy alone is insufficient. “We need engineering and governance—recycled or zero-water cooling where feasible, aggressive efficiency targets, heat reuse, smart siting, and community benefit agreements baked into permits,” he adds.
Amazon founder Jeff Bezos, meanwhile, has suggested a different long-term solution. Speaking at the New York Times’ DealBook Summit earlier this week, he argued that companies will eventually move away from building isolated data centres, much as factories once shifted from private generators to public grids. AI infrastructure, he said, will consolidate around large-scale cloud platforms such as Amazon Web Services.
AWS, the world’s largest cloud provider, operates more than 900 data centres across 50 countries, according to SourceMaterial. Amazon has also pledged $35 billion by 2030 to strengthen India’s AI ecosystem.
However, Zoho co-founder and chief scientist Sridhar Vembu criticised Big Tech’s shifting priorities. “Electricity prices rising due to AI data centres have become such a political issue that President Trump is intervening. Sustainability has vanished from Big Tech’s vocabulary in the AI rush—which tells you how deep their climate convictions really were,” he wrote on X.
Zoho on Tuesday launched new data centres in Dubai and Abu Dhabi as part of a AED 100 million (~$27 million) UAE investment announced in 2023.
Will India Benefit?
When Google announced a $15 billion AI data centre investment in Visakhapatnam last year, advocacy groups warned of public resource diversion, highlighting the region’s acute water stress.
India’s data centre water consumption is expected to more than double from 150 billion litres in 2025 to 358 billion litres by 2030, a Mordor Intelligence study identified. According to JLL, India’s data centre capacity is projected to grow 77% by 2027 to 1.8GW, with $25–30 billion in investments expected by 2030.
Microsoft’s “good neighbour” model could be especially relevant for India. “India’s water stress and grid constraints mean every new data centre should commit to non-potable water use, full-cost grid upgrades and public reporting,” Bindra says.
The World Bank notes that India has 18% of the world’s population but just 4% of its water resources. An S&P Global study predicts that 60–80% of India’s data centres will face high water stress this decade.
Energy is another concern. The International Energy Agency estimates data centres’ share of India’s electricity demand could potentially double to 1–2% by 2030.
Abhishek Uperwal, CEO of Soket.AI, proposes that India must take a different path. “As data centre demand grows, we cannot ignore households, agriculture and industry. Growth in AI must go hand in hand with sustainability.”
Experts argue that Microsoft’s approach could soon become a licence-to-operate norm. Costs will rise—but the alternative may be delays, moratoriums, and mounting reputational damage.
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