By Rory Jones and Krishna Pokharel | Photography by Saumya Khandelwal for WSJ
VISAKHAPATNAM, India -- When Google arrived last year in this sleepy coastal Indian city, the government rolled out the welcome mat, offering billions of dollars' worth of incentives for the U.S. company to build data centers for artificial intelligence.
Some residents had never heard of AI, much less Gemini and ChatGPT.
What they do know is that Visakhapatnam doesn't have much water, which is typically needed in large volumes to cool data-center servers. Some fear their community will be hollowed out entirely, with many residents already pushed from land they have farmed for decades for the $15 billion project.
"How can we be happy about Google coming?" said 42-year-old Pyla Kondamma, who is giving up farming, although she concedes she is getting around $83,000 in compensation from the government. "We'll all be scattered. It feels very sad."
Data centers have faced bitter opposition in the U.S. and other rich countries. Now, similar debates are spreading across the developing world, as Google, Amazon, Microsoft and other companies rush to capitalize on growing demand for AI in places with newly emerging middle classes.
Often, the debates are even more fraught than in the U.S.
Poorer countries such as Malaysia, Thailand, Kenya and the Philippines have some of the fastest build-outs of data centers anywhere, with annual capacity growth forecast at between 20% and 40% until 2030, higher than in the U.S., according to Structure Research, which tracks the global digital infrastructure market.
Many developing-world governments have tight financial resources and more competing needs for them -- yet are still offering massive subsidies for the facilities, in some cases totaling billions of dollars.
Developing-world communities are also more prone to water shortages. Their power grids tend to be more fragile. And given the low literacy levels in the rural areas where the projects are often built, their potential impact is often poorly understood.
Protests have broken out in places including Johor Bahru, Malaysia, and Batam, Indonesia, both of which have attracted data-center investments after nearby Singapore imposed rules aimed at slowing such development. Complaints have focused on risks to water and power supplies, among other concerns.
Indian opposition
U.S. tech firms have faced some of the fiercest responses in India, where data-center capacity is forecast to grow fivefold to roughly 10 gigawatts over roughly the next five years, according to Morgan Stanley.
Microsoft and other companies have faced allegations from residents in an Indian court that they illegally occupied public land at a data-center site under construction outside Hyderabad. Microsoft says it rejects the allegations and remains committed to complying with regulations. The case is pending.
Nearby, farmers say the government forced them into giving up land for a data center run by Amazon, which they say emptied out a village.
Amazon didn't comment. It has previously said it has programs to replenish water in India, including restoring lakes. It also runs community initiatives to improve locals' skills, renovate schools and help female entrepreneurs.
Sanjay Kumar, a senior official in the Telangana state government, said it compensates people for land and runs its own efforts to improve skills and provide loans for new businesses.
Tech firms frame their investments as a bet on India's digital destiny and have all pledged to be sustainable in their build-outs. Google describes its Visakhapatnam project, which broke ground in late April, as a landmark investment that will help transform the city of two million, affectionately known in India as Vizag.
"Our goal is a partnership that works for all sides, delivering national-scale infrastructure and economic impact that benefits the Vizag community for decades to come," said Alexander Smith, a Google executive who helps oversee the company's global data-center build-out. News Corp, owner of The Wall Street Journal, has a commercial agreement to supply content on Google platforms.
The Andhra Pradesh state government is giving Google a 25% discount for 10 years on the cost of any water it uses, along with a 25% discount on the land. Other subsidies include reimbursement of costs related to electricity infrastructure and upgrades, waivers on state taxes and discounts on the cost of power.
The incentives equate to roughly $2.3 billion over 20 years, with Google and its local partners investing billions more, according to a state government document laying out the subsidies.
Rights groups have criticized what they describe as a lack of public consultation about the project's environmental impact. They have questioned whether the government can provide enough water to help cool data centers in a city the World Resources Institute denotes as under "extremely high" water stress. Some areas get less than an hour of tap water a day.
City officials say the incentives are needed to draw a blue-chip U.S. company whose presence can attract other investments, helping turn the city into a global tech hub, much like the Indian cities of Hyderabad and Bengaluru. They say that will eventually lift the local economy for everyone.
Tech-services firms Infosys and Cognizant have announced plans to build new offices in the city and house thousands of employees.
"Google announcing a data center in Visakhapatnam has created a buzz," said Palla Srinivasa Rao, a lawmaker for the ruling party in the state. "Now it is going to create an ecosystem."
AI fears
Driving Indian officials is a fear that the world's most populous country could become collateral damage in the AI race. Indian tech-services firms, like their global counterparts, this year saw tens of billions of dollars wiped off their market values over fears that AI tools can replace software and labor they sell to the world.
To stay relevant, India is leaning in to its status as a country with potentially voracious AI consumers. Anthropic opened an office in Bengaluru in February, noting the country was the second-largest market globally for Claude, its chatbot. OpenAI's ChatGPT boasts 100 million weekly users in the country.
Google's data-center hub in Visakhapatnam is a crucial component of India's plans. According to state planning documents, it is eventually expected to include three sites across at least 600 acres, or the equivalent of about 454 football fields. It will be India's first hub focused on training and running large-scale AI models for a U.S. tech firm.
If run at full tilt, it is expected to use the equivalent electricity of six million people in India a year.
At one of the proposed sites, farmers like Pyla Kondamma who have grown mangoes and cashews for 50 years are being forced out by the local government to make room. While the government owns the land, it has offered as much as 4 million rupees, the equivalent of $42,000, an acre in compensation. Many residents are slated to receive a piece of land -- smaller than their existing plots -- elsewhere to farm.
Locals worry that for anyone who doesn't get a job, the cash benefits won't last, and land they are left with won't be enough to farm sustainably.
"The government can evict you from what you thought was yours for so long," said Bali Venkata Raju, a farmer. "There are no legal rights to fight over it." He said the government paid him roughly $115,000 in compensation to leave land he had farmed for four decades.
Google, which is working on the project with Indian corporate giants Bharti Airtel and Adani Group, has committed to power the data center by investing in 100% renewable energy and new transmission lines and energy storage. Google is also planning to lay undersea telecom cables that will connect Visakhapatnam with other parts of Asia.
Google's Smith said the Visakhapatnam project will operate primarily with air cooling in its initial phase, a setup that uses far less water than some other data centers that rely on evaporative cooling systems.
The company has pledged globally to replenish more fresh water than it consumes by 2030 by restoring lakes and wetlands and improving technologies used in agriculture. In India, it is tying up with a design firm in Visakhapatnam to integrate clean-drinking-water systems around its data centers. It is also planning to equip fishermen with GPS navigation and weather-forecasting applications, and train students on AI.
Rights groups say those efforts are superficial.
"This whole data center is a very, very troubling convergence of corporate power and full-state patronage," said V.S. Krishna of the India-based Human Rights Forum. Offering public subsidies to a big and profitable tech company is "very problematic," he said.
Write to Rory Jones at Rory.Jones@wsj.com and Krishna Pokharel at krishna.pokharel@wsj.com
(END) Dow Jones Newswires
May 27, 2026 22:00 ET (02:00 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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