Unlock Editor's Digest at no cost
FT editor Roula Khalaf selects her favourite stories on this weekly newsletter.
Imagine a consortium of a) a multi-trillion dollar asset manager whose corporate governance values are continually changing, b) an all-powerful technology company facing rebuke from competition authorities, and c) an authoritarian oil state with a checkered human rights record.
Is this the newest villain from the Marvel Cinematic Universe? No, this group may be very real. The alliance is planning a $100 billion spending spree that may “strengthen American competitiveness in AI while meeting the growing need for energy infrastructure to fuel economic growth.”
The trio consists of BlackRock, Microsoft and MGX, the latter an Abu Dhabi-based investment vehicle. The group says it could possibly raise a combined $30 billion in equity, leveraged thrice to succeed in total purchasing power, to construct the vast energy infrastructure that artificial intelligence supposedly requires. It is one in all several attempts by private investors to get in on the gold rush.
Mining is proving to be very expensive, whether it's semiconductors, computing power or energy. The result’s an arms race between already overpowered players within the economy who could further consolidate their power by controlling the subsequent big technological innovation. Society and regulators should consider whether this heralds a joyful ending or a questionable plot development.
The huge pools of capital which have gathered around the globe are increasingly searching for more stable, long-term investment horizons offered by infrastructure, private credit and a mix of each. Even before the AI craze of the last two years, electrification, power transmission and distribution and the energy transition were the foremost targets of asset managers. BlackRock has bought Global Infrastructure Partners for $12.5 billion to take part in precisely this megatrend.
After the financial crisis, electricity demand within the USA remained largely unchanged for several years. But that’s now changing rapidly: The US Department of Energy expects a pointy increase in the common annual growth rate of two.4 percent by 2030. The need for electricity is especially acute in Texas and Virginia attributable to the high concentration of knowledge centers.
What was once an arms race between corporations like BlackRock, Blackstone and Brookfield now appears to require collaboration with a Big Tech giant and maybe a sovereign wealth fund. Microsoft argues that AI infrastructure requires efforts that transcend a single country or company. Perhaps we’d like a superhero antitrust lawyer to take a detailed take a look at this proposal before it's too late.
