Small and medium-sized enterprises (SMEs) in Germany do not complain. They work. They adapt to external circumstances and are successful with their products against all odds. Many of them worldwide. This is the secret of their success. But the current economic situation gives cause for concern. We launched our DATEV SME Index a year ago. Our index provides up-to-date, fact-based and broad insights into German SMEs in a way that has not been available before: it is based on the advance VAT returns of more than one million SMEs and the payroll accounts of more than eight million employees. As an IT service provider for the tax consulting profession, this effectively lets us look directly into the engine room of German SMEs. But this detailed view is not very pleasant at the moment. The figures we publish each month based on data from tax advisors paint an almost worrying picture. The increase in the minimum wage that has already been decided is likely to exacerbate this situation for small and micro-enterprises. Sales are falling, wages are rising The German economy is in a difficult situation. Since September 2024, we have observed declining sales in SMEs. Concurrently, wages are increasing. Our latest statistics show that this trend is continuing — in all German federal states, industries and company sizes. There is currently no indication of a change in this trend. As previously described, SMEs rarely voice dissatisfaction. Instead, they seek pragmatic solutions. This challenging situation is no different. There are in fact a number of ways to resolve this issue. Many SMEs are looking to the federal government with high expectations. They expect it to pursue business-friendly policies to strengthen the backbone of the German economy. Small and medium-sized companies represent 99 percent of it and employ around half of the workforce in Germany. Without relief and incentives, the existence of many SMEs is increasingly at risk. Above all, we need to reduce bureaucracy and implement a bureaucracy moratorium: meaning the standardization and reduction of documentation and retention requirements. > Above all, we need to reduce bureaucracy and implement a bureaucracy > moratorium: meaning the standardization and reduction of documentation and > retention requirements. Financial incentives for greater productivity The regulatory frenzy of recent decades in Germany and in the EU makes it difficult for companies to catch their breath. It not only costs SMEs time and money, but it also hinders innovation. But there are now initial indications that something is being done about this. The importance and necessity to modernize the administration has been recognized and will be supported financially. A separate ministry for digital transformation and state modernization is a positive first step. > The German government has also already decided on the so-called investment > booster. However, this will only help to a limited extent The German government has also already decided on the so-called investment booster. However, this will only help to a limited extent. The investment booster allows for declining balance depreciation of up to 30 percent, which enables companies to write off higher amounts, especially in the first few years. This is intended to accelerate investment and secure liquidity for businesses. However, this only helps if there is still enough substance or capital available for further financing. And in many cases, this is no longer the case for SMEs. In order to boost productivity, financial incentives must be provided as quickly as possible. It is our hope that there will be extensive investments in infrastructure and the digitalization of administration as well. Artificial intelligence creates greater efficiency Another encouraging sign: new technological advancements facilitate operations for business. Artificial intelligence (AI) is more than just a buzzword. As Germany’s second largest software company, we are dedicated to developing innovative products and solutions for tax firms, so that they can provide even more exceptional counsel to their clients — mostly small and medium-sized businesses. For me, it is evident that AI will positively transform work in tax consulting firms, creating significant opportunities. AI helps to simplify monotonous, repetitive tasks, allowing for more efficient workflow. It is a valuable tool for supporting individuals rather than replacing them. This is especially important in a time of pressing issues such as skilled worker shortages. The use of AI thus also offers new opportunities for all companies that wish to prioritize their core business over bureaucracy. Digital and AI-supported processes with tax advisors will provide sustainable support in this. The acceptance and use of AI tools is steadily increasing in tax consulting firms. Among the most widely used industry-specific offerings, the DATEV appeal generator and specialist research tools are highly regarded. It is clear that we have only just begun to see the full extent of the situation. We are working every day on new solutions that make it easier for tax consulting firms to better advise their client companies to improve their successes. We also use our detailed knowledge that we generate from our DATEV SME Index. > The smart use of AI can also enhance the success of German SMEs and strengthen > their ability to compete globally — despite existing regulatory challenges, > bureaucratic hurdles and complicated tax systems. Ultimately, it depends on how we deal with the challenges in our daily work. How we successfully shape the path to the digital future with the possibilities offered by AI. We have learned from major American software providers over the past 20 years that those who best understand the data business enjoy great economic success. Now comes the second chance. The smart use of AI can also enhance the success of German SMEs and strengthen their ability to compete globally — despite existing regulatory challenges, bureaucratic hurdles and complicated tax systems. So, enough whining. Let’s proceed! Robert Mayr, tax advisor, auditor and doctor of business administration, is CEO of DATEV eG since 2016. From 2014 to 2016, he was on the board of the Nuremberg-based data processing cooperative, responsible for finance and purchasing, and had already been responsible for internal data processing and production since 2011. After studying business administration at Ludwig Maximilian University in Munich, he began his professional career as a consultant at Treuhandanstalt Berlin. Mayr worked for Deloitte from 1994 to 2001, after which he spent nine years as managing partner of Solidaris Revisions-GmbH in Munich. Since 2012, Mayr has been vice president of the Nuremberg Chamber of Tax Consultants. DATEV eG is a data processing cooperative with more than 850,000 customers. Founded in 1966, it now employs a staff of about 9,000, working at its headquarters in Nuremberg and 22 branch offices throughout Germany. Its legal structure as a cooperative guarantees continuity, meaning no investor can buy DATEV. For more information on the DATEV Small and Medium-Sized Enterprises Index, please visit mittelstandsindex.datev.de (in German).

BRUSSELS — Almost 60 members of the European Parliament want to include a gift in the bloc’s next long-term budget: a phone with more storage for Ursula von der Leyen. Right-wing politicians filed an amendment on Thursday to the EU’s budget bill, telling the EU executive to “dedicate sufficient funding to provide the president of the Commission with a mobile phone with adequate storage capacity and appropriate IT support to ensure that messages are preserved without exception.” Von der Leyen got in hot water last month over a deleted 2024 text message she received from French President Emmanuel Macron that POLITICO reported had urged her to block the EU-Mercosur trade deal. The Commission said the message was auto-deleted, defending von der Leyen’s use of disappearing messages as being, in part, “for space reasons.” But tech experts debunked that defense as “a non-argument” and ” hard to believe,” because text messages hardly take any space on modern phones. The Commission president already faced an investigation earlier over text conversations with Pfizer’s Chief Executive Officer Albert Bourla about Covid-19 vaccine contracts which were never archived. Lawmakers are due to vote on the EU’s draft budget for 2026 at a plenary session in Strasbourg next week. The amendment on phone storage came from Germany far-right member Christine Anderson and Swedish hard-right member Charlie Weimers. It had been signed by 57 members of parliament on Thursday, largely from Weimers’ European Conservative and Reformists group, Anderson’s Europe Sovereign Nations and the far-right Patriots for Europe. The amendment urged the EU executive to mind “importance of keeping proper records of all official communications of the Commission.”

BRUSSELS — Two of Europe’s tech powerhouses tied the knot on Tuesday in a landmark deal that bolsters a push by politicians to reduce reliance on the United States for critical technology. Dutch microchips champion ASML confirmed it was investing €1.3 billion in French AI frontrunner Mistral, one of the few European companies that is able to go head-to-head with U.S. leaders like OpenAI and Anthropic on artificial intelligence technology.  It’s a business deal soaked in politics. Officials from Brussels to Paris, Berlin and beyond have called for Europe to reduce its heavy reliance on U.S. technology — from the cloud to social media and, most recently, artificial intelligence — under the banner of “tech sovereignty.”  “European tech sovereignty is being built thanks to you,” was how France’s Junior Minister for Digital Affairs and AI Clara Chappaz cheered the deal on X. Europe has struggled to stand out in the global race to build generative AI ever since U.S.-based OpenAI burst onto the scene in 2022 with its popular ChatGPT chatbot. Legacy tech giants like Google quickly caught up, while China proved its mettle early this January when DeepSeek burst onto the scene. European politicians can showcase the ASML-Mistral deal as proof that European consumers and companies still can rely on homegrown tools. That need has never been more urgent amid strained EU-U.S. ties under Donald Trump’s repeated attacks against EU tech regulation. But the deal also illustrates that while Europe can excel in niche areas, like industrial AI applications, winning the global consumer AI chatbot race is out of reach. EUROPE KEEPS CONTROL Tuesday’s deal brings together two European companies that are most closely watched by those in power. ASML, a 40-year-old Dutch crown jewel, has grown into one of the bloc’s most politically sensitive assets in recent years. The U.S. government has repeatedly tried to block some of the company’s sales of its advanced microchips printing machines to China in an effort to slow down Chinese firms.  Mistral is only two years old but has been politically plugged in from the start, with former French Digital Minister Cédric O among its co-founders.      When the company faced the need to raise new funding this summer, several non-European players were floated as potential backers, including the Abu Dhabi-based MGX state fund. There were even rumors Mistral could be acquired by Apple. Apple’s acquisition of Mistral would have been “quite negative” for Europe’s tech sovereignty aspirations, said Leevi Saari, EU policy fellow at the U.S.-based AI Now Institute, which studies the social implications of AI. “The French state has no appetite [for] letting this happen,” he added.  Getting financing from an Abu Dhabi-based fund, conversely, would have reinforced the perception that Europe can provide the millions in venture capital funding needed to start a company, but not the billions needed to scale it.  With this week’s €1.7 billion funding round led by ASML, Europe’s tech sovereignty proponents can breath a sigh of relief. “European champions creating more European champions is the way to go forward and it needs further backing from the EU,” said Dutch liberal European Parliament lawmaker Bart Groothuis in a statement. The deal is also what officials, experts and the industry want to see more of: one where startups are backed by an established European corporation rather than a venture capitalist. “A European corporation finally investing massively in a European scale-up from its industry, even [if] it [is] not directly tied to its core business,” said Agata Hidalgo, public affairs lead at French startup group France Digitale, on Linkedin. A French government adviser, granted anonymity to speak freely on private deals, said they felt “hyped” by the news after months of uncertainty due to Mistral’s refusal to publicly deny talks with Apple. The deal is also expected to avoid any close scrutiny from Europe’s powerful antitrust regulators, which in the past have intervened in mergers and deals to keep the market competitive. Tuesday’s deal is not a full takeover and does not need merger clearance. Nicolas Petit, a competition law professor at the European University Institute, said there was “nothing to see here unless the EU wants to shoot itself in the foot with a bazooka.” “It’s a non-controlling investment, and neither ASML [nor] Mistral AI compete in any product or service market,” he added. REALITY CHECK While the incoming Dutch investment goes a long way toward keeping Mistral in European hands, it also determines the path forward for the French artificial intelligence challenger.  Mistral had already been struggling “to keep up with the race for market share” with other large language models, Saari claimed in a blogpost published last week, in which he cited numbers suggesting that Mistral’s market share is “around 2 percent.”  “Mistral was known to face challenges both technically and in finding a business model,” said Italian economist Cristina Caffarra, who has been leading the charge for European tech sovereignty through the Eurostack movement. “It’s great they found a European champion anchor investor” that will, in part, “protect them from the [venture capital] model.” Tuesday’s deal could mean that Mistral will get more support to work on industrial applications instead of a consumer-facing chatbot that venture capitalists like to propagate.  “With Mistral AI we have found a strategic partner who can not only deliver the scientific AI models that will help us develop even better tools and solutions for our customers, but also help us to improve our own operations over time,” ASML CEO Christophe Fouquet wrote in a post on Linkedin.  ASML’s main customers are the world’s biggest microchips manufacturers, including Taiwan’s TSMC and America’s Intel. The company also has a wide network of industrial suppliers, which could be leveraged as well. For Mistral, catering to European industrial applications could strengthen its business. But it could also be seen as a tacit admission that in the global AI race, Europe has to pick its battles.  Francesca Micheletti and Océane Herrerro contributed reporting.

Mehdi Paryavi is the Chairman and CEO of the International Data Center Authority think tank. Every day we grow more reliant on technology. And the more we digitize our lives, the more data we produce — health records, financial information, buying habits, and so on. In fact, the amount of data handled by the internet continues to double every three years. As governments across the developed world accelerate their digitization of public services in tandem — from health records to tax filings — their promise is faster, cheaper and more efficient services for citizens. In practice, however, things are much more complicated. For example, the U.K. government’s new deal with Google will see vast amounts of public data stored on U.S. servers, while Microsoft recently said it “cannot guarantee” data sovereignty to customers in France — and by extension the rest of the EU — if the U.S. government demanded access. This situation raises questions that affect every single one of us: Who has access to our digital footprint? Who actually owns this data? Who controls it? And how can people trust governments to protect them from intrusion into their private data? Within the EU, the 2018 General Data Protection Regulation (GDPR) was enacted to address these very issues. And the measure is generally considered to be a success, having tightened the use of personal data by websites and companies in the U.S. as well as Europe. Legislation like the Data Sovereignty Act, the Data Act and the NIS2 Directive also stipulate EU control of data and prevent unauthorized international access. But even these seemingly strong measures won’t stop all forms of privacy intrusion. And as the U.K. government seemingly works its way back into a tighter relationship with the EU, its agreement with Google is worth examining. Announced in early July, the deal states that the U.S. tech giant will provide “free” technology to the U.K. government to modernize its outdated systems. According to the U.K. Secretary of State for Science, Innovation and Technology, more than 25 percent of public sector IT and as much as 70 percent of the so-called legacy systems running parts of the country’s National Health Service and police forces date back three to four decades. Google wants to fix all this by replacing wheezing, inefficient technology with the latest cloud-based systems, and will provide hundreds of millions of pounds of in-kind services to do its good deeds. In return, it will be able to bid on future public sector IT projects, and benefit from the goodwill and better branding profile this will bring. But is the U.K. government “dangerously naive” for turning the keys to the data castle over to Google? One of the major worries here is vendor lock-in — that is, the reliance on a single vendor, which is headquartered in a foreign nation, for such a large and critical amount of the government’s computing systems. There’s also the specter of the U.S. government using its CLOUD Act to spy on and attempt to prosecute U.K. residents. The U.K. government’s new deal with Google will see vast amounts of public data stored on U.S. servers. | Facundo Arrizabalaga/EPA The CLOUD Act — which stands for the tortured nomenclature, Clarifying Lawful Overseas Use of Data Act — was written to “clarify” the circumstances under which U.S. companies must comply with requests for data from the government. It also created a framework for bilateral agreements with other countries to share data, which seems to counter GDPR protections, as well as the general EU spirit of protecting personal data from prying eyes. Google has responded to all this by stating that all its technology will be under the control of the U.K. government, and that it will challenge any U.S. government efforts to intrude upon data privacy in the U.K. But is that enough to erase concerns? Meanwhile, a new deal with Microsoft is raising similar issues within the EU. According to this agreement, Microsoft will invest as much as €5 billion to upgrade public sector IT across the bloc. And just like Google, it stands to benefit from better access to future public sector IT bids and the warm feelings that come from its largesse. Potential vendor lock-in is, again, an issue here. But more profoundly, recent testimony by Microsoft France’s Director of Public and Legal Affairs Anton Carniaux revealed that the company could not guarantee that data can’t be exposed to the U.S. government by way of the CLOUD Act. Carniaux’s testimony came after Microsoft outlined what it calls its “diversified” approach to sovereign cloud data centers in the EU. For instance, Microsoft plans to work with local companies Capgemini and Orange in France on a joint venture named “Blue,” which will be designed as a trusted cloud platform. And a similar sovereign cloud is planned in Germany, with SAP and Bertelsmann subsidiary Arvato Systems. But in all of this, we can’t forget that the data generated by the citizens of these nations is invaluable for Big Tech. In today’s global economy, data is more valuable than gold, and it should be preserved as such. That’s why at the International Data Center Authority, we advise government leaders to do their best to protect their national interests and the interests of their citizens. We also advise them to create trusted alliances with their economic peers on data and data rights, so there can be bilateral trade that both enables data sovereignty and is financially lucrative. A nation might have technical challenges with regards to its data center and cloud infrastructure capabilities. It may be faced with financial obstacles in tackling these challenges. But giving up national computing resources to outside parties doesn’t warrant a visionary or long-term solution. It’s also important to realize that tech giants have a bigger valuation and larger budgets than many nations around the world. Their buying power, lobby and influence are such that they can pull a wide spectrum of strings when negotiating deals. They’re also for-profit entities that will ultimately do what’s best for their stakeholders. These companies are in constant search of resources like energy, water, land, human capital and friendly regulations. At the same time, they have a mandate to sell their services. And while the in-kind services to be provided by Google and Microsoft will improve the underlying IT infrastructure of many nations and foster goodwill, we can’t forget these companies must conduct a profitable business. Free services aren’t free forever. That means that for the world’s technology purveyors, any nation that’s struggling with its national computing capacities but can pay its bills on time is a prime prospect. They’re also interested in any country or region that has key resources but lacks the technological capacity to export advanced computing. Microsoft recently said it “cannot guarantee” data sovereignty to customers in France — and by extension the rest of the EU. | Hannibal Hanschke/EPA The U.K. and EU member countries meet this distinction, as do dozens of other nations across the world. On more than a few occasions, proud officials have told us that certain major vendors have agreed to talk to them about locating cloud services in their country. But these companies are motivated by creating new revenue and supporting market caps that now reach into the trillions of dollars. The enormous pressures tech giants face to continue to grow and maintain their wealth shouldn’t be the concern of any government. Rather, it should be to serve their societies and preserve national security, intellectual property and individual privacy. That’s where data sovereignty comes in. Data sovereignty is the concept that each country maintains the data of its government, businesses and residents on its own local systems, and protects that information from foreign eyes. Today, data sovereignty is an integral part of national sovereignty. And the governments of the U.K. and the EU must not acquiesce to the wishes of big tech vendors — whether from the U.S. or anywhere else — if doing so weakens data privacy within their countries. Additionally, it is essential for political leaders to understand that the physical borders of a nation define its data sovereignty. When it comes to digitized data, sovereignty and privacy must be governed by the bounds of cybersecurity and in the realms of the cyber world. The idea of Google, Microsoft or any other large company having a presence abroad certainly isn’t new. But big tech companies are different from Coca-Cola, McDonald’s and Nike. They’re in the business of acquiring, refining and managing data — which can be extremely profitable. It’s no surprise to see tech leaders hoping to create as much business as possible in a European economy that now collectively generates $25 trillion annually. But for governments, the privacy rights of their citizens and residents must come first. Establishing trusted global alliances at the government level, ensuring the privacy and integrity of national data isn’t compromised, and being watchful in signing ambiguous agreements are vital. Eternal vigilance is the price of maintaining data sovereignty.

The next major political fight over Big Tech has been brewing for years in the backyards of northern Virginia. Now the debate over data centers is poised to go national. The push by companies like OpenAI and Google to win the artificial intelligence race has led to a proliferation of data centers — giant warehouses for computer systems — in communities across all 50 states. The rise of these server farms has sparked fierce battles from the Virginia suburbs to Tucson, Arizona, and beyond, as city and county governments grapple with how to balance job creation and new revenue streams against the strain data centers put on water and energy resources. That debate is inching up the ballot as state lawmakers race to regulate a nascent industry, governors rush to embrace a new economic boon and Big Tech makes major investments in AI growth. Even as data centers are ready to explode on the national scene, the politics around them don’t cut neatly across party lines. The sites sit at the intersection of a typically partisan divide between pro-business interests and organized labor. Efforts to regulate data centers in Virginia’s Legislature have drawn bipartisan backing, though they’ve been largely unsuccessful because of concerns about local control and excessive bureaucracy. And some Democratic officials appear as eager as their Republican counterparts to attract data centers to help bolster their states’ economies. “Every governor — Democrat or Republican — is going to want economic development. I think the question is always at what cost — and that’s where you see some of the political rubber meeting the road in terms of cost of energy bills, whether Big Tech’s paying its fair share,” Virginia-based Democratic strategist Jared Leopold said. But, he added, “it is so nascent that there isn’t a standard Democratic-versus-Republican playbook for dealing with data centers yet.” Tech companies like Amazon and Microsoft are counting on data centers to power their AI expansions — and the U.S. already has more of these facilities than any other country. President Donald Trump has vowed to “win the AI race,” moving to implement a Biden-era executive order to build the facilities on federal lands and announcing a $500 billion AI and data center sprint with large tech companies known as Stargate, with a site underway in Texas. But the surge is proving polarizing, particularly in northern Virginia — considered the tip of the spear on this issue with the world’s largest and fastest-growing data center market. The Energy Department is projecting data centers will require up to nearly three times as much energy by 2028, raising fears that the tech sector will turn to polluting sources like coal and natural gas in their rush for power. The data center industry is expected to contribute $9.1 billion in gross domestic product to Virginia’s economy annually. In Loudoun County, Virginia, that has meant a $250 million budget surplus and a property tax cut. That’s a prospect that’s hard to ignore for counties with Big Tech knocking on their doors. “We don’t know where to put the money,” said Democrat Juli Briskman, who sits on the county board of supervisors. But the typical residential ratepayer in that state could experience a $14 to $37 monthly electric bill increase by 2040, according to a report from Virginia’s Joint Legislative Audit and Review Commission, in part because of the need for infrastructure upgrades whose costs could be spread to all customers. “Enough is enough,” said Loudoun County Vice Chair Michael Turner, also a Democrat, who is largely opposing new data centers. “The next election for supervisor will hinge on data centers,” adding that two weeks don’t go by where he doesn’t hear from other county officials around the country looking for advice. John Chambers, a spokesperson for Rep. Mike Carey (R-Ohio), said in a statement he attributes the Columbus area’s growth to “tech jobs and data centers that will help America win the AI innovation race” and that he supports “an all-of-the-above energy strategy to ensure electricity is affordable and available for families and businesses in the region.” Illinois Gov. JB Pritzker, who’s seeking a third term as governor and is considered a potential Democratic presidential contender in 2028, is looking to lure data centers to his state so as not to miss out on the boom. And down south, De’Keither Stamps, a Democratic member of Mississippi’s Public Services Commission, said data centers could bring positive economic development and the opportunity to finance needed electrical system upgrades “if regulated prudently.” Not everyone is on board. Ben Inskeep, program director at Indiana-based Citizens Action Coalition, a consumer and environmental advocacy group, sees the issue is up for grabs and at an inflection point as grassroots opposition takes shape. “Both our political parties have been completely captured by Big Tech and are doing the bidding of Big Tech in every way imaginable,” he said. “This does have all the hallmarks of an issue that could create new, interesting political coalitions.” In the Virginia Legislature, efforts to put guardrails around the rapid expansion of data centers — such as assessing who’s footing the energy bills for them — drew bipartisan support even as they failed. Youngkin, the Republican governor, vetoed a bipartisan bill that would have required data-center applications complete site assessments because he said he didn’t want to create “unnecessary red tape.” Still, “It’s less partisan than most issues. It’s more geographic,” said Virginia state Del. Ian Lovejoy, a Republican from Prince William County who unsuccessfully pushed a bill last session to put land buffers between data centers and parks, schools and residential areas. “So if you’re in an area that is negatively affected by them, then it crosses party lines. And if you’re not in an area that’s really affected by them, neither party really cares that much, because broadly speaking, on the right side of the aisle you have the pro-business desire to build, and on the left side of the aisle, you have the labor movement, where unions really like these data centers because it’s jobs.” Now, Lovejoy expects state Democrats to loosen fossil fuel restrictions baked into the state’s Clean Economy Act in response to the energy crunch. Industry efforts to advance data centers have also been targeted at both parties. The nearly quarter of a million dollars the Data Center Coalition has poured into state legislative campaigns in Virginia have been split across the aisle. The group has spent nearly the same amount on federal lobbying and is active in states like California, where it spent $50,000 so far this year. Other players in the sector are targeting northern Virginia officials, too. “Data centers enjoy bipartisan support across states, but we have also heard our fair share of bipartisan concerns across states,” said Dan Diorio, vice president of state policy at the Data Center Coalition, an industry group. “We are very much an engaged stakeholder in all the states in which our members are active in to work on policies with lawmakers of both sides of the aisle to ensure that states continue to see the economic benefits of data centers while also addressing their priorities.” As data centers move up the ballot as a campaign issue, the complications for candidates in both parties are playing out in real time. Democrats who are watching their party nationally hemorrhage voters over the economy are scrambling to strike a balance between adding jobs and revenue while stopping energy costs from skyrocketing. And in some cases, Republicans whose party leaders are cracking down on renewable energy are calling for “all of the above” approaches to energy production to keep power prices down — providing tacit backing to a sector Trump is trying to crush even as they follow the president in promoting fossil fuels. That dynamic is on clear display in Virginia’s gubernatorial race, where data-center regulation has emerged as a focal point. Former Rep. Abigail Spanberger, Democrats’ nominee, is proposing a “statewide strategy” for data centers that calls for boosting local and renewable energy production and charging Big Tech companies to offset rising energy costs for consumers. “Virginia can benefit from having data centers here — but to reap those benefits, we need to make sure we are accounting and planning for the energy generation, water, and other resources needed to support them,” Spanberger said in a statement. Her Republican opponent, Lt. Gov. Winsome Earle-Sears, wants to open the state to “all kinds of energy” and to reduce red tape around power projects to help meet increasing demand. Earle-Sears’ campaign did not respond to a request for comment. Rising power prices, which could spike further as more energy-demanding data centers come online, are already roiling politics across the midwest and mid-Atlantic as Democratic governors and candidates blame grid manager PJM for consumers’ higher bills and New Jersey’s gubernatorial candidates clash over how to bring those costs down. The debate has the potential to spill into next year’s broader slate of gubernatorial contests, with several of those governors — including Pritzker, Pennsylvania’s Josh Shapiro and Maryland’s Wes Moore — up for reelection and Democrats eager to prove they understand voters’ cost-of-living concerns. The issues surrounding data centers are bleeding into federal politics, too, though ultimately decisions around zoning and electric rates will largely remain in state and local control. Congressional Republicans had pushed a 10-year moratorium on state-level AI regulations — including those around data center permitting — as part of their “big, beautiful” domestic policy bill, though the effort fell apart in the Senate. At the same time, they voted to roll back credits for clean-energy projects from Democrats’ 2022 climate law that could help offset rising energy demand. “The federal government is going to have to take this on,” said Virginia state Sen. Russet Perry, a Democrat who has spearheaded data center regulatory efforts in her legislature. “In the interim, the state is going to be at the forefront for dealing with it, and it’s going to be bipartisan.” Shia Kapos contributed to this report.